July 31, 2014

Summary of Consolidated Financial Results
For the First Quarter Ended June 30, 2014 [Japan GAAP]
Name of Company:
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Representative
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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
Ryoichi Kado
Director, Administration Headquarters
Eiji Kawamura+81-(0)3-5657-0111
August 12, 2014
NoneNone(Yen in millions, rounded down)

1.

Financial results for the first quarter of the fiscal year ending March 2015 (April 1, 2014 – June 30, 2014)(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%
96.8
First quarter ended June 2014
56,849(1.4)
842 139.9
1,023451
723.0First quarter ended June 2013
57,67516.1351520
54
Note: Comprehensive income: First quarter of FY3/2015: 270 million yen [-59.1%], First quarter of FY3/2014: (661) million yen [-%]Net income per share

Net income per share fully dilutedYen-Yen
15.99
1.94

First quarter ended June 2014
First quarter ended June 2013
(2) Financial Position (Consolidated)
Total assets
As of June 30, 2014

Equity ratio

Million yen
52,719%45.1

126,028

52,82541.9

As of March 31, 2014
Reference: Shareholders’ equity
As of June 30, 2014:52,675 million yen
2.

Net assets

Million yen
116,733

As of March 31, 201452,786 million yen

Dividends
End of 1Q
Yen-

End of 2Q
Yen
15.00

Dividend per share
End of 3Q
Yen-

Fiscal year ended March 2014
Fiscal year ending March 2015
Fiscal year ending March 2015 (est.)
15.00
Note: Change in the estimation of dividend from the latest announcement: None

End of FY
Yen
20.00

Full year
Yen
35.00

15.00

30.00

-

Yearend dividend of FY3/14 includes ordinary dividend of 15.00 yen and commemorative dividend of 5 yen (completion of new headquarter building)3.

Forecast for the fiscal year ending March 2015 (Consolidated, April 1, 2014 to March 31, 2015)(Percentage figures represent year on year changes)
Net income
Net sales
Operating income
Ordinary income
Net income
per share%

YenFirst Half
115,000(5.8)
1,200(45.3)
1,500(38.5)
600(55.7)
260,000
0.8
5,300
3.8
6,000
2.6
4,000
3.2
Full year
Note: Change in the forecast from the latest announcement: Yes
Please refer “Notice of Revision in Forecast for Fiscal Year Ending March 2015” announced on 31 July, 2014.

Million yen%

Million yen%

Million yen%

Million yen

21.23
141.56

* Notes(1) Changes in significant subsidiaries (Changes in specific subsidiaries accompanied by changes in the scope ofconsolidation): 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: None(d) Retrospective restatement: None
Note: For more information, please see 2. Other Information (3) Changes in accounting principles and estimates, andretrospective restatement(4) Number of shares outstanding (common stock)(a) Shares outstanding (including treasury stock)
As of June 30, 2014:

28,702,118

As of March 31, 2014:

28,702,118

As of June 30, 2014:

445,076

As of March 31, 2014:

445,002

Period ended June 30, 2013:

28,258,153(b) Treasury stock(c) Average number of shares (quarterly consolidated cumulative period)
Period ended June 30, 2014:

28,257,098* Information concerning quarterly review procedure
The rule mandating a review of quarterly financial statements (under the Financial Instruments and Exchange Act) does not apply
to this Summary of Financial Results. The financial statements for the first quarter were under review at the time this Summary ofFinancial Results was released.
* 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 thisreport 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 ofSupplementary Information for further information.

Index for Supplementary Information
1.

Results of Operations ....................................................................................................................................................................2(1)Overview on consolidated business performance ....................................................................................................................2(2)Overview of financial condition ..............................................................................................................................................2(3)Forecast....................................................................................................................................................................................32.

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)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 ...................................6For the first quarter (April 1, 2014 – June 30, 2014).....................................................................................................................6(3)Notes to quarterly consolidated financial statements ...............................................................................................................8(Notes to ongoing concern assumptions) ......................................................................................................................................8(Significant change in shareholders’ equity) .................................................................................................................................8(Segment information) ..................................................................................................................................................................81

1.

