October 28, 2011

Summary of Consolidated Financial Results
For the First Half Ended September 30, 2011 [Japan GAAP]
Name of Company:
Stock Code:
Stock Exchange Listing:
URL:
Representative
Title:
Name:
Contact Person
Title:Name:
Phone:
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
Tomohisa Tsukamoto
Senior Managing Director, Finance & Administration Headquarters
Waichiro Shimoyama+81-(0)3-4455-3111
November 11, 2011
December 2, 2011
Yes
Yes (for institutional investors)(Yen in millions, rounded down)

1.

Financial results for the first half of the fiscal year ending March 2012 (April 1, 2011 – September 30, 2011)(1) Result of operations (Consolidated, year-to-date)(Percentage figures represent year on year changes)
Net sales

Operating income

Ordinary income

Net income

Million yen% Million yen%
Million yen% Million yen%
First half ended September 2011
116,271-3.5
805 -68.9
929 -64.9
321 -77.2
First half ended September 2010
120,4705.7
2,594 605.9
2,644
1,412
Note: Comprehensive income: First half of FY3/2012: -958 million yen (-%), First half of FY3/2011: 288 million yen (-%)
Net income per share

Net income per share fully diluted
Yen
-

Yen
11.66
51.18

First half ended September 2011
First half ended September 2010
(2) Financial Position (Consolidated)
Total assets
Million yen
As of September 30, 2011
110,147
As of March 31, 2011
114,686
Notes: Shareholders’ equity
As of September 30, 2011: 45,530 million yen
2.

Net assets
Million yen
47,09848,598
As of March 31, 2011

%
41.3
40.9
46,934 million yen

Dividends
End of 1Q
Yen-

End of 2Q
Yen
15.00
15.00

Dividend per share
End of 3Q
Yen-

Fiscal year ended March 2011
Fiscal year ending March 2012
Fiscal year ending March 2012 (est.)
Note: Change in the estimation of dividend from the latest announcement: No
3.

Equity ratio-

End of FY
Yen
15.00

Full year
Yen
30.00

15.00

30.00

Forecast for the fiscal year ending March 2012 (Consolidated, April 1, 2011 to March 31, 2012)(Percentage figures represent year on year changes)
Net income
Net sales
Operating income
Ordinary income
Net income
per share
Million yen% Million yen% Million yen% Million yen%
Yen
Full year
238,000
0.0
2,100
-41.1
2,600
-30.5
1,300
-29.9
47.11
Note: Change in the forecast from the latest announcement: No4.

Others(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: None(b) Changes other than in (a): None(c) Changes in accounting estimates: None(d) Retrospective restatement: None
(4) Number of shares outstanding (common stock)(a) Shares outstanding (including treasury stock)
As of September 30, 2011:

28,702,118

As of March 31, 2011:

28,702,118

1,104,836

As of March 31, 2011:

1,104,656

Period ended September 30, 2010:

27,598,119(b) Treasury stock
As of September 30, 2011:(c) Average number of shares (quarterly consolidated cumulative period)
Period ended September 30, 2011:

27,597,393* Description of quarterly review procedure implementation status
It is under the quarterly review procedure process based upon the Financial Instruments and Exchange Act at the time of
disclosure of this report.
* 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.

Index for Supplementary Information
1.

Results of Operations.................................................................................................................................................................2(1)
Overview on consolidated business performance .............................................................................................................2(2)
Overview of financial condition .......................................................................................................................................3(3)
Forecast for fiscal year ending in March 2012 .................................................................................................................3
2. Other Information ......................................................................................................................................................................3(1)
Changes in significant subsidiaries:..................................................................................................................................3(2)
Use of 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
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 ongoing concern assumptions ............................................................................................................................9(5)
Segment information ........................................................................................................................................................9(6)
Notes on significant change in shareholders’ equity: .....................................................................................................10(7)
Subsequent event:...........................................................................................................................................................101

1.

Results of Operations(1) Overview on consolidated business performance
In the first half of the fiscal year, there were increasing concerns about a slowdown in U.S. economic growth due to thegovernment deficit problem, persistently high unemployment, weakening consumer spending and other factors. The
economic picture was similar in Europe, where there is also instability due to the sovereign debt crisis in Greece and othercountries. Economic growth rates are slowing in emerging countries like China and India as well because of weakening
economies in industrialized countries and measures to control inflation. Overall, the pace of economic growth worldwide
decreased during the first half as a result.
In Japan, there was a temporary economic downturn following the Great East Japan Earthquake but the economy isrecovering due to the restoration of supply chains and demand backed by reconstruction activity. However, in the second
quarter, the economic outlook was uncertain because of the long-term nature of the nuclear power plant crisis, economic
weakness in the United States, Europe and other regions, and the further increase in the yen’s value.
In the electronics industry, there was growth in demand for smartphones, tablet computers and some other products. But
declining shipments of consumer products like televisions and other digital consumer electronics had an impact on demandfor electronic components and semiconductors.
In this environment, the KAGA ELECTRONICS Group responded to the rapid changes in the electronics industry bytaking actions based on its management philosophy of “Everything we do, we do for our customers.” New products wereadded and there were measures to increase sales of environmental products like LED lamps and existing products to offset
the effects of the Great East Japan Earthquake and other events. At the same time, actions were taken to strengthensolidarity among group companies. Despite these initiatives, first half consolidated net sales decreased 3.5% to 116,271
million yen, operating income fell 68.9% to 805 million yen, ordinary income was down 64.9% to 929 million yen, and net
income declined 77.2% to 321 million yen.
Business segment performance was as follows.
(a) Electronic components (Development, manufacture and sale of semiconductors, general electronic components andother products, electronics manufacturing service (EMS)*, and other activities)
During the first half, there were measures to secure procurement channels for semiconductors and electronic
components where shortages occurred briefly after the Great East Japan Earthquake. Group companies also focused onincreasing sales to current customers and enlarging sales channels for LED products. Overseas, there were extensive
sales activities to capture more EMS orders, increase sales of semiconductors and electronic components to companies
in China, and grow in other ways. In Japan, orders were lower from EMS customers and other client companies asthese manufacturers reduced output in response to the Great East Japan Earthquake and falling consumer spending.
The result was a 5.8% decrease in segment sales to 83,411 million yen and a 68.8% decrease in operating income to
636 million yen.
*Electronics manufacturing service is a term used for the provision of product development and manufacturingservices on an outsourcing basis.
(b) Information equipment (Sales of PCs, PC peripherals, photograph and imaging products, original-brand products, andother products)
Segment sales increased despite the effects of the Great East Japan Earthquake. Performance benefited from measures
to increase sales of PCs, PC peripherals and other existing products and add new products. In addition, orders forterrestrial digital TV broadcast tuners increased due to the July 2011 end of terrestrial analog TV broadcasts in Japan.
Segment sales increased 9.1% to 26,591 million yen but a decline in the gross profit margin and higher selling
expenses resulted in an operating loss of 77 million yen compared with operating income of 139 million yen one year
earlier.
(c) Software (Production of computer graphics, planning and development of amusement products, and other activities)
Group companies focused on the production of computer graphics for animation, the development of image processing
ICs for amusement devices, and sales of game and application software. However, additional time required fordevelopment projects and other factors caused segment sales to fall 43.5% to 1,533 million yen and operating income
to decline 45.4% to 163 million yen.
(d) Others (Electronic device repairs and support, sales of sporting goods, and other activities)
The Great East Japan Earthquake impacted sales in the golf product sales business because of falling demand andreduced orders in the recycling business and other activities in this segment, too. The result was a 2.2% decrease insegment sales to 4,734 million yen and a 31.9% decrease in operating income to 142 million yen.

2(2) Overview of financial condition(a) Assets, liabilities and net assets
Assets decreased 4,538 million yen from one year earlier to 110,147 million yen at the end of the fiscal year. The decreaseof accounts receivable was mainly responsible for this decrease.
Liabilities decreased 3,038 million yen to 63,049 million yen mainly because of an decrease in notes and accounts payabletrade.
Net assets decreased 1,500 million yen to 47,098 million yen mainly because of a fluctuation in foreign currency translation
adjustment.
(b) Cash flows
There was a net decrease of 1,197 million yen in cash and cash equivalents to 10,251 million yen at the end of the fiscal
year.
(Operating activities)
Net cash used by operating activities was 2,446 million yen compared with 4,591 million yen one year earlier. A decreasein notes and accounts receivable-trade was a major source of cash.
(Investing activities)
Net cash used in investing activities was 1,449 million yen compared with 1,563 million yen one year earlier. The primary
use of cash was payments for the purchase of property, plant and equipment.
(Financing activities)
Net cash provided by financing activities was 2,735 million yen. Financing activities used net cash of 3,024 million yen in
the previous fiscal year. Increase of short-term loans payable was the primary source of cash.
(3) Forecast for fiscal year ending in March 2012
The Japanese economy is expected to begin to recover as manufacturing recovers from the effects of the Great East Japan
Earthquake and consumer spending increases as well. But economic growth is slowing in the United States and Europe andthe yen will probably continue to strengthen. As a result, the operating environment will probably remain uncertain.
In this environment, while strengthening solidarity among group companies, the KAGA ELECTRONICS Group willcapture synergies, increase sales to existing customers, and add new products and trading rights in order to grow.
There is no change in the fiscal year forecast at this time. The massive flooding in Thailand that began in early October
2011 is having a widespread impact on supply chains in various industries. Although the flood has affected the factory of a
KAGA ELECTRONICS Group company, it is not currently possible to establish a reasonable estimate of the damage at
this factory.
An announcement will be made promptly in accordance with disclosure standards if KAGA ELECTRONICS determinesthat the flood will have a significant effect on results of operations.

