2019

Annual Report

7-7-1 Nakagaito, Daito, Osaka 574-0013, Japan
Phone +81-72-870-4303 Fax +81-72-871-1112

https://www2.funai.co.jp/en/index.html

Corporate Philosophy

Fundamental
Principle

Management
Philosophy

Dream with Conviction,
and Act on Information

Corporate Philosophy

1

Message from the President & CEO

3

Business Description

5Core Competencies

7

Topics9

Mid-term Business Plan

11

History

15

Company’s Outline

17

Challenge the company to growby becoming helpful
in the community

Funai creates products that are the choice ofpeople around the world

Group Vision“Around the world,” as a global company“The choice,” aiming for top share in the industry“Creates products,” that people will love

Corporate Logo
Our Corporate Logo, which shows a stylized “F” breaking out of its
circular boundaries, expresses our focus on breaking away fromstereotypes, while at the same time symbolizing our vigorous growth.
The shape of the “F” resembles a human hand, connoting production andmanufacturing. This shape is meant to convey our high productivity andoutstanding quality, with sharp angles to express simplicity.

1

Annual Report 20192

Message
Message fromfrom thethe President
President &
& CEO
CEO

We Will Persist in our Challenge
to Make our Company “FUNAI Strong” Again
and Achieve Sustainable Growth
The
The FUNAIFUNAI Group
Group has
has accomplishedaccomplished its
its mission
mission toto restore
restore profitability
profitability andand will
will stabilize
stabilize thethe revenue
revenue base
base andand aimaim forfor thethe next
nextstage,
stage, sustainable
sustainable growth.
growth.
We
We will
will taketake onon eveneven greater
greater challenges
challenges inin thethe faceface ofof many
many changes
changes andand demonstratedemonstrate thethe true
true value
value ofof ourour proprietary
proprietary
technology
technology andand ingenuity
ingenuity to
to makemake FUNAIFUNAI strong
strong again,
again, now
now moremore than
than ever.
ever.

Hideaki
Hideaki Funakoshi
Funakoshi
Representative
Representative Director
Director
President
President && CEO
CEO

Opportunities
Opportunities forfor gaining
gaining greater
greater exposure
exposure ofof thethe FUNAIFUNAI logo
logo

the
the entire
entire company
company inin working
working onon thethe keykey issue
issue ofof accelerating
accelerating

were
were also
also expanded
expanded throughthrough aa partnershippartnership agreementagreement with
with thethethe
the management
management agility
agility andand makemake sure
sure thatthat everyone
everyone isis aware
aware

Funai
Funai ElectricElectric provides
provides high-quality
high-quality digital
digital consumer
consumer electronics
electronics

Los
Los Angeles
Angeles Angels,
Angels, aa major
major league
league team
team inin thethe U.S.,
U.S., aimed
aimed at
atofof this,this, fromfrom thethe management
management level
level toto eacheach individual
individual employee.
employee.

products
products with
with superior
superior cost-performance,
cost-performance, based
based onon ourourachievingachieving higher
higher penetration
penetration ofof thethe FUNAIFUNAI brand.
brand. We
We launchedlaunched

Production
Production locations:locations: We
We will
will shut
shut down
down production
production ininfundamental
fundamental principle
principle ofof “Dream“Dream with
with Conviction,
Conviction, andand Act
Act onon

products
products thatthat apply
apply printerprinter head
head technology
technology andand medical
medical andand

China,
China, which
which isis steadilysteadily losing
losing its
its competitivecompetitive superiority
superiority as
as aa

the
the global
global market
market based
based onon aa stablestable revenue
revenue base.
base. WeWe areare

Information”
Information” andand thethe groupgroup visionvision ofof creating
creating products
products thatthat arearein-vehicle
in-vehicle products
products as
as successes
successes inin technology
technology we
we havehave been
been

production
production location
location due
due toto U.S.-China
U.S.-China trade
trade issues,
issues, thethe steep
steep

workingworking toto introduce
introduce uniqueunique products
products toto thethe global
global market
market andandthethe choicechoice ofof customers
customers aroundaround thethe world.
world.

workingworking on
on developing.
developing. We
We also
also launchedlaunched newnew businesses.
businesses.

rise
rise inin labor
labor costs,
costs, andand otherother factors,
factors, andand areare buildingbuilding aa global
globalcreatecreate products
products thatthat areare thethe choicechoice ofof all
all users.
users. II think
think thatthat this
thisproduction
production structure
structure centeredcentered mainly
mainly on
on production
production locations
locations ininseveresevere environment
environment teeming
teeming with
with changes
changes isis precisely
precisely thethe

Thailand,Thailand, thethe Philippines,
Philippines, Mexico,
Mexico, andand otherother locations
locations thatthat areareenvironment
environment thatthat will
will enableenable Funai
Funai ElectricElectric toto demonstratedemonstrate thetheadvantageous
advantageous forfor exporting
exporting toto thethe U.S.
U.S.