Results of Operations(1)Overview on consolidated business performanceIn the first quarter, the Japanese economy staged a gentle recovery despite a temporary decline in consumer spending inreaction to the hike in the consumption tax rates as positive factors including improvement in corporate earnings and in theemployment situation took hold.
In the electronics industry, although overall demand for consumer electronics remained weak, demand in the markets fortablets and for devices installed in automobiles continued to expand, and, in addition to strong growth in sales ofelectronics in the environmental, energy, and heath-care sectors, other areas including the PC market, which benefited fromreplacement demand for Windows XP computers, recorded solid performance.
In this environment, the KAGA ELECTRONICS Group reinforced collaboration among group companies, worked onincreasing sales to major current customers, developed additional new products and expanded its network of overseas
facilities, as well as engaging in cost-cutting measures.
Consequently, consolidated net sales in the first quarter decreased 1.4% from one year earlier to 56,849 million yen,operating income increased 139.9% to 842 million yen, ordinary income increased 96.8% to 1,023 million yen, and net
income increased 723.0% to 451 million yen.
Business segment performance was as follows.
(a) Electronic components (Development, manufacture and sale of semiconductors, general electronic components andother products, EMS*, and other activities)
In Japan, there were declines in demand for electronic components, semiconductors, EMS and other items used inamusement equipment and sales also decreased as a result of partial alterations in distribution channels for someproducts handled. Overseas, however, demand for electronic components, semiconductors, and EMS for electronicdevices was strong. The result was a 2.2% decrease in segment sales to 44,004 million yen and a 111.1% increase inoperating income to 893 million yen.
* EMS: Electronics Manufacturing Service is a term used for the provision of product development and manufacturing services on an
outsourcing basis.

(b) Information equipment (Sales of PCs, PC peripherals, photograph and imaging products, original-brand products, andother products)
Demand for PCs and other consumer products in the information equipment category increased due to replacement
demand for Windows XP computers. Moreover, sales of housing-related products and PCs, software, and other items
for educational institutions were strong. As a result, segment sales increased 10.3% to 9,812 million yen and there wasan operating loss of 26 million yen (compared with a 17 million yen loss in the same quarter one year earlier).
(c) Software (Production of computer graphics, planning and development of amusement products, and other activities)
Activities in this segment focused mostly on the production of computer graphics for animation applications and salesof image processing systems for use in amusement equipment. Segment sales decreased 62.9% to 268 million yen andthere was an operating loss of 21 million yen (compared with a 121 million yen loss in the same quarter one yearearlier).
(d) Others (Electronic device repairs and support, sales of sporting goods, and other activities)
The manufacture and sale of amusement machines to arcades in Japan had weak performance and sales of golf
products and other products were lower. Segment sales decreased 9.4% to 2,763 million yen and there was anoperating loss of 36 million yen compared with an operating profit of 63 million yen loss for the segment in the samequarter one year earlier.
(2)

Overview of financial condition
Assets, liabilities and net assets
Assets totaled 116,733 million yen at the end of the first quarter, 9,294 million yen lower than at the end of the previous
fiscal year mainly because of decreases in notes and accounts receivable-trade.
Liabilities decreased 9,188 million yen to 64,014 million yen mainly because of a decrease in notes and accounts payabletrade in current liabilities.
Net assets decreased 106 million yen to 52,719 million yen. This was primarily the result of payment of dividend and others.

2(3)Forecast(a) Consolidated forecast for the first half ending September 2014 (April 1, 2014 – September 30, 2014)

Previous forecast (A)Million yen
115,000

OperatingincomeMillion yen
600

Million yen
400

Net income
per share
Yen
14.16

Revised forecast (B)115,000

1,200

1,500600

21.23

Difference (B-A)

-600

600

200-

Pct. change (%)-100.0

66.7

50.0-

122,077

2,194

2,437

1,352

47.88

Net Sales(Ref.) Previous first half (firsthalf ended September 30, 2013)

Ordinaryincome
Million yen900

Net income(b) Reason for revisions
The forecast for the first half of the fiscal year has been revised mainly because sales in the EMS business in overseas
are higher than initially expected, and effect of cost cut measures throughout the Group.
There are no revisions to the fiscal year forecast because the outlook is still unclear. An announcement will be madepromptly if there is a need to revise this forecast later in the fiscal year.

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 policy(Application of accounting standard for retirement benefits)
Beginning at the start of the first quarter of the fiscal year ending on March 31, 2015, the Company is using AccountingStandard for Retirement Benefits (ASBJ Statement No. 26, May 17, 2012) and Guidance on Accounting Standard for
Retirement Benefits (ASBJ Guidance No. 25, May 17, 2012) as prescribed in paragraph 35 of this accounting standard
and paragraph 67 of this guidance. The method for setting the discount rate has been changed from a method based ondetermining a base value for the number of years approximating to employees’ average remaining service period to amethod using a simple weighted average discount rate that reflects the anticipated payment period for accrued retirement
benefits and the amounts to be paid in for each period.
For the application of the accounting standard for retirement benefits, in accordance with the transitional handlingprescribed in paragraph 37 of this standard, the effect of the change in the method for calculating retirement benefit
liabilities and service cost as of the beginning of the first quarter is included in retained earnings.
As a result, at the beginning of the first quarter, retained earnings increased 188 million yen. However, effects on firstquarter operating income, ordinary income and income before income taxes and minority interests were negligible.

33.

Quarterly Consolidated Financial Statements(1)

Quarterly consolidated balance sheet(Million yen)
Fiscal year ended March 2014
(As of March 31, 2014)

First quarter ended June 2014
(As of June 30, 2014)ASSETS
Current assets
Cash and deposits

14,192

15,685

Notes and accounts receivable-trade60,667

49,820

Short-term investment securities

114

125

Merchandise and finished goods

16,37816,937

848

1,290

3,991

4,308

Work in process
Raw materials and supplies
Deferred tax assets
Other

993

966

5,836

4,812

(93)

(85)

102,930

93,863

Buildings and structures, net

5,737

5,618

Machinery, equipment and vehicles, net

1,711

1,768

Tools, furniture and fixtures, net

1,004

842

Land

4,038

4,038

133

6

12,625

12,274

Goodwill

715

679Software

486

492

Other332

277

1,533

1,449

5,377

5,521

Allowance for doubtful accounts
Total current assets
Fixed assets
Property, plant and equipment

Construction in progress
Total property, plant and equipment
Intangible assets

Total intangible assets
Investments and other assets
Investment securities

562

529

Other

4,015

4,022

Allowance for doubtful accounts(1,017)(928)

Total investments and other assets

8,938

9,146

23,09822,870126,028

116,733

Deferred tax assets

Total noncurrent assets
Total assets

4

(Million yen)
Fiscal year ended March 2014
(As of March 31, 2014)

First quarter ended June 2014
(As of June 30, 2014)

Notes and accounts payable-trade

41,69536,032

Short-term loans payable

12,172

10,951

Income taxes payable

1,525

625

Other

8,016

7,043

Total current liabilities

63,41054,653Long-term loans payable

4,681

4,324

Provision for directors' retirement benefits

1,437

1,433

Net defined benefit liability

1,954

1,649

Other

1,719

1,954

Total noncurrent liabilities

9,792

9,360

73,20264,014

Capital stock

12,133

12,133

Capital surplus

13,912

13,912Retained earnings

27,41427,489Treasury stock

(536)

(536)

52,92352,998161203

LIABILITIESCurrent liabilities

Noncurrent liabilities

Total liabilities
NET ASSETS
Shareholder’s equity

Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

0(5)Foreign currency translation adjustment5(232)

Remeasurements of defined benefit plans

(304)