2.

Other Information(1)

Changes in significant subsidiaries:
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:
None

3

3.

Quarterly Consolidated Financial Statements(1)

Quarterly consolidated balance sheet(million yen)
Fiscal year ended March 2011
(As of March 31, 2011)ASSETS
Current assets
Cash and deposits
Notes and accounts receivable-trade
Short-term investment securities
Merchandize and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
OthersAllowance for doubtful accounts

First half ended September 2011
(As of September 30, 2011)

11,92654,17371
15,775
555
3,189
975
6,392
(182)

10,331
51,883
69
16,126
776
3,597
837
6,416
(211)

92,87689,827

Fixed assets
Property, plant and equipment
Buildings and structures, net
Machinery, equipment and vehicles, net
Tools, furniture and fixtures, net
LandConstruction in progress

2,494
1,601
1,016
4,099
511

3,002
1,368
957
4,076
41

Total property, plant and equipment

9,724

9,445

464
790
1,344

353
743
1,293

2,599

2,391

4,493
619
6,000
(1,627)

4,034
566
5,654
(1,772)

9,485

8,483

Total current assets

Intangible assets
Goodwill
Software
OthersTotal intangible assets
Investments and other assets
Investment securities
Deferred tax assets
OthersAllowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets

4

21,81020,320114,686

110,147

(million yen)
Fiscal year ended March 2011
(As of March 31, 2011)
LIABILITIESCurrent liabilities
Notes and accounts payable-trade
Short-term loans payable
Income taxes payable
Provision for directors' bonuses
OthersTotal current liabilities
Noncurrent liabilities
Long-term loans payable
Provision for retirement benefits

First half ended September 2011
(As of September 30, 2011)

40,790
8,505
1,511
138
6,041

36,257
12,525
861
107
5,123

56,98754,875

4,636
1,556

Provision for directors' retirement benefits
Asset retirement obligations
Others

1,294
226
1,385

3,729
1,576
1,340
225
1,300

Total noncurrent liabilities

9,099

8,173

Total liabilities

66,08763,049NET ASSETS
Shareholder’s equity
Capital stock
Capital surplus
Retained earnings
Treasury stock

12,133
13,91225,038(1,332)

12,133
13,912
24,946(1,332)49,75249,659(246)
0(2,571)(811)
2(3,320)(2,817)(4,129)Subscription rights to shares
Minority interests

0
1,664

0
1,567

Total net assets

48,59847,098

114,686

110,147

Total shareholder’s equity
Valuation and translation adjustments
Valuation differences on available-for-sales securities
Deferred gains or losses on hedges
Foreign currency translation adjustments
Total valuation and translation adjustments

Total liabilities and net assets

5

(2)

Quarterly consolidated statements of income and consolidated statements of comprehensive income
For the first half (April 1, 2011 – September 30, 2011)(million yen)First half ended September 2010
First half ended September 2011
(April 1, 2010 – September 30, 2010) (April 1, 2011 – September 30, 2011)

Net sales
Cost of sales

120,470
104,410116,271
101,913Gross profit

16,06014,357

Selling, general and administrative expenses

13,465

13,551

Operating income

2,594

805

31
35
113
208

32
44
105
198

388

381

50
219
69

71
134
51

338

257

2,644

929

1
140

11
187
-

101
-

0

243

199

10
164
-

33
75
3

38
6
46

19
15

Non-operating income
Interest income
Dividend income
Commission income
OthersTotal non-operating income
Non-operating expenses
Interest expense
Foreign exchange losses
OthersTotal non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of noncurrent assets
Gain on sales of investment securities
Compensation income
Gain on foreign currency translation adjustments
for liquidation of subsidiaries
OthersTotal extraordinary income
Extraordinary losses
Loss on retirement of fixed assets
Loss on revaluation of investment securities
Impairment loss
Loss on adjustment for changes of accounting
standard for asset retirement obligations
Loss on valuation of golf club membership
Others266

148

Income before income taxes and minority interests

Total extraordinary losses

2,621

980

Income, inhabitants and enterprise taxes
Income tax adjustment

1,084
104

677
(48)

Total taxes
Income (loss) before minority interests

1,188
1,432

628
351

Minority interests in income (loss)
Net income (loss)

20

29

1,412

321

Minority interests in income (loss)

20

29

1,432

351

Income (loss) before minority interests

6First half ended September 2010
First half ended September 2011
(April 1, 2010 – September 30, 2010) (April 1, 2011 – September 30, 2011)
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of
the parent
Comprehensive income attributable to minority
interests

7

(208)
(33)
(902)

(567)
1
(744)

(1,143)(1,310)

288

(958)

275

(989)

13

31

(3)

Quarterly consolidated statements of cash flows(million yen)First half ended September 2010
First half ended September 2011
(April 1, 2010 – September 30, 2010) (April 1, 2011 – September 30, 2011)
Operating activities
Income before income taxes and minority interest
Depreciation and amortization
Impairment loss
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Interest and dividend income
Interest expenses
Loss (gain) on revaluation of investment securities
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories
Decrease (increase) in accounts receivable-other
Decrease (increase) in advance payments
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in accounts payable-other andaccrued expenses
Increase (decrease) in other current liabilities
OthersSub-totalInterest and dividends received
Interests paid
Income taxes-paid
OthersNet cash provided by (used in) operating activities
Investing activities
Payment for purchase of property, plant and equipment
Payment for purchase of intangible assets
Payment for purchase of investment securities
Proceeds from sales of investment securities
Purchase of investments in subsidiaries resulting inchange in scope of consolidation
Proceeds from purchase of investments in subsidiaries
resulting in change in scope of consolidation
Short-term loans provided
Short-term loans collected
Security deposits provided
Security deposits collected
Other payments
Other proceeds
Net cash provided by (used in) investing activities
Financing activities
Increase (decrease) in short-term bank loans
Repayment of long-term loans payable
Payment of dividends
OthersNet cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period

8

2,621
1,110
114
181
(67)
50
164
2,263
(852)
198
101
(75)

980
1,025
3
55
217
(76)
71
75
1,045
(1,503)310
109(3,509)

48
(279)
183
5,764
77
(57)
(1,015)
(178)
4,591

(387)
274
(65)
(1,372)75(71)(1,323)245(2,446)

(899)
(523)
(190)
96

(1,478)
(219)
(56)
273

-

(10)

64
(90)
113
(6)
42
(207)
37
(1,563)

(1)
19
(49)
41
(99)
130
(1,449)(1,891)
(668)
(413)
(50)
(3,024)(351)(348)
11,797
11,449

4,210
(915)
(414)
(144)
2,735
(383)
(1,544)
11,796
10,251(4)Notes to ongoing concern assumptions
None

(5)

Segment information
For the first half ended September 2010 (Apr. 1, 2010 – September 30, 2010)
1. Information about sales and income (loss) by reportable segments

Electronic
components

Reporting segments
Information
Softwareequipment

Others

Total

Adjustments(million yen)Amount in the
consolidated
statement of income*Net sales(of which tooutside customers)(of which intersegment)

88,52824,384

2,715

4,841

120,470-

120,470

697

384

1,217

1,833

4,133

(4,133)-

Total

89,226

24,769

3,933

6,675

124,604(4,133)

120,470

Segment income
2,042
139
298
209
2,689
(95)
2,594
(loss)* Segment operating income includes adjustments to the operating income shown in the quarterly consolidated statements
of income and consolidated statements of comprehensive income.
2. Reconciliation of difference between total income (loss) for reportable segments and in quarterly consolidated statementof income (Item concerning adjustment for difference)(million yen)
Item

AmountElimination of inter-segment trade6

Amortization of goodwill

(101)

Total

(95)

9

For the first half ended September 2011 (Apr. 1, 2011 – September 30, 2011)
1. Information about sales and income (loss) by reportable segments

Electronic
components
Net sales(of which tooutside customers)(of which intersegment)

83,411

Total

Reporting segments
Information
Softwareequipment

Adjustments

Others

Total

4,734

116,271-(million yen)Amount in the
consolidated
statement of income*

26,591

1,533

116,271

800

364

1,781

739

3,687

(3,687)-

84,212

26,956

3,315

5,474

119,959(3,687)116,271

Segment income
636
(77)
163
142
864
(58)
805
(loss)* Segment operating income includes adjustments to the operating income shown in the quarterly consolidated statements
of income and consolidated statements of comprehensive income.
2. Reconciliation of difference between total income (loss) for reportable segments and in quarterly consolidated statementof income (Item concerning adjustment for difference)(million yen)
Item

AmountElimination of inter-segment trade(18)

Amortization of goodwill

(39)

Total

(58)

(6)

Notes on significant change in shareholders’ equity:
None

(7)

Subsequent event:Flooding in Thailand
The severe flooding in Thailand that started in October 2011 has damaged the Ayutthaya factory of consolidated subsidiary
KAGA ELECTRONICS (THAILAND) CO., LTD. The monetary amount of this damage has not yet been confirmed.
However, since this company’s fixed assets and other assets are insured, the effective amount of flood losses is expected tobe limited, including construction, repair and improvement expenses.

10