November 7, 2012

Summary of Consolidated Financial Results
For the First Half Ended September 30, 2012 [Japan GAAP]
Name of Company:
Stock Code:
Stock Exchange Listing:
URL:
Representative
Title:
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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
Director, Finance & Administration Headquarters
Eiji Kawamura+81-(0)3-4455-3111
November 13, 2012
December 7, 2012
Yes
Yes (for institutional investors)(Yen in millions, rounded down)

1.

Financial results for the first half of the fiscal year ending March 2013 (April 1, 2012 – September 30, 2012)(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 2012
103,845 (10.7)
(470)
(355)
(1,373)First half ended September 2011
116,237(3.5)
771 (70.3)
895 (66.1)
301
Note: Comprehensive income: First half of FY3/2013: -2053 million yen (-%), First half of FY3/2012: -978 million yen (-%)
Net income per share

Net income per share fully diluted
Yen
-

Yen
(49.79)10.92

First half ended September 2012
First half ended September 2011%(78.7)(2) Financial Position (Consolidated)
Total assets
Million yen
As of September 30, 2012
104,961
As of March 31, 2012
114,714
Notes: Shareholders’ equity
As of September 30, 2012: 44,011 million yen
2.

Net assets

Equity ratio

Million yen
45,33347,936
As of March 31, 2012

%
41.9
40.5
46,410 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 2012
Fiscal year ending March 2013
Fiscal year ending March 2013 (est.)
Note: Change in the estimation of dividend from the latest announcement: None-

End of FY
Yen
15.00

Full year
Yen
30.00

15.00

30.00

3.

Forecast for the fiscal year ending March 2013 (Consolidated, April 1, 2012 to March 31, 2013)(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
230,000
0.1
1,500(27.4)
1,800(29.9)
300(67.2)
10.87
Note: Change in the forecast from the latest announcement: Yes
Please refer “Notice concerning Differences between Forecast and Actual Performance in First Half of Fiscal Year Ending March2013 and Revisions to the Annual Forecasts” announced on November 7, 2012 regarding the change in the forecast above.

* 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: Yes(d) Retrospective restatement: None
Note: Please refer (3) Changes in accounting principles and estimates, and retrospective restatement of 2. Other
information on page 3 of Supplementary Information for more details.
(4) Number of shares outstanding (common stock)(a) Shares outstanding (including treasury stock)
As of September 30, 2012:

28,702,118

As of March 31, 2012:

28,702,118

1,105,417

As of March 31, 2012:

1,105,201

Period ended September 30, 2011:

27,597,393(b) Treasury stock
As of September 30, 2012:(c) Average number of shares (quarterly consolidated cumulative period)
Period ended September 30, 2012:

27,596,838* 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. 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 .......................................................................................................................................3(3)

Forecast ............................................................................................................................................................................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 and consolidated statements of comprehensive income ............................6(3)

Quarterly consolidated statements of cash flows..............................................................................................................8(4)

Notes to going concern assumptions ................................................................................................................................9(5)

Segment information ........................................................................................................................................................9(6)

Notes on significant change in shareholders’ equity: .....................................................................................................101

1.

Results of Operations(1) Overview on consolidated business performance
In the first half of the fiscal year, there was a slow economic recovery in Japan due to demand associated with earthquake
reconstruction activity and other factors. However, the operating environment remains uncertain because of the risk of adownturn in the global economy due to the European debt crisis, concerns about slowing economic growth in Japan due tothe yen’s prolonged strength and weak stock prices, and other reasons.
In the electronics industry, market conditions for digital consumer electronics, particularly flat-panel televisions, remained
difficult. But sales were strong for portable information devices such as smartphones and tablets.
In this environment, the KAGA ELECTRONICS Group focused on conducting aggressive sales activities based on the
management philosophy of “Everything we do, we do for our customers” while reinforcing collaboration among groupcompanies. Group companies worked on increasing sales to current customers, increasing sales of LED lamps and otherenvironmental products, and increasing sales in other areas. In addition, subsidiary AD DEVICE absorbed AS Device, which
has much expertise in the in-vehicle electronics market, on July 1, 2012. As a result, there were increases in first half sales ofautomotive products and in overseas EMS* sales. But orders decreased for electronic components and semiconductors usedin consumer products and products used in amusement equipment. There was also weakness in sales of consumer
information equipment and in the software business. First half consolidated net sales decreased 10.7% from one year earlier
to 103,845 million yen. There was an operating loss of 470 million yen compared with operating income of 771 million yen
one year earlier and an ordinary loss of 355 million yen compared with ordinary income of 895 million yen. After an asset
impairment charge for fixed assets at a poorly performing subsidiary, the reversal of deferred tax assets and other items, there
was a net loss of 1,373 million yen compared with net income of 301 million yen one year earlier.
* Electronics manufacturing service is a term used for the provision of product development and manufacturing services onan outsourcing basis.

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)
There was growth in sales of in-vehicle electronic components and semiconductors and in the EMS business, mainlyfor office and air conditioning equipment overseas. But in Japan orders were lower for electronic components used inamusement devices and for semiconductors and other products. As a result, sales decreased 6.7% to 77,783 million yen
and operating income was down 46.0% to 343 million yen.
(b) Information equipment (Sales of PCs, PC peripherals, photograph and imaging products, original-brand products, andother products)
This business took steps to increase sales of existing products and add new products. However, there was a decline insales mainly because of lower sales of personal computers and the negative impact of changes in sales and distribution
channels for memory-card products sold at large consumer electronics stores and specialty shops. The result was a
27.4% decrease in sales to 19,270 million yen and an operating loss of 337 million yen compared with a 111 million
yen loss one year earlier.
(c) Software (Production of computer graphics, planning and development of amusement products, and other activities)
Activities in this business focused on the production of computer graphics for animation applications, image
processing for amusement equipment, and sales of game software and new products. However, a decline in sales ofgame software and additional time required for the development of this software caused sales to decrease 2.7% to
1,491 million yen. There was an operating loss of 403 million yen compared with operating income of 163 million yen
one year earlier.
(d) Others (Electronic device repairs and support, sales of sporting goods, and other activities)
There were recoveries in the recycling business, golfing products sales business and other activities in this segment. As
a result, sales increased 11.9% to 5,299 million yen. However, due mainly to higher selling, general and administrative
expenses associated with growth in the scale of operations, there was an operating loss of 27 million yen comparedwith operating income of 142 million yen one year earlier.

2(2) Overview of financial condition(a) Assets, liabilities and net assets
Assets totaled 104,961 million yen at the end of the first half, 9,753 million yen less than at the end of the previous fiscal
year mainly because of a decrease in notes and accounts receivable-trade.
Liabilities decreased 7,150 million yen to 59,627 million yen mainly because of a decrease in notes and accounts payabletrade.
Net assets decreased 2,602 million yen to 45,333 million yen. This was attributable primarily to the first half net loss anddividends paid from retained earnings.
(b) Cash flows
There was a net decrease of 789 million yen in cash and cash equivalents from the end of the previous fiscal year to 8,905
million yen at the end of the first half.
(Operating activities)
Net cash provided by operating activities was 3,293 million yen compared with cash used of 2,446 million yen one year
earlier. The main source of cash was a net decrease in notes and accounts receivable-trade.
(Investing activities)
Net cash used in investing activities increased from 1,449 million yen to 3,695 million yen. The primary use of cash was
payments for the purchase of property, plant and equipment.
(Financing activities)
Net cash used in financing activities was 258 million yen compared with 2,735 million yen provided one year earlier.
Repayments of long-term loans payable were the primary use of cash.
(3) Forecast(a) Forecast for fiscal year ending in March 2013 (Consolidated, April 1, 2012 to March 31, 2013)
Operating
Ordinary
Net sales
Net income
incomeincome(Million yen)
(Million yen)
(Million yen)
(Million yen)

Earnings per
share
(yen)

Previous forecast (A)230,000

1,500

1,800

1,000

36.24

Revised forecast (B)230,000

1,500

1,800

300

10.87

Difference (B–A)

-

-

-

(700)

-

Pct. change (%)

-

-

-

(70.0)-

229,856

2,067

2,569

914

33.13

(Ref.) Previous fiscal year
(FY3/2012)(b) Explanation of forecast
In the current fiscal year, earnings are expected to recover starting in the third quarter due to growth in sales channels ingrowing markets such as automotive products and to growth of the EMS business. However, the forecast has beenrevised as shown above mainly because of an asset impairment loss for fixed assets and reversal of deferred tax assets inthe fiscal year’s first half.

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:(Changes in accounting policies for items that are difficult to categorize as changes in accounting estimates)
In accordance with revisions to the Corporation Tax Act, starting with the first quarter of the current fiscal year, KAGAELECTRONICS and its consolidated subsidiaries in Japan are calculating depreciation for property, plant and equipmentthat was acquired on or after April 1, 2012 by using the method based on the revised Corporation Tax Act. The effect of
this change on earnings was immaterial.

3

3.

Quarterly Consolidated Financial Statements(1)

Quarterly consolidated balance sheet(Million yen)
Fiscal year ended March 2012
(As of March 31, 2012)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 2012
(As of September 30, 2012)

9,775
55,97974
17,104
334
4,115
861
6,272
(144)

8,985
48,33877
16,576
664
4,618
683
3,937
(70)

94,374

83,811

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

2,945
1,492
926
4,077
45

3,083
1,568
946
4,121
123

Total property, plant and equipment

9,487

9,843

253
800
1,191

883
468
1,147

Total current assets

Intangible assets
Goodwill
Software
OthersTotal intangible assets

2,245

2,499

Investments and other assets
Investment securities
Deferred tax assets
OthersAllowance for doubtful accounts

4,032
341
5,911
(1,678)

4,153
543
5,434
(1,324)

Total investments and other assets

8,607

8,806

Total fixed assets
Total assets

4

20,34021,149114,714104,961(Million yen)
Fiscal year ended March 2012
(As of March 31, 2012)
LIABILITIESCurrent liabilities
Notes and accounts payable-trade
Short-term loans payable
Income taxes payable
OthersTotal current liabilities
Noncurrent liabilities
Long-term loans payable
Provision for retirement benefits
Provision for directors' retirement benefits
OthersTotal noncurrent liabilities

First half ended September 2012
(As of September 30, 2012)

41,74811,084
1,082
5,558

35,91012,129564
4,566

59,47453,170

2,833
1,579
1,399
1,491

1,934
1,614
1,350
1,557

7,303

6,456

Total liabilities

66,77759,627NET ASSETS
Shareholder’s equity
Capital stock
Capital surplus
Retained earnings
Treasury stock

12,133
13,91225,038(1,333)

12,133
13,912
23,250(1,333)49,75147,963(653)(24)(2,663)(790)
1(3,162)(3,341)(3,951)

0
1,526

0
1,321

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
Subscription rights to shares
Minority interests
Total net assets
Total liabilities and net assets

547,93645,333

114,714104,961(2)Quarterly consolidated statements of income and consolidated statements of comprehensive income
For the first half (April 1, 2012 – September 30, 2012)(Million yen)First half ended September 2011
First half ended September 2012
(April 1, 2011 – September 30, 2011) (April 1, 2012 – September 30, 2012)

Net sales
Cost of sales

116,237
101,913103,845
91,515Gross profit

14,323

12,329Selling, general and administrative expenses

13,551

12,800Operating income (loss)

771

(470)

Non-operating income
Interest income
Dividend income
Commission income
Others

32
44
105
198

20
42
117
252

381

432

71
134
51

66
188
63

Total non-operating income
Non-operating expenses
Interest expense
Foreign exchange losses
OthersTotal non-operating expenses

257

318

Ordinary income (loss)

895

(355)

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

11
187
0

4
6
-

199

10

33
75
3
19
15

2
184
122
25
0

Total extraordinary losses
Income (loss) before income taxes and minority
interests

148

334

945

(680)

Income, inhabitants and enterprise taxes
Income tax adjustment

677
(62)

530
238

Total taxes
Income (loss) before minority interests

614
331

769
(1,449)Minority interests in income (loss)
Net income (loss)

29

(75)

301

(1,373)

Total extraordinary income
Extraordinary losses
Loss on retirement of fixed assets
Loss on revaluation of investment securities
Impairment loss
Loss on valuation of golf club membership
OthersMinority interests in income (loss)

29

(75)

