KAGA group head office (in Ochanomizu, Tokyo)

The Investor Meeting for a Results
Briefing of the FY 2006
, its brand name for original I.C. and PC peripheralproducts, and highly penetrated in many countries all over the world,
comes from a Japanese “Takusun” which means “many,” in hoping
to distribute lots of quality products to make more people muchhappier.

KAGA ELECTRONICS CO., LTD.
(Tokyo Stock Exchange, First Section
Stock code: 8154)
2-2-9, Hongo, Bunkyo-ku, Tokyo, Japan113-8503
URL：http：//www.taxan.co.jp
TEL：03-4455-3131
FAX：03-3815-6807May 23, 2006

2006/5/23

1, KAGA ELECTRONICS group outline

2

2006/5/23

Company profile

Established
September 12, 1968
Capital12.1 billion yen (as of March 31, 2006)
Founder & CEO
Isao Tsukamoto
Stock exchange listing
Tokyo stock exchange, First section (Stock code:8154)
Consolidated financial results
FY2006 <actual>
Net sales : 257.7 billion yen
Ordinary income : 8.6 billion yen
FY2007 <plan>
Net sales : 280.0 billion yen
Ordinary income : 8.7 billion yen Number of group companies (as of March 31, 2006)
39 (Domestic : 20 / Overseas : 19)
 Number of group employees
4,469 (Head quarters : 559 / KAGA ELECTRONICS group : 3,910)
 Group business outline
Sale of general electronic components and semiconductors, EMS (Electricmanufacturing service), sale of computers and computers peripherals,
development and design of dedicated integrated circuit andsemiconductors, production of computer graphics。

3

2006/5/23

4Sales transition
300
Kashimura Company Limited become a subsidiary.
KGF CO., LTD. is established.

250(Unit : billion yen)
280.0 billion yen(Plan)FYT CO., LTD. is established.
KAGA DEVICES (H.K.) LIMITED is established.
Digital Media Lab., Inc. become a subsidiary.
KAGA ELECTRONICS (THAILAND) CO., LTD. is established.

200

KAGA SHENZHEN ELECTRONICS TECHNOLOGY DEVELOPMENT CO., LTD. is established.
KAGA (SHANGHAI) ELECTRONICS CO., LTD. is established.
AD DEVICE CORPORATION become a subsidiary.
DIGITAL GAIN CO., LTD. is established.

150

KAGA (TAIWAN) ELECTRONICS CO., LTD.
KAGA SOLUTION NETWORK CO., LTD. are established.
KAGA (SINGAPORE) ELECTRONICS PTE LTD.
KAGA (KOREA) ELECTRONICS CO., LTD. are established.

100

KAGA (H.K.) ELECTRONICS LIMITED is established.
Sales department for Apple computer products is transferred.
KAGA DEVICE CO., LTD. is established.
KAGA COMPONENT CO., LTD. become a subsidiary.
TAXAN (EUROPE) LTD. becomes a subsidiary.

50

Taxan USA Corporation is established.

0 '68 '69 '70 '71 '72 '73 '74 '75 '76 '77 '78 '79 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 (Plan)

2006/5/23

Management policies
Statement of management policies“KAGA ELECTRONICS becomes a company which could please itsstockholders, its customers, its employees and all others, who associate with us,
hope and contribute to the society”.

The spirit of “FYT”
F = Flexibility, Y = keeping Young、T = Try
The keyword is “3G”
GeneralGlobalGroup“We always think of tomorrow andeventually become the number one”,
Founder & CEO
Isao Tsukamoto5

2006/5/23

Strengths of KAGA ELECTRONICS Group
We cater to all needs in electronics from upstream to downstream＜How an electronics product is produced＞
Procurement ofDesign,
electronicPlanningcomponentsanddevelopment
semiconductors

Manufacturingof Semi-finishedproductsElectronics components ・ Semiconductors business /EDMS business Drawing up the plan for the product.
 Designing and developing the product.
 Developing electronic parts, semiconductors and motherboards.
 Gathering electronic parts and semiconductors for the productin a place where they are needed.
 Carrying out the manufacturing process as requested at arequested place.

Sale offinishedproducts

Informationequipment business Selling PCs andperipheral equipment
to home appliancevolume stores, PC
shops, DPE shops andconvenience stores.

 Selling digital
videos and editing
equipment.

62006/5/23

Sales by products category
Others (IT(IT-related business)

Information equipment

8%
22%

9%

FY2006<Full-year actual>
Net sales
257,7 billion yen

EMS (Processed business)

General electroniccomponents

27%

34%

General electronic components
Semiconductors
EMS (Processed business)
Information equipment
Others (IT-related business)

Semiconductors

72006/5/23

KAGA ELECTRONICS features
We cater to all kinds of electronic product requests
 We serve all needs from upstream to downstream.
 Advantage of Independent company
ー Merchandise : About 2,000 companies
ー Sales : About 4,000 companies, 7,000 accounts
 Wide variety of business fieldー Information equipment・Communication device・Audio-Visual・
Office-automation devices・Amusement devices
 Overseas deployment
ー Developing business worldwide with outposts in nine countries in theworld
 Number of engineer
ー KAGA ELECTRONIS Group：400、ー Business partner：5,000

82006/5/23

Main business connection
A wide range of products for a wide range of customers
Merchandise(About 2,000 companies)

Sales(About 4,000 companies, 7,000 accounts

92006/5/23

KAGA ELECTRONICS Group, developing business worldwide
KAGA (EUROPE)

KAGA (SHENZHEN)ELECTRONICS TECHNOLOGYDEVELOPMENTDONGGUAN POWERTEKELECTRONICS
KAGA (SHANHAI)GUANGZHOU KEIDENKI

KAGA (KOREA)

KAGA (SHENZHEN)ELECTRONICS TECHNOLOGYDEVELOPMENTKAGA (EUROPE)
Checho business office

Kaga Electronics
Headquarters（Headquarters（Japan）Japan）
KAGA DEVICES (H.K.)
KAGA (TAIWAN)

KAGA (THAILAND)KAGA COMPONENTS MALAYSIA

KAGA (H.K.)
KAGA DEVICE (H.K.)

Electronic components /Semiconductors business

KAGA (SINGAPORE)

EMS businessInformation equipmentbusiness

I-O Data device USA
KAGA USA102006/5/23

Toward the further globalization of KAGA ELECTRONICS GroupWe are organizing marketing campaigns in areas all over the world to further
promote the globalization of our group

RussiaChechoChina・DalianIndia
Vietnam11

2006/5/23

Summary of Main subsidiaries

Business office＜Kaga Electronics group domestic subsidiaries＞

A company that undertakes new businessventures by making full use of the engineeringexpertise of Kaga Electronics Group.

A semiconductor dealer and agency with theadvanced technology for Mitsubishi Electric
Corporation and Renesas Technology Corporation.

A company that supports Toshiba as its system
integrator in activities from the sale ofsemiconductors to the EDMS.

A company that integrates all the EDMS divisions of
Kaga Electronics Group to design, develop,
manufacture and sell products in Japan and overseas.

Factory
A company that produces movies ad computer
graphics for TV games using high-resolution
pictures and design expertise.

A total coordinator of digital video equipment
and general sales agency for Kodak.

A domestic manufacturing outpost of Kagaelectronics Group, which manufactures products
such as information equipment and game machines.

A company that provides a range of services fromthe construction of the most advanced company
LAN protected by an effective security system tothe creation of a security video system.

A company that conducts sales promotion andcontent business using digital technologies suchas computer graphics and the Web.

A company that undertakes new businessventures for promoting digital equipment and IT
in sports industries such as golf.

On-line shopping of food and health supplements
using E-commerce.

12

2006/5/23

Business models of the companies that are financially supported by the group
Financial support provided for a wide range of venture businesses, from manufacturers ofsemiconductors and electronics equipment to developers of content and software「CSC engine」
Planning anddevelopment ofcommunication module

Development andmanufacturing ofsemiconductors

Planning anddevelopment of voicerecognition system

Planning andmanufacturing ofTV game equipment
and free bonus gift

Digital Satellite
Broadcasting
service

Planning anddevelopment ofgame software

Development anddesign of PC,
peripheraldevices and board「STB(Set Top Box)」
Planning and development of
STB, VOD, and information
communication devices

KAGA ELECTRONICS group

Embedded OS 「axLinux」
Development of captureboardsPlanning anddevelopment ofgroupware

Planning anddevelopment ofinternetsecurity system

Development,
manufacture andsale of electronic
devices

Sale of electronic
components in an
online transaction

Development,manufactureand sale of LSIInternet cafe

Dual mode
IP wireless mobile phone「WipCom 1000」
Planning anddevelopment of IP
wireless mobile phone13

2006/5/23

2, Operating highlights during FY2006

14

2006/5/23

15

New business strategy for the information equipment divisions ①＜Kaga Electronics・ITM management headquarters＞
Summary
Selling all types of digitalequipment, including PCs
and peripheral equipment infinished form

Sales channel Line of business・Major volume retailers ofhome appliances
・Specialty stores・PCs and peripheralequipment
・Digital image devices

Sharing the sales
channels and commodity
products with each other＜Information equipment
divisions＞
Sales target of thecurrent term
Producing synergistic
effects by sharing theITM Headquarters of
Kaga Electronics andthe sales channels andcommodity productsof Kashimura＜Kashimura＞
Summary

Sales channel

Line of businessSelling all types of camerarelated products, such asfilms, films with lenses andphotographic paper

・Photo-specialty
store・Films
・Films with lens・Photographic
papers・Public office・DPE shops

Aiming to achievesales of 65billion yenin fiscal 2007!!

2006/5/23

New business strategy for the information equipment divisions ②
We will continue to create pioneering products in the future

Mac OSX-compliant software「Location Free®」High-resolution digital
image server for digital
cinema「QuVIS Cinema PlayerTM」

IP phone system forsmall scale office「Selaza」

Concluding general sales
agency contracts for Kodak
digital cameras and otherdigital equipment, films,
photographic paper and otherproducts

Wireless earphones forcell phones using theBluetooth technology

16

2006/5/23

Further development of the EDMS business
Integrating all the EDMS business divisions of Kaga Electronics Group into thesubsidiary, Kaga Components Co., Ltd.

DLP front projector

LED relationshipLamina Ceramics

Taking over the front
projector businessfrom PLUS VISIONCorp.

LED ceramic package
Luminous
New white fluorescent material KLD

LCOS rear projection TVToriconHigh brightness white LED

Completing thedevelopment of thevideo engine for LCOS
rear projection TVs’2006 JAPAN SHOP
Submission to “LED show”

172006/5/23

Challenges for one-segment broadcastingStaring the development of “builtin one-segment TV module” using
silicon tuners of IntegrantTechnologies Inc. as the core

Developing and manufacturing CMOS 1/3
segment silicon tuners needed for themarket in receivers for digital mobilebroadcasting
CMOS 1/3 segment
silicon tuner

PDA
LCD TV for automobile use

Portable DVD players

Portable TV
Taking advantage of the technologies for reducing electricity
consumption and downsizing, we will produce global solutions for
portable receivers for mobile broadcasting18

2006/5/23

3, Financial highlights for FY2006

19

2006/5/23(Consolidated)
Financial highlights in FY2005 and FY2006(Unit : million yen)

FY2005Net sales
Gross profit
Gross profit
ratio
SG & A
expenses
Operating income
Ordinary income
Net income

250,244
25,624
10.2%
17,149
8,474
8,644
4,731
FY2005

Total assets(Total shareholders'equity)(Interest bearingdebt)

115,901
40,661
12,928FY2006

257,764
29,546
11.5%
21,336
8,209
8,638
7,272
FY2006

119,441
49,841
10,299

Increase/decrease

7,520
3,922
1.2%
4,187-265
-6
2,541

3.0%
15.3%
24.4%
-3.1%
-0.1%
53.7%

Increase/decrease

3,540
9,180
-2,6293.1%
22.6%-20.3%

20

2006/5/23(Consolidated)
Results by business category in FY2005 and FY2006(Unit : million yen)
Net sales

Increase/decrease

BusinessFY2005

FY2006

Amount%Informationequipment

40,25455,33615,082

37.5%

EMS

76,09986,646

10,547

13.9%

Semiconductors

97,07569,866-27,209-28.0%

General electronic
component

23,75824,393635

2.7%

Others13,056

21,521

8,465

64.8%

Total

250,244257,764

7,520

3.0%

21

2006/5/23(Consolidated)
Financial highlights and plan in FY2006 and FY2007(Unit : million yen)

FY2006
Net sales
Gross profit
Gross profit ratio
SG & Aexpenses
Operating income
Ordinary income
Net income

257,764
29,546
11.5%
21,336

280,000
32,700
11.7%

8,209
8,638
7,272
FY2006

Total assets(Total shareholders'equity)(Interest-bearingdebt)

FY2007 (Plan)

Increase/decrease

8.6%
10.7%

24,40022,236
3,154
0.2%
3,064

8,300
8,700
5,300

91
62-1,972

1.1%
0.7%-27.1%

FY2007 (Plan)

119,441
49,841

126,539

10,299

14.4%

Increase/decrease

51,685

7,098
1,844

5.9%
3.7%

9,004

-1,295-12.6%

22

2006/5/23(Consolidated)
Sales and sales plan by business category in FY2006 and FY2007(Unit : million yen)

Net sales

Increase/decrease

BusinessFY2006

FY2007 (Plan)

Amount%Informationequipment

55,33665,000

9,664

17.5%

EMS

86,646

98,50011,854

13.7%

Semiconductors

69,86660,000-9,866-14.1%

General electronic
components

24,39324,500107

0.4%

Others21,521

32,00010,479

48.7%

Total

257,764

280,000

22,236

8.6%23