(288)

Total accumulated other comprehensive income

(137)

(323)

39

43

52,82552,719126,028116,733

Minority interests
Total net assets
Total liabilities and net assets

5(2)Quarterly consolidated statements of income and consolidated statements of comprehensive income
For the first quarter (April 1, 2014 – June 30, 2014)(Million yen)First quarter ended June 2013
(April 1, 2013 – June 30, 2013)

First quarter ended June 2014
(April 1, 2014 – June 30, 2014)

Net sales

57,67556,849

Cost of sales

50,61949,579Gross profit

7,056

7,269

Selling, general and administrative expenses

6,704

6,426351

842

Interest income

1841

Dividends income5058

Operating income (loss)
Non-operating income

Commission fee

33

77

Other

135

147

Total non-operating income

237

325

32

29

Foreign exchange losses-91

Loss on investments in partnership

21－

Other

15

24

Non-operating expenses
Interest expenses

69

145

520

1,023

Gain on sales of noncurrent assets

17

Total extraordinary income

17

Loss on retirement of noncurrent assets

13

Loss on valuation of investment securities

73

163

Office transfer expenses

-4

Other

1－

Total non-operating expenses
Ordinary income (loss)
Extraordinary income

Extraordinary loss76

171

Income (loss) before income taxes

445

859

Income taxes-current

286

269

Income taxes-deferred

101

134

Total income taxes

388

403

Income (loss) before minority interests

57

455

Total extraordinary loss

Minority interests in income (loss)

2

3

Net income (loss)

54

451

Minority interests in income (loss)

2

3

Income (loss) before minority interests

57

455

6

(Million yen)First quarter ended June 2013
(April 1, 2013 – June 30, 2013)

First quarter ended June 2014
(April 1, 2014 – June 30, 2014)

121

42

5(6)

476

(238)

-16603(185)66127066026604

Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to owners of
the parent
Comprehensive income attributable to minority
interests

7

(3)Notes to quarterly consolidated financial statement(Notes to going concern assumptions)None(Significant change in shareholders’ equity)
None(Segment information)
I For the first quarter ended June 2013 (Apr. 1, 2013 – June 30, 2013)
Information about sales and income (loss) by reportable segments
Reporting segments

Electroniccomponents

Informationequipment

45,007

Adjustment(Note 1)

(Million yen)Amount on thequarterly
consolidated
statements ofincome andconsolidated
statements ofcomprehensiveincome(Note 2)

Software

Others

Total

8,893

723

3,050

57,675-57,675

329

136

362

700

1,528

(1,528)-45,337

9,030

1,085

3,751

59,204(1,528)57,675Net salesof which tooutside customersof which intersegment
Total

Segment
423(17)(121)
63347
4351
income (loss)
Notes:
1. The adjustment increasing segment income by 4 million yen includes amounts for intersegment cancellation of 20
million yen and for goodwill amortization of -16 million yen.
2. Segment income (loss) is adjusted for operating income (loss) on the quarterly consolidated statements of income
and consolidated statements of comprehensive income.
II For the first quarter ended June 2014 (Apr. 1, 2014 – June 30, 2014)
Information about sales and income (loss) by reportable segments

Reporting segments

Adjustment(Note 1)

(Million yen)Amount on thequarterly
consolidated
statements ofincome andconsolidated
statements ofcomprehensive
income(Note 2)

Electronic
components

Informationequipment

Software

Others44,004

9,812

268

2,763

56,849-56,849

281

158

729

622

1,792

(1,792)-44,286

9,971

997

3,386

58,641(1,792)

56,849Total

Net salesof which tooutside customersof which intersegment
TotalSegment
893
(26)
(21)
(36)
809
33
842
income (loss)
Notes:
1.
The adjustment 33 million yen includes amounts for intersegment cancellation of 33 million yen.
2.
Segment income (loss) is adjusted for operating income (loss) on the quarterly consolidated statements of income
and consolidated statements of comprehensive income.

8