February 3, 2012

Summary of Consolidated Financial Results
For the Third Quarter Ended December 31, 2011 [Japan GAAP]
Name of Company:
Stock Code:
Stock Exchange Listing:
URL:
Representative
Title:
Contact Person
Title:KAGA ELECTRONICS CO., LTD.
8154
Tokyo Stock Exchange, First Section
http://www.taxan.co.jp/
President & COO
Name:
Senior Managing Director, Finance &Name:Administration Headquarters
Phone:+81-(0)3-4455-3111
Date of quarterly securities report (tentative):
February 14, 2012
Date of commencement of dividend payment (tentative):
Quarterly earnings supplementary explanatory documents:
None
Quarterly earnings presentation:
None

1.

Tomohisa Tsukamoto
Waichiro Shimoyama(Yen in millions, rounded down)
Financial results for the first three quarters of the fiscal year ending March 2012 (April 1, 2011 – December 31, 2011)(1) Result of operations (Consolidated)(Percentage figures represent year on year changes)
Net sales

Operating income

Ordinary income

Million yen% Million yen% Million yen
First three quarters of FY3/2012
173,690
-2.2
1,276
-60.2
1,402
First three quarters of FY3/2011
177,535
1.5
3,208
263.2
3,130
Note: Comprehensive income: First three quarters of FY3/2012: -1,696 million yen (-%)
First three quarters of FY3/2011:
305 million yen (-%)
Net income per share% Million yen
-55.2
-356
295.7
1,431

%
-

Net income per share fully diluted
Yen
-

Yen
-12.91
51.86

First three quarters of FY3/2012
First three quarters of FY3/2011

Net income(2) Financial Position (Consolidated)
Total assets

Net assets

Equity ratio

Million yen
114,675

Million yen
45,922%38.7

As of March 31, 2011
114,686
Reference: Shareholders’ equity
As of December 31, 2011:
44,377 million yen

48,59840.9

As of December 31, 20112.

As of March 31, 2011:

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.

46,934 million yen

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
227,000
-4.6
1,600
-55.1
2,100
-43.8
950
-48.8
34.42
Note: Change in the forecast from the latest announcement: Yes

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 December 31, 2011:
28,702,118

As of March 31, 2011:

28,702,118

As of March 31, 2011:

1,104,656(c) Average number of shares (quarterly consolidated cumulative period)
Period ended December 31, 2011:
27,597,345
Period ended December 31, 2010:

27,598,022(b) Treasury stock
As of December 31, 2011:

1,104,936* 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 disclosureof 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.

2.

3.

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

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

Quarterly Consolidated Financial Statements............................................................................................................................4(1)

Quarterly consolidated balance sheet ...............................................................................................................................4(2)

Quarterly consolidated statements of income ...................................................................................................................6(3)

Notes to ongoing concern assumptions ............................................................................................................................8(4)

Segment information ........................................................................................................................................................8(5)

Notes on significant change in shareholders’ equity: .......................................................................................................81

1.

Results of Operations(1)

Overview on consolidated business performance
In the first three quarters of the fiscal year, the U.S. economy began to recover due to a break in the sharp upturn in crude
oil prices that was caused by turmoil in the Middle East. But in the third quarter, the U.S. economic situation was unstableas fears about a slowdown mounted because of the debt crisis in Europe, a weak housing market, the slow recovery in
employment and other issues. In Europe, the economy became increasingly weaker as the sovereign debt crisis in Greece
spread to create instability in the entire financial system. In China and other emerging countries as well, economic growth
rates declined due to measures to control inflation and the impact of slowing economic growth in industrialized countries.
Overall, global economic growth has been slowing as a result.
In Japan, toward the summer the economy began to stage a recovery from the downturn following the Great East Japan
Earthquake along with the emergence of demand backed by reconstruction activity as supply chains were restored.
However, the economic outlook is uncertain because of slowing global economic growth, a strong yen and weak stock
prices, the impact of flooding in Thailand on manufacturing and other events.
In the electronics industry, there was growth in demand for smartphones, tablet computers and some other products. There
was also a rush to buy flat-screen televisions following the start of terrestrial digital TV broadcasts in Japan. But there wasa drop in sales of flat-screen televisions, digital home electronics and other consumer electronics starting in the summer. In
addition, the impact of flooding in Thailand on shipments of electronic components and semiconductors made theoperating environment even more difficult.
In this environment, the KAGA ELECTRONICS Group further increased solidarity among group companies in Japan andoverseas and conducted effective sales activities. Activities also included adding new products and taking steps to increase
sales of environmental products like LED lamps. Despite these initiatives, sales and earnings were lower than one year
earlier mainly because of the difficult business environment in the electronics industry and losses to fixed assets,inventories and other items caused by flood damage at a factory in Thailand.
Consolidated net sales in the first three quarters decreased 2.2% to 173,690 million yen, operating income fell 60.2% to
1,276 million yen, ordinary income was down 55.2% to 1,402 million yen and there was a net loss of 356 million yen
compared with net income of 1,431 million yen one year earlier.
Losses to fixed assets, inventories and other items due to flooding in Thailand are covered by insurance. Since insurance
payments are expected to be received in the fourth quarter of the current fiscal year, these losses will have no effect on
consolidated results of operations for the fiscal year.

Business segment performance was as follows.
(a) Electronic components (Development, manufacture and sale of semiconductors, general electronic components andother products, electronic manufacturing service (EMS)*, and other activities)
During the first three quarters, there were measures to secure procurement channels for semiconductors and electronic
components where shortages occurred after the Great East Japan Earthquake. Group companies also focused onincreasing sales to current customers and enlarging sales channels for LED products and solar panels. Environmental
products have attracted particularly strong attention in Japan after the earthquake. Overseas, there were extensive
activities to increase sales to Japanese client companies, companies in China and other companies.
However, sales of electronic components and semiconductors and EMS orders were lower in Japan. The primary cause
was a decline in output by client manufacturers in response to the Great East Japan Earthquake and weakening
consumer spending. Overseas, sales were impacted by lower output by client manufacturers because of flooding in
Thailand and by other events. The result was a 2.5% decrease in segment sales to 124,428 million yen and a 51.6%
decrease in operating income to 1,223 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)
The performance of this segment was impacted by the Great East Japan Earthquake, the downturn in consumer
spending in Japan that started in the summer, and a lower supply of products sold in this segment because of floodingin Thailand. Despite these challenges, sales were higher because of measures to increase sales of PCs, PC peripherals
and other existing products and add new products. In addition, orders for terrestrial digital TV broadcast tuners
increased due to the July 2011 end of terrestrial analog TV broadcasts in Japan. Segment sales increased 1.6% to39,332 million yen but a decline in sales of products with a high gross profit margin and a provision for the allowancefor doubtful accounts resulted in an operating loss of 188 million yen compared with operating income of 256 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
for amusement devices, and sales of game and application software. However, additional time required fordevelopment projects, delays in the start of sales and other factors caused segment sales to fall 33.2% to 2,445 million
yen and operating income to decrease 75.6% to 66 million yen.
2

(d) Others (Electronic device repairs and support, sales of sporting goods, and other activities)
The Great East Japan Earthquake caused demand to fall in the golf product sales business and reduced orders in therecycling business and other activities in this segment. Although there was a recovery in recycling orders in the third
quarter, segment sales decreased 0.3% to 7,484 million yen and operating income decreased 11.7% to 243 million yen.
(2)

Overview of financial condition
Assets totaled 114,675 million yen at the end of the third quarter, 11 million yen less than at the end of the previous fiscal
year mainly because of a decrease in cash and cash equivalents.
Liabilities increased 2,664 million yen to 68,752 million yen mainly because of a increase in short-term bank loans.
Net assets decreased 2,675 million yen to 45,922 million yen. This was attributable primarily to dividend payment anddecrease of other comprehensive income.

(3)

Forecast for fiscal year ending in March 2012
Based on the consolidated operating results for the first three quarters, we have revised the forecast for the current fiscal
year that was announced on October 28, 2011.
(a) Consolidated forecast for the fiscal year ending March 2012 (April 1, 2011 – March 31, 2012)

Previous forecast (A)Million yen
238,000

OperatingincomeMillion yen
2,100

Revised forecast (B)

227,000

1,600

Difference (B-A)-11,000(Ref.) Previous fiscal year

237,951

Net Sales

Ordinary
incomeMillion yen
2,600

Million yen
1,300

Net income
per share
Yen
47.11

2,100

950

34.42

-500

-500

-350

-

3,563

3,738

1,854

67.20

Net income(b) Reason for revisions
Consolidated sales in the current fiscal year are expected to fall below the previous forecast. One reason is a temporary
downturn in electronic component, semiconductor and EMS sales as client manufacturers reduced output because of
the difficulty of procuring parts and materials due to the Great East Japan Earthquake and flooding in Thailand. Sales
have also been affected by a decline in sales of PCs, PC peripherals and other computer products because of economic
weakness in Japan.
Losses to fixed assets, inventories and other items due to flooding in Thailand are covered by insurance. Since
substantial insurance payments are expected to be received in the fourth quarter, the revised forecast shown above
includes these insurance payments.

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 cash equivalents
Notes and accounts receivable-tradeMarketable securities
Merchandize and finished goods
Work in process
Raw materials and other supplies
Deferred tax assets
OthersAllowance for doubtful receivables

Third quarter ended December 2011
(As of December 31, 2011)

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

10,861
53,95365
17,667
712
4,054
685
6,721
(225)

92,876

94,496

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

2,931
1,047
1,034
4,076
45

Total property, plant and equipment

9,724

9,135

464
790
1,344

315
786
1,282

2,599

2,385

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

3,842
846
5,673
(1,703)

9,485

8,658

Total current assets

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

4

21,81020,178

114,686

114,675

(million yen)
Fiscal year ended March 2011 Third quarter ended December 2011
(As of March 31, 2011)(As of December 31, 2011)
LIABILITIESCurrent liabilities
Notes and accounts payable-trade
Short-term bank loans
Income taxes payable
Allowance for directors’ and corporate auditors’ bonuses
OthersTotal current liabilities
Long-term liabilities
Long-term bank loans
Allowance for retirement benefits for employees
Allowance for retirement benefits for directors andcorporate auditors
Asset removal obligations
Others40,790
8,505
1,511
138
6,041

41,25012,944
711
120
6,005

56,98761,032

4,636
1,556

3,281
1,570

1,294
226
1,385

1,366
226
1,275

9,099

7,719

Total liabilities

66,08768,752NET ASSETS
Shareholder’s equity
Paid-in capital
Capital surplus
Retained earnings
Treasury stock

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

12,133
13,912
23,854(1,332)49,752

48,567(246)
0(2,571)(887)(0)(3,302)(2,817)(4,190)

Subscription rights to shares
Minority interests

0
1,664

0
1,545

Total net assets

48,59845,922

114,686

114,675

Total long-term liabilities

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 three quarters (April 1, 2011 – December 31, 2011)(million yen)
Third quarter ended December 2010
(April 1, 2010 - December 31, 2010)

Third quarter ended December 2011
(April 1, 2011 - December 31, 2011)

Net sales
Cost of sales

177,535
154,293

173,690
152,425

Gross profit

23,241

21,264

Selling, general and administrative expenses

20,033

19,988Operating income

3,208

1,276

49
63
164
279

45
66
127
304

557

544

79
468
87

109
231
76

635

418

3,130

1,402

17
12
140

11
195
-

101
-

0

272

207

12
383
101

36
133
3
1,050
42

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 noncurrent assets
Loss on valuation of investment securities
Impairment loss
Loss on disaster
Others497

1,265

Income before income taxes and minority interests

Total extraordinary losses

2,905

344

Income, inhabitants and enterprise taxes
Income tax adjustment

1,192
244

880
(212)

Total taxes
Income (loss) before minority interests

1,436
1,468

668
(323)

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

37

32

1,431

(356)

Minority interests in income (loss)

37

32

1,468

(323)

Income (loss) before minority interests

6

Third quarter ended December 2010
(April 1, 2010 - December 31, 2010)

Third quarter ended December 2011
(April 1, 2011 - December 31, 2011)20(38)(1,145)

(644)
(0)
(727)

(1,163)(1,372)305(1,696)269(1,729)36

32

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 to owners of
the parent
Comprehensive income attributable to minority
interests

7

(3)Notes to ongoing concern assumptions
None

(4)

Segment information
For the first three quarters ended December 2010 (Apr. 1, 2010 – December 31, 2010)
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 salesof which to outside
customersof which intersegment

127,642

38,724

3,661

7,506

177,535-

177,535

913

564

1,587

2,738

5,803

(5,803)-

Total

128,556

39,2895,248

10,244

183,339(5,803)

177,535

Segment income
2,525
256
274
275
3,331
(122)
3,208
(loss)
Note: 1. Adjustment of segment loss of 122 million yen includes -0 million yen of elimination of inter-segment trade and -122
million yen of amortization of goodwill.
2. Segment income includes adjustments to match operating income as presented in the consolidated statement ofincome and statement of comprehensive income.
For the first three quarters ended December 2011 (Apr. 1, 2011 – December 31, 2011)
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 salesof which to outside
customersof which intersegment

124,428

39,332

2,445

7,484

173,690-

173,690

1,170

583

2,313

1,931

5,999

(5,999)-Total

125,598

39,916

4,758

9,416

179,690(5,999)173,690

Segment income
1,223
(188)
66
243
1,344
(68)
1,276
(loss)
Note: 1. Adjustment of segment loss of 68 million yen includes -8 million yen of elimination of inter-segment trade and -59
million yen of amortization of goodwill.
2. Segment income includes adjustments to match operating income as presented in the consolidated statement ofincome and statement of comprehensive income.

(5)

Notes on significant change in shareholders’ equity:None8