true
true value
value ofof itsits uniqueunique technicaltechnical development
development capabilities
capabilities andand

Reflecting
Reflecting on
on FY2018
FY2018DuringDuring FY2018
FY2018 (ending(ending March
March 31,
31, 2019),
2019), thethe initial
initial year
year ofofourour mid-term
mid-term management
management plan
plan (FY2018–FY2020),(FY2018–FY2020), we
we
implemented
implemented initiatives
initiatives aimed
aimed reforming
reforming thethe revenue
revenue structure
structuretoto achieve
achieve sustainable
sustainable growth
growth andand measures
measures aimed
aimed at
at restoring
restoringprofitability,
profitability, andand achievedachieved ourour goals
goals based
based onon thethe three
three basic
basic

As
As aa global
global company,
company, thethe Funai
Funai Group
Group isis targetingtargeting top
top shareshare inin

Existing
Existing businesses:
businesses: In
In thethe display
display business,business, we
we areareingenuity.
ingenuity. In
In thethe future,
future, we
we will
will continue
continue toto introduce
introduce products
products ofofconcentrating
concentrating management
management resources
resources on
on Android
Android TV
TV inin NorthNorthsuperior
superior cost-performancecost-performance andand quality
quality toto thethe global
global market
market inin aa

strategies
strategies ofof expanding
expanding market
market share,share, achieving
achieving penetration
penetration of
of

Under
Under thethe Management
Management Policy
Policy forfor Fiscal
Fiscal Year
Year 2018,2018, we
we worked
workedAmerica,
America, televisions
televisions equipped
equipped with
with 4K
4K internalinternal tuners,
tuners, andandtimelytimely mannermanner andand makemake steadysteady progress
progress toward
toward thethe stagestage ofofthethe FUNAIFUNAI brand,brand, andand launchinglaunching new
new products.
products.

toto movemove past
past thethe losses
losses andand succeeded
succeeded inin restoring
restoring profitability
profitability

other
other products
products forfor whichwhich we
we anticipate
anticipate growth.
growth. In
In thethe digital
digitalsustainable
sustainable growth.
growth.

inin thethe initial
initial fiscal
fiscal year.
year.

media
media business,business, we
we areare seeking
seeking expansion
expansion into
into Europe
Europe andandIn
In thethe printing
printing solutions
solutions business,business, we
we reassessed
reassessed
unprofitableunprofitable products
products andand launchedlaunched thethe Nail
Nail Art
Art PrinterPrinter andand

33“Agile“Agile Management”
Management” toto Adapt
Adapt totoChanges
Changes inin thethe BusinessBusiness Environment
Environment

Make
Make FUNAIFUNAI Strong
Strong throughthroughaa Stable
Stable Revenue
Revenue BaseBaseInIn thethe future,
future, we
we will
will continue
continue toto pushpush further
further ahead
ahead onon ourour

otherother newnew markets
markets inin addition
addition toto thethe North
North American
American and
and

other
other newnew products.
products. In
In thethe display
display business,business, aa radical
radicalbasic
basic strategy
strategy while
while also
also working
working toto accomplish
accomplish ourourrestructuring
restructuring ofof thethe Central
Central American
American market
market resulted
resulted in
in an
an

positioning
positioning strategy
strategy andand alliancealliance strategy,
strategy, which
which areare part
part ofof ourour

improved
improved profit
profit structure,
structure, andand wewe succeeded
succeeded inin reducing
reducing

overalloverall businessbusiness strategy.
strategy. We
We will
will also
also focus
focus onon creating
creating aa

businesses
businesses by
by takingtaking advantage
advantage ofof areas
areas we
we specialize
specialize inin andandmaterialmaterial costs
costs forfor liquid
liquid crystal
crystal panels
panels andand otherother products
products

stablestable revenue
revenue base
base throughthrough dynamic
dynamic restructuring
restructuring ofof ourourentering
entering alliances.
alliances. We
We areare also
also accelerating
accelerating development
development ofofexperiencing
experiencing declines.
declines. In
In thethe North
North American
American market,
market, we
webusinessbusiness portfolio.
portfolio.

derivative
derivative products
products thatthat apply
apply thethe printerprinter head
head technology
technology weweJapaneseJapanese markets.
markets.
New
New businesses:
businesses: We
We areare accelerating
accelerating development
development ofof newnew

focusedfocused on
on expanding
expanding businessbusiness with
with other
other major
major mass
mass retailers
retailers

The
The businessbusiness environment
environment surrounding
surrounding ourour company
company isishave
have worked
worked many
many years
years toto develop,
develop, specialty
specialty printers
printers thatthat

inin addition
addition toto Walmart,
Walmart, andand steadilysteadily accