January 31, 2014

Summary of Consolidated Financial Results
For the Third Quarter Ended December 31, 2013 [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:

1.

KAGA ELECTRONICS CO., LTD.
8154
Tokyo Stock Exchange, First Section
http://www.taxan.co.jp/
President & COO
Tomohisa Tsukamoto
Director, Finance & Administration Headquarters
Eiji Kawamura+81-(0)3-4455-3111
February 13, 2014
None
None

(Yen in millions, rounded down)
Financial results for the first three quarters of the fiscal year ending March 2014 (April 1, 2013 – December 31, 2013)(1) Result of operations (Consolidated, year-to-date)(Percentage figures represent year on year changes)
Net sales

Operating income

Ordinary income

Million yen% Million yen% Million yen
First three quarters of FY3/2014
188,460
20.1
4,109
4,506
First three quarters of FY3/2013
156,891
(9.6)
(39)
351
Note: Comprehensive income: First three quarters of FY3/2014: 4,410 million yen (-%)
First three quarters of FY3/2013:-470 million yen (-%)
Net income per share
Yen
99.42
(29.62)First three quarters of FY3/2014
First three quarters of FY3/2013

Net income% Million yen
2,809(72.5)(817)%-

Net income per share fully diluted
Yen-(2) Financial Position (Consolidated)
Total assets
As of December 31, 2013

Million yen
129,738
111,888

As of March 31, 2013
Reference: Shareholders’ equity
As of December 31, 2013:
52,206 million yen
2.

Net assets

As of March 31, 2013:

%
40.2
43.5
48,656 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 2013
Fiscal year ending March 2014
Fiscal year ending March 2014 (est.)
Note: Change in the estimation of dividend from the latest announcement: None3.

Equity ratio

Million yen
52,24648,806End of FY
Yen
15.00

Full year
Yen
30.00

15.00

30.00

Forecast for the fiscal year ending March 2014 (Consolidated, April 1, 2013 to March 31, 2014)(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
255,000
17.8
4,200
233.3
4,700
143.4
3,000
574.5
106.17Full year
Note: Change in the forecast from the latest announcement: Yes
Please refer “Notice of Revision in Forecast for Fiscal Year Ending March 2014” announced on 31 January 2014.

*

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 restatements(a) Changes due to revision of accounting standards: None(b) Changes other than in (a): None(c) Changes in accounting estimates: None(d) Retrospective restatements: None
(4) Number of shares outstanding (common stock)(a) Shares outstanding (including treasury stock)
As of December 31, 2013:
28,702,118

As of March 31, 2013:

28,702,118

As of March 31, 2013:

443,831(c) Average number of shares (quarterly consolidated cumulative period)
Period ended December 31, 2013:
28,257,908
Period ended December 31, 2012:

27,596,769(b) Treasury stock
As of December 31, 2013:

444,553* 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. Please refer (3) Forecast in 1. Results of Operations on page 3 of Supplementary Information for further
information.

Index for Supplementary Information
1.

2.

3.

Results of Operations ............................................................................................................................... 2(1)

Overview on consolidated business performance ................................................................................. 2(2)

Overview of financial condition ............................................................................................................. 2(3)

Forecast .................................................................................................................................................. 3

Other Information .................................................................................................................................... 3(1)

Changes in significant subsidiaries: ..................................................................................................... 3(2)

Use of accounting methods specifically for the preparation of the quarterly consolidated financial
statements:............................................................................................................................................. 3(3)

Changes in accounting principles and estimates, and retrospective restatements: ........................... 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)

Notes ...................................................................................................................................................... 8(Notes to ongoing concern assumptions)........................................................................................................ 8(Significant change in shareholders’ equity) ................................................................................................ 8(Segment information, etc.) ............................................................................................................................ 8

1

1. Results of Operations(1)

Overview on consolidated business performance
In the first three quarters of the fiscal year, the Japanese economy recovered slowly as the benefits of the Japanese
government’s economic measures and monetary easing led to higher corporate earnings as well as growth in capital
expenditures and consumer spending.
In the electronics industry, there were strong sales of high-performance mobile devices like smartphones and tablets and of
automotive components as the use of electronics in cars continues to increase. However, the operating environment is still
difficult for digital consumer electronics and information equipment, chiefly personal computers and peripherals, despite
signs of the start of a recovery.
In this environment, the KAGA ELECTRONICS Group reinforced collaboration among group companies, worked onincreasing sales to major current customers, added new products and took other actions. At the same time, there werereviews of unprofitable businesses, including actions such as mergers and liquidations, and cost-cutting measures.
In the first three quarters, consolidated net sales increased 20.1% from one year earlier to 188,460 million yen. Operating
income was 4,109 million yen compared with a 39 million yen loss one year earlier and ordinary income was 4,506 million
yen compared with 351 million yen one year earlier. Net income improved from a loss of 817 million yen to a profit of
2,809 million yen.
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)
In Japan, demand increased in the EMS, electronic components and other categories and overseas EMS sales involving
electronic devices were higher. The result was a 23.3% increase in segment sales from one year earlier to 145,213
million yen and a 239.5% increase in operating income to 2,983 million yen.
* Abbreviation for Electronics Manufacturing Service which is a term used for the provision of product development andmanufacturing services on an outsourcing basis.

