November 4, 2015

Summary of Consolidated Financial Results
For the First Half Ended September 30, 2015 [Japan GAAP]
Name of Company:
Stock Code:
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Date of quarterly securities report (tentative):
Date of commencement of dividend payment (tentative):
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
November 12, 2015
December 4, 2015
Yes
Yes (for institutional investors)(Yen in millions, rounded down)

1.

Financial results for the first half of the fiscal year ending March 2016 (April 1, 2015 – September 30, 2015)(1) Result of operations (Consolidated, year-to-date)(Percentage figures represent year on year changes)
Net sales
Million yen

Profit attributable toowners of parent

Operating income

Ordinary income%

Million yen%

Million yen%

Million yen%

First half ended September 2015

122,975

2.2

4,195

36.8

4,427

21.7

2,943

36.4

First half ended September 2014

120,318

(1.4)

3,067

39.8

3,636

49.2

2,157

59.4

Note: Comprehensive income: First half of FY3/2016: 2,017 million yen (-34.4%), First half of FY3/2015: 3,073 million yen (46.3%)
Net income per share

Net income per share fully diluted
Yen

Yen

First half ended September 2015

104.17-First half ended September 2014

76.34

-

(2) Financial Position (Consolidated)
Total assets

Net assets

Equity ratio

Million yen

Million yen%

As of September 30, 2015

123,959

60,92449.1

As of March 31, 2015

127,948

59,603

46.6

Reference: Shareholders’ equity
As of September 30, 2015: 60,882 million yen
2.

As of March 31, 2015

59,564 million yen

Dividends
End of 1Q
Yen

End of 2Q
Yen

Fiscal year ended March 2015

-

15.00

Fiscal year ending March 2016

-

20.00

Dividend per share
End of 3Q
Yen-

End of FY
YenFull year
Yen

25.00

40.00

Fiscal year ending March 2016 (est.)
20.00
Note: Change in the estimation of dividend from the latest announcement: None
Year-end dividend of FY3/15 includes ordinary dividend of 15.00 yen and commemorative dividend of 10 yen

40.00

3.

Forecast for the fiscal year ending March 2016 (Consolidated, April 1, 2015 to March 31, 2016)(Percentage figures represent year on year changes)
Profit attributable
Net income
Net sales
Operating income
Ordinary income
to owners of parent
per share
Million yen%

Million yen%

Million yen%

Million yen%

Yen

252,000

(1.2)

7,200

13.2

7,700

0.5

5,000

13.2

176.96

Full year

Note: Change in the forecast from the latest announcement: Yes* Notes(1) Changes in significant subsidiaries (Changes in specific subsidiaries accompanied by changes in the scope of
consolidation): None
(2) Use of of accounting methods specifically for the preparation of the quarterly consolidated financial statements: None
(3) Changes in accounting principles and estimates, and retrospective restatement(a) Changes due to revision of accounting standards: Yes(b) Changes other than in (a): None(c) Changes in accounting estimates: None(d) Retrospective restatement: None
Note: Please refer (3) Changes in accounting principles and estimates, and retrospective restatement in 2. Other Information on page 3(4) Number of shares outstanding (common stock)(a) Shares outstanding (including treasury shares)
As of September 30, 2015:

28,702,118

As of March 31, 2015:

28,702,118

446,606

As of March 31, 2015:

446,040

Period ended September 30, 2014:

28,256,963(b) Treasury shares
As of September 30, 2015:(c) Average number of shares (quarterly consolidated cumulative period)
Period ended September 30, 2015:

28,255,854* Information concerning quarterly review procedure
The rule mandating a review of quarterly financial statements (under the Financial Instruments and Exchange Act) does not apply
to this Summary of Financial Results. The financial statements for the first quarter were under review at the time this Summaryof Financial Results was released..
* Cautionary statement regarding forecasts of operating results and special notes
Forward-looking statements in these materials are based on information available to management at the time this report was
prepared and assumptions that management believes are reasonable. Actual results may differ significantly from these statements
for a number of reasons. For information about the forecasts, please see “(3) Forecast for fiscal year ending March 2016” on page3.

Index for Supplementary Information
1.

Results of Operations ............................................................................................................................................. 22.

(1) Overview on consolidated business performance ........................................................................................ 2(2) Overview of financial condition ................................................................................................................... 2(3) Forecast ........................................................................................................................................................ 3
Other Information................................................................................................................................................... 3
(1)
(2)

3.