Income (loss) before minority interests

331(1,449)6

First half ended September 2011
First half ended September 2012
(April 1, 2011 – September 30, 2011) (April 1, 2012 – September 30, 2012)
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment

(567)
1
(744)

Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of
the parent
Comprehensive income attributable to minority
interests(1,310)

(603)

(978)

(2,053)(1,010)
31

7

(134)
26
(495)

(1,984)(68)

(3)Quarterly consolidated statements of cash flows(Million yen)First half ended September 2011
First half ended September 2012
(April 1, 2011 – September 30, 2011) (April 1, 2012 – September 30, 2012)
Operating activities
Income (loss) before income taxes and minority interests
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 and accrued
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
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of investments in subsidiaries
Payments for merger
Payments of short-term loans receivableCollection of short-term loans receivable
Payments for guarantee deposits
Proceeds from collection of guarantee deposits
Other payments
Other proceeds
Net cash provided by (used in) investing activities
Financing activities
Net increase (decrease) in short-term loans payable
Repayment of long-term loans payable
Cash dividends paid
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period

8

945
1,025
3
55
217
(76)
71
75
1,081
(1,503)310
109(3,509)

(680)
1,260
122
2
(384)
(62)
66
184
11,444
(570)
829
618
(8,312)

(387)
274
(67)
(1,372)75(71)(1,323)245(2,446)

(280)
(465)
143
3,914
63
(66)
(1,312)693
3,293(1,478)
(219)
(56)
273
(10)
(1)
19
(49)
41
(99)
130
(1,449)(1,415)
(205)
(525)
30
(43)
(350)
(1,208)
7
(26)
21
(105)
126
(3,695)

4,210
(915)
(414)
(144)
2,735
(383)
(1,544)
11,796
10,251

1,152
(906)
(413)
(90)
(258)
(129)
(789)
9,695
8,905

(4)

Notes to going concern assumptions
None

(5)

Segment information
For the first half ended September 2011 (April 1, 2011 – September 30, 2011)
1.
Information about sales and income (loss) by reporting segments
Reporting segments
Adjustments(Note 1)

(Million yen)Amount in the
consolidated
statement of income(Note 2)

Electronic
components

Informationequipment

Software

OthersTotal

83,411

26,557

1,533

4,734

116,237-

116,237

800

364

1,781

739

3,687

(3,687)-

Total

84,212

26,922

3,315

5,474

119,924(3,687)116,237

Segment income(loss)

636

(111)

163

142

830

(58)

771

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

Notes:

1. Adjustment in segment income of -58 million yen includes -18 million yen for elimination of inter-segment tradeand -39 million yen for amortization of goodwill.
2. Segment income and losses are adjusted for consistency with quarterly consolidated income and operating incomein the statements of comprehensive income.

For the first half ended September 2012 (April 1, 2012 – September 30, 2012)
1.
Information about sales and income (loss) by reporting segments
Reporting segments
Adjustments(Note 1)

(Million yen)Amount in the
consolidated
statement of income(Note 2)

Electronic
components

Informationequipment

Software

OthersTotal

77,783

19,270

1,491

5,299

103,845-

103,845

671

349

766

1,164

2,952

(2,952)－

Total

78,455

19,619

2,258

6,464

106,798(2,952)

103,845

Segment income(loss)

343

(337)

(403)

(27)

(424)

(46)

(470)

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

Notes:

1. Adjustment in segment income of -46 million yen includes -12 million yen for elimination of inter-segment tradeand -33 million yen for amortization of goodwill.
2. Segment income and losses are adjusted for consistency with quarterly consolidated income and operating incomein the statements of comprehensive income.

9

2.

Business segment information for fixed asset impairment losses and goodwill amortization(Major impairment losses for fixed assets)
In the information equipment segment, an impairment loss was posted for business assets in association witha decline in earnings. This impairment loss was 122 million yen in the first half of the current fiscal year.
(Major changes in goodwill)In the electronic components segment, goodwill was posted due to the merger of AD DEVICECORPORATION and AS Device Co., Ltd. The increase in goodwill in the first half of the current fiscal year
resulting from this merger was 718 million yen.
(6)

Notes on significant change in shareholders’ equity:None10