(b) Information equipment (Sales of PCs, PC peripherals, photographic and imaging products, original-brand products, andother products)
Demand for PCs and other consumer products in the information equipment category have declined because of the
popularity of smartphones, tablets and other high-performance mobile devices. But there were higher sales of products
for the home, personal computers and software for schools, environmental products and other products. As a result,segment sales increased 9.9% to 31,623 million yen and operating income was 413 million yen compared with a 513
million yen loss one year earlier.
(c) Software (Production of computer graphics, planning and development of amusement products, and other activities)
Activities in this segment focused on the production of computer graphics for animation applications, the development
and production of electronic amusement products, and the development of image processing systems for amusement
equipment. Sales were 2,043 million yen, 3.4% higher than one year earlier, and operating income was 376 million yen
compared with a 469 million yen loss one year earlier.
(d) Others (Electronic device repairs and support, sales of sporting goods, and other activities)
Sales of amusement machines to arcades in Japan increased and there were strong sales of golf products and otherproducts in this segment. As a result, sales increased 14.6% from one year earlier to 9,579 million yen and operating
income increased 209.6% to 350 million yen.
(2)

Overview of financial condition
Assets, liabilities and net assets
Assets totaled 129,738 million yen at the end of the third quarter, increased 17,849 million yen from the end of theprevious fiscal year mainly because of an increase in accounts receivable.
Liabilities increased 14,409 million yen to 77,492 million yen mainly because of an increase in notes and accounts
payable-trade.
Net assets increased 3,440 million yen to 52,246 million yen. This was due primarily to the net income for the quarter.

2

(3)

Forecast(a) Consolidated forecast for the fiscal year ending March 2014 (April 1, 2013 – March 31, 2014)
Net Sales

OperatingincomeOrdinary
incomeNet income

Net income
per share

Million yen

Million yen

Million yen

Million yen

Yen

Previous forecast (A)247,000

3,600

4,300

2,200

77.85

Revised forecast (B)255,000

4,200

4,700

3,000

106.17

Difference (B-A)

8,000

600

400

800

-

Difference (%)

3.2

16.7

9.3

36.4

-

216,405

1,260

1,931

444

16.09

(Ref.) Previous fiscal year
(Fiscal year ended March 2013)(b) Reason for revisions
In the current fiscal year, sales in Japan have been higher for electronic components, products for the home and certain
other products. In addition, overseas sales in the EMS business are strong. Due to this operating environment, the fiscal
year forecasts for consolidated sales and earnings have been revised as shown in the above table.

2. Other Information(1)

Changes in significant subsidiaries:
None

(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:
None

3

3. Quarterly Consolidated Financial Statements(1)

Quarterly consolidated balance sheet(Million yen)
Fiscal year ended March 2013
(As of March 31, 2013)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
Other
Allowance for doubtful receivables

Third quarter ended December 2013
(As of December 31, 2013)12,25854,580111
14,075
637
4,065
482
3,823
(90)

13,19560,903108
18,862
1,368
4,408
964
5,948
(107)

89,945

105,654

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

3,126
1,714
805
4,305
606

5,556
1,603
719
4,328
7

Total property, plant and equipment

10,55912,215

799
435
991

753
429
704

2,226

1,887

Investments and other assets
Investment securities
Deferred tax assets
Other
Allowance for doubtful receivables

4,491
472
5,239
(1,046)

5,119
676
5,205
(1,019)Total investments and other assets

9,157

9,981

Total current assets

Intangible assets
Goodwill
Software
Other
Total intangible assets

Total fixed assets
Total assets

4

21,94324,084

111,888

129,738(Million yen)
Fiscal year ended March 2013 Third quarter ended December 2013
(As of March 31, 2013)(As of December 31, 2013)
LIABILITIESCurrent liabilities
Notes and accounts payable-trade
Short-term loans payable
Income taxes payable
Other

37,423
9,567
1,055
5,309

43,986
13,547894
8,681

53,355

67,110

Other

5,121
1,643
1,398
1,562

5,038
1,465
1,413
2,464

Total noncurrent liabilities

9,726

10,381

Total liabilities

63,08277,492NET ASSETS
Shareholder’s equity
Capital stock
Capital surplus
Retained earnings
Treasury stock

12,133
13,912
24,384(535)

12,133
13,912
26,346(535)

49,89551,856

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

(180)
(6)
(1,052)250
1486

Total accumulated other comprehensive income(1,238)350

Total current liabilities
Noncurrent liabilities
Long-term loans payable
Provision for retirement benefits
Provision for directors' retirement benefits

Total shareholder’s equity

Minority interests

149

39

Total net assets

48,80652,246

111,888

129,738

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, 2013 – December 31, 2013)(Million yen)
Third quarter ended December 2012
(April 1, 2012 - December 31, 2012)

Third quarter ended December 2013
(April 1, 2013 - December 31, 2013)

Net sales
Cost of sales

156,891
137,663

188,460
164,066

Gross profit

19,22824,394

Selling, general and administrative expenses

19,26820,284

Operating income (loss)

(39)

4,109

Non-operating income
Interest income
Dividend income
Commission income
Foreign exchange gains
Other

29
69
130
18
337

44
76
175
44
272

585

613

Non-operating expenses
Interest expense
Loss on investments in partnership
Other

100
36
57

98
66
52

Total non-operating expenses

194

217

Ordinary income

351

4,506

Extraordinary income
Gain on sales of noncurrent assets
Gain on sales of investment securities
Gain on sales of subsidiaries and affiliates' stocks
Insurance income

5
6
365

4
5
-

377

9

3
117
122
80
74
42

23
45
44
91
80
16

440

301

Income before income taxes and minority interests

289

4,213

Income taxes-current
Income taxes-deferred

797
446

1,305
89

Total income taxes
Income (loss) before minority interests
Minority interests in income (loss)

1,244
(955)
(138)

1,394
2,818
9

Net income (loss)

(817)

2,809

Minority interests in income (loss)

(138)

9

Income (loss) before minority interests

(955)

2,818

Total non-operating income

Total extraordinary income
Extraordinary losses
Loss on retirement of noncurrent assets
Loss on valuation of investment securities
Impairment loss
Litigation settlement
Business structure improvement expenses
Loss on liquidation of subsidiaries and affiliates
Office transfer expenses
Other
Total extraordinary losses

6Third quarter ended December 2012
(April 1, 2012 - December 31, 2012)

Third quarter ended December 2013
(April 1, 2013 - December 31, 2013)

65

431

(9)
428

20
1,140

484

1,592

(470)

4,410

(334)

4,398

(136)

12

Other comprehensive income
Valuation difference on available-for-salesecurities
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

(3)

Notes
(Notes to ongoing concern assumptions)
None(Significant change in shareholders’ equity)
None(Segment information, etc.)
Segment information
I. For the first three quarters ended December 2012 (April 1, 2012 – December 31, 2012)
1. Information about sales and income (loss) by reportable segments
Reporting segments(Million yen)Amount in the
consolidated statements
of income andAdjustments
consolidated statements(Note 1)of comprehensive
income(Note 2)

Electronic
components

Informationequipment

Software

OthersTotal

Net salesof which to outside
customersof which intersegment

117,782

28,771

1,976

8,361

156,891-

156,891

1,018

509

1,259

1,462

4,249

(4,249)-Total

118,800

29,281

3,236

9,823

161,141(4,249)156,891

Segment income
878
(513)
(469)
113
9
(48)
(39)
(loss)
Note: 1. Adjustment of segment loss of 48 million yen includes 1 million yen of elimination of inter-segment tradeand -50 million yen of amortization of goodwill.
2. Segment income includes adjustments to match operating income as presented in the consolidated statementof income and statement of comprehensive income.
2. Information about impairment losses on fixed assets and goodwill by reportable segments(Significant impairment losses on fixed assets)
In the information equipment segment, an impairment loss was posted for business assets in association with a decline
in earnings. This impairment loss was 122 million yen in the first three quarters of the fiscal year.
(Major changes in goodwill)In the electronic components segment, goodwill was posted due to the merger of AD DEVICE CORPORATION and
AS Device Co., Ltd. The increase in goodwill in the first three quarters of the current fiscal year resulting from thismerger was 718 million yen.

8II. For the first three quarters ended December 2013 (April 1, 2013 – December 31, 2013)
1. Information about sales and income (loss) by reportable segments
Reporting segments(Million yen)Amount in the
consolidated statements
of income andAdjustments
consolidated statements(Note 1)of comprehensive
income(Note 2)

Electronic
components

Informationequipment

Software

OthersTotal

145,213

31,623

2,043

9,579

188,460-

188,460

1,094

496

4,468

1,741

7,800

(7,800)-146,308

32,1196,512

11,321

196,261(7,800)188,460

Net salesof which to outside
customersof which intersegment
Total

Segment income
2,983
413
376
350
4,124
(14)
4,109
(loss)
Note: 1. Adjustment of segment loss of 14 million yen includes 2 million yen of elimination of inter-segment tradeand -16 million yen of amortization of goodwill.
2. Segment income includes adjustments to match operating income as presented in the consolidated statementof income and statement of comprehensive income.
2. Information about impairment losses on fixed assets and goodwill by reportable segments(Significant impairment losses on fixed assets)
Omitted because insufficiently significant(Major changes in goodwill)
Omitted because insufficiently significant

9