Changes in significant subsidiaries: ............................................................................................................. 3
Use of accounting methods specifically for the preparation of the quarterly consolidated financial
statements: .................................................................................................................................................... 3(3) Changes in accounting principles and estimates, and retrospective restatement: ......................................... 3
Quarterly Consolidated Financial Statements ........................................................................................................ 4(1) Quarterly consolidated balance sheet ........................................................................................................... 4(2) Quarterly consolidated statements of income and consolidated statements of comprehensive income ....... 6(3) Quarterly consolidated statements of cash flows ......................................................................................... 8(4) Notes to quarterly consolidated financial statement ..................................................................................... 9(Notes to going concern assumptions) .................................................................................................................. 9(Significant change in shareholders’ equity) ........................................................................................................ 9(Segment information).......................................................................................................................................... 9

1

1.
(1)

Results of Operations
Overview on consolidated business performance
In the first half of the fiscal year, the Japanese economy recovered slowly due to a continuation of improvements in corporate
earnings and employment because of economic measures by the Japanese government and the Bank of Japan’s monetaryeasing. However, the outlook for the economy remained uncertain due to slowing economic growth in China and otherevents.
In the electronics industry, the principal area of operations for the KAGA ELECTRONICS Group, demand for PCs andconsumer electronics remained weak. But overall demand in the industry increased because of higher demand for mobile
devices, automotive devices, and medical and healthcare products. In addition, there was growth in new market sectors forenvironmental and energy products, the IoT (Note 1), and wearable terminals.
Based on the management philosophy of “Everything we do, we do for our customers,” the KAGA ELECTRONICS Groupestablished the GR Management Headquarters to reinforce collaboration among group companies, worked on increasing
sales to major current customers, added new products, strengthened its overseas network and implemented cost-cutting
measures.
First half consolidated net sales increased 2.2% from one year earlier to 122,975 million yen, operating income increased
36.8% to 4,195 million yen, ordinary income increased 21.7% to 4,427 million yen, and profit attributable to owners ofparent increased 36.4% to 2,943 million yen.
(Note 1): IoT is the abbreviation for Internet of Things. It is a concept that supports or enables the creation of new services and businessmodels by connecting all objects through the Internet.

Business segment performance was as follows.
(a) Electronic components (Development, manufacture and sale of semiconductors, general electronic components andother products, EMS (Note 2), and other activities)
First half sales were higher in Japan for electronic components and semiconductors used in communications equipment
and amusement products. Overseas, there was growth in EMS operations for electronic devices. The result was a 2.5%
increase in segment sales to 95,815 million yen and a 41.8% increase in operating income to 3,755 million yen.
(Note 2)

Electronics manufacturing service is a term used for the provision of product development and manufacturing services onan outsourcing basis.

(b) Information equipment (Sales of PCs, PC peripherals, photograph and imaging products, original-brand products, andother products)
The volume of PCs and digital cameras decreased but there were higher sales of housing-related products and otherproducts. As a result, segment sales increased 1.5% to 20,120 million yen and operating income increased 40.9% to
229 million yen.
(c) Software (Production of computer graphics, planning and development of amusement products, and other activities)
This segment is focusing on development and sales of computer graphics and game software while cutting costs.
Segment sales increased 8.5% to 1,136 million yen and operating income was up 134.9% to 288 million yen.
(d) Others (Electronic device repairs and support, sales of sporting goods, and other activities)
Sales of arcade amusement machines in Japan and sales of used PCs and communications equipment in the recycling
business were weak. As a result, segment sales decreased 0.4% to 5,901 million yen and there was an operating loss of
102 million yen compared with operating income of 51 million yen in the first half of the previous fiscal year.

(2)

Overview of financial condition(a) Assets, liabilities and net assets
Assets decreased 3,989 million yen from the end of the previous fiscal year to 123,959 million yen at the end of the firsthalf mainly because of a decrease in notes and accounts receivable-trade. Liabilities decreased 5,310 million yen to 63,034
million yen mainly because of a decrease in notes and accounts payable-trade. Net assets increased 1,321 million yen to
60,924 million yen mainly because of profit attributable to owners of parent.
(b) Cash flows
There was a net increase of 2,790 million yen in cash and cash equivalents to 20,360 million yen at the end of the first half.
(Operating activities)
Net cash provided by operating activities was 4,344 million yen compared with 4,940 million yen one year earlier. Income
before income taxes and minority interests was the major source of cash.
(Investing activities)
Net cash provided by investing activities was 385 million yen compared with net cash used of 730 million yen one year
earlier. The primary sources of cash were proceeds from sales of property, plant and equipment and proceeds fromcancellation of insurance funds.
2

(Financing activities)
Net cash used by financing activities was 1,614 million yen compared with 3,409 million yen one year earlier. Cash wasused primarily for repayments of long-term loans payable and cash dividends paid.
(3)

Forecast(a) Consolidated fiscal year forecast (April 1, 2015 to March 31, 2016)
OperatingincomeNet sales
Million yen

Ordinary
incomeProfitattributable toowners ofparent

Net income
per share

Million yen

Million yen

Million yen

Yen

Previous forecast (A)260,000

6,500

7,000

4,600

162.80

New forecast (B)252,000

7,200

7,700

5,000

176.96

Change (B) – (A)(8,000)

700

700

400

10.8

10.0

Percent change (%)(Ref.) Previous fiscal year
(FY3/15)(3.1)
255,143

6,362

7,664

-

8.7
4,416

156.28(b) Reasons of revision of forecast
There is a small reduction in the sales forecast because of weak demand for PCs, digital cameras and other products in
the information equipment segment. The earnings forecasts are higher because of the outlook for an improvement in the
gross profit margin resulting mainly from a focus on EMS operations in Japan and overseas and other operations wheregroup companies can add value.

2.
(1)

Other Information(2)

Use of accounting methods specifically for the preparation of the quarterly consolidated financial statements:
None

(3)

Changes in accounting principles and estimates, and retrospective restatements:
Changes in accounting policy(Application of accounting standard for concerning business combinations and other accounting standards)
Beginning with the first quarter of the fiscal year ending on March 31, 2016,KAGA ELECTRONICS is using AccountingStandard for Business Combinations (ASBJ Statement No. 21, September 13, 2013), Accounting Standard forConsolidated Financial Statements (ASBJ Standard No. 22, September 13, 2013) and Accounting Standard for Business
Divestitures (ASBJ Statement No. 7, September 13, 2013). As a result, when ownership changes at a subsidiary where
KAGA ELECTRONICS retains control, this difference is included in the capital surplus. In addition, the recognition of
expenses associated with acquisitions has been changed to the consolidated fiscal year in which the corresponding expense
occurred. Furthermore, there is a revision in the allocation of acquisition expenses for business combinations occurring on
or after the beginning of the first quarter of the fiscal year ending on March 31, 2016. The revised method reflects in the
consolidated financial statements of the quarter in which the business combination occurred any changes to the amountallocated to acquisition cost resulting from the confirmation of provisional accounting methods. There are also revisions to
the presentation of quarterly net income and other items and minority interests is now called non-controlling interests. To
reflect these changes in the presentation of the financial statements, first half and fiscal year consolidated financial
statements for the previous fiscal year have been revised. For the application of these three accounting standards, thetransitional measures specified in Accounting Standard for Business Combinations No. 58-2 (4), Accounting Standard forConsolidated Financial Statements No. 44-5 (4) and Accounting Standard for Business Divestitures No. 57-4 (4) were used.
These three accounting standards will continue to be applied starting with the beginning of the first quarter of the fiscal
year ending on March 31, 2016. The application of these accounting standards had no effect on the consolidated financial
statements for the first half of the current fiscal year.

Changes in significant subsidiaries:
None

3

3.
(1)

Quarterly Consolidated Financial Statements
Quarterly consolidated balance sheet(Million yen)
Fiscal year ended March 2015
(As of March 31, 2015)

First half ended September 2015
(As of September 30, 2015)

ASSETS
Current assets
Cash and deposits

18,13020,475

Notes and accounts receivable-trade58,16755,036127

121

17,276

16,083

Securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other

401

665

5,024

4,459

929

682

4,497

4,302

(131)

(155)

104,424

101,671

Buildings and structures, net

5,455

5,257

Machinery, equipment and vehicles, net

2,285

2,106

936

845

4,041

4,041

6

5

12,725

12,256

Goodwill

607

539

Software

479

476

Other

44

90

1,131

1,106

6,351

6,259

Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property, plant and equipment

Tools, furniture and fixtures, net
LandConstruction in progress
Total property, plant and equipment
Intangible assets

Total intangible assets
Investments and other assets
Investment securities
Deferred tax assets

274

275

Other

4,210

3,552

Allowance for doubtful accounts(1,169)(1,163)

Total investments and other assets
Total noncurrent assets
Total assets

4

9,667

8,924

23,524

22,287

127,948

123,959(Million yen)
Fiscal year ended March 2015
(As of March 31, 2015)

First half ended September 2015
(As of September 30, 2015)

LIABILITIESCurrent liabilities
Notes and accounts payable-trade40,54336,661

Short-term loans payable

5,925

5,774

Income taxes payable

1,286

1,101

Other

6,856

6,712

Total current liabilities

54,61250,249Long-term loans payable

8,253

7,539

Provision for directors' retirement benefits

1,501

1,175

Net defined benefit liability

1,643

1,685

Other

2,335

2,385

Total noncurrent liabilities

13,733

12,784

68,34563,034

Capital stock

12,133

12,133

Capital surplus

13,912

13,912Retained earnings

31,02933,266

Noncurrent liabilities

Total liabilities
NET ASSETS
Shareholder’s equity

(537)

(538)

56,53858,774

Valuation difference on available-for-sale securities

790

636

Deferred gains or losses on hedges

23

(5)

Foreign currency translation adjustment

2,462

1,759

Remeasurements of defined benefit plans

(250)

(281)

Total accumulated other comprehensive income

3,026

2,108

Treasury shares
Total shareholders' equity
Accumulated other comprehensive income

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

5

38

42

59,60360,924

127,948

123,959

(2)Quarterly consolidated statements of income and consolidated statements of comprehensive income
For the first half (April 1, 2015 – September 30, 2015)(Million yen)First half ended September 2014
(April 1, 2014 – September 30, 2014)

First half ended September 2015
(April 1, 2015 – September 30, 2015)

Net sales

120,318

122,975

Cost of sales

104,521

105,983

Gross profit

15,796

16,991

Selling, general and administrative expenses

12,72912,796

Operating income (loss)

3,067

4,195

Interest income

78

38

Dividends income

6570Commission fee

170

113

Foreign exchange gains

161

-

Other

197

160

Total non-operating income

674

382

Interest expenses

58

58

Foreign exchange losses-

44

Non-operating income

Non-operating expenses

Other

46

47

Total non-operating expenses

105

150

3,636

4,427

Gain on sales of noncurrent assets

72Gain on sales of investment securities

3

1

Other

1

-

Total extraordinary income

123

Loss on retirement of noncurrent assets

44Loss on valuation of investment securities

166

4

8

-

Business structure improvement expenses-

13

Office transfer expenses

4-

Special retirement expenses-

15

Settlement package

64

-

Other

1

0

Ordinary income (loss)
Extraordinary income

Extraordinary loss

Impairment loss

Total extraordinary loss

249

39

3,400

4,392

Income taxes - current

998

1,100

Income taxes - deferred

237

355

Total income taxes

1,236

1,455

Net income

2,164

2,936

Profit attributable to owners of parent

2,157

2,943

7

(6)

Income before income taxes and minority interests

Profit (loss) attributable to non-controlling interests

6

(Million yen)First half ended September 2014
(April 1, 2014 – September 30, 2014)

First half ended September 2015
(April 1, 2015 – September 30, 2015)

214

(154)

40
620

(29)
(703)

33

(31)

909

(919)

3,073

2,017

3,066

2,024

7

(7)

Other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net oftax
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to owners ofparentComprehensive income attributable to noncontrolling interests

7

(3)

Quarterly consolidated statements of cash flows(Million yen)

Operating activities
Income before income taxes and minority interests
Depreciation and amortization
Amortization of goodwill
Increase (decrease) in provision for directors' retirement benefits
Decrease (Increase) in allowance for doubtful accounts
Interest and dividends income
Interest expenses
Loss on valuation of investment securities
Decrease in notes and accounts receivable-trade
Increase (decrease) in inventories
Increase (decrease) in accounts receivable-other
Increase in advance payments
Decrease in notes and accounts payable-trade
Increase (decrease) in accounts payable-other and accrued expenses
Decrease in consumption taxes refund receivable
Decrease (increase) in other current assets
Decrease (Increase) in other current liabilities
Other, net
Sub-totalInterest and dividends income received
Interest expenses paid
Income taxes paid
Other, net
Net cash provided by operating activities
Investing activities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of investments in subsidiaries
Proceeds from purchase of shares of subsidiaries resulting inchange in scope of consolidation
Payments of short-term loans receivable
Proceeds from cancellation of insurance funds
Payments for guarantee deposits
Proceeds from collection of guarantee deposits
Other payments
Other proceeds
Net cash used in by (provided) investing activities
Financing activities
Net decrease in short-term loans payable
Repayment of long-term loans payable
Cash dividends paid
Other, net
Net cash used in financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
8First half ended Sept. 2014
(April. 1, 2014 – Sepmber. 30, 2014)

First half ended Sept. 2015
(April. 1, 2015 – September. 30, 2015)

3,400
968
61
20
(130)
(144)
58
166
4,693
(546)
(40)
(192)
(3,147)
47
369
1,276
(657)
94
6,297
142
(58)
(1,439)
(1)
4,940

4,392
764
106
(326)
23
(109)
58
4
2,766
1,178
237
(514)
(3,430)
(149)
367
(26)
303
(66)
5,580
112
(57)
(1,283)
(7)
4,344

(646)
152
(119)
(527)
243
(11)

(701)
320
(144)
(160)
61
-

-

8

(13)
100
(8)
12
(195)
280
(730)

(3)
375
(4)
71
(32)
595
385

(2,061)
(714)
(563)
(70)
(3,409)202
1,003
13,361
14,365

(145)
(714)
(705)
(49)
(1,614)(325)
2,790
17,56920,360(4)Notes to quarterly consolidated financial statement(Notes to going concern assumptions)
None(Significant change in shareholders’ equity)
None(Segment information)
I. For the first half ended September 2014 (April 1, 2014 – September 30, 2014)
1. Information about sales and income (loss) by reporting segments
Reporting segments

Adjustments(Note 1)

(Million yen)Amount on thequarterly
consolidated
statements of income
and consolidated
statements ofcomprehensive
income(Note 2)

Electronic
components

Informationequipment

Software

OthersTotal

93,51919,828

1,047

5,922

120,318-

120,318

584

325

2,022

879

3,811

(3,811)-

Total

94,103

20,154

3,070

6,802

124,130(3,811)

120,318

Segment income

2,648

162

122

51

2,985

81

3,067

Net salesof which to outside
customersof which intersegment

Notes:

1. Adjustment in segment income of 81 million yen includes 81 million yen for elimination of intersegment trade.
2. Segment income (loss) is adjusted for operating income (loss) on the quarterly consolidated statements
of income and consolidated statements of comprehensive income.

2. Reportable segment information concerning impairment losses or goodwill amortization(Significant impairment losses for noncurrent assets)
Omitted because insufficiently significant.
(Significant changes in goodwill)
There were no significant change in goodwill.
(Significant changes in gain on bargain purchase)
Omitted because insufficiently significant

9II. For the first half ended September 2015 (April 1, 2015 – September 30, 2015)
1. Information about sales and income (loss) by reporting segments
Reporting segments

Net salesof which to outside
customers(of which intersegment)
Total
Segment income(loss)
Notes:

Adjustments(Note 1)

(Million yen)Amount on thequarterly
consolidated
statements of income
and consolidated
statements ofcomprehensive
income(Note 2)

Electronic
components

Informationequipment

Software

OthersTotal

95,815

20,120

1,136

5,901

122,975-

122,975

422

310

1,705

920

3,358

(3,358)-96,23820,431

2,842

6,822

126,333(3,358)122,975

3,755

229

288

(102)

4,170

24

4,195

1. Adjustment in segment income of 24 million yen includes 63 million yen for elimination of intersegment trade and -38 million yen for amortization of goodwill.
2. Segment income (loss) is adjusted for operating income (loss) on the quarterly consolidated statements
of income and consolidated statements of comprehensive income.

2. Reportable segment information concerning impairment losses or goodwill amortization(Significant impairment losses for noncurrent assets)
There were no significant impairment losses.
(Significant changes in goodwill)
There were no significant change in goodwill.
(Significant changes in gain on bargain purchase)
There were no significant changes in gain on bargain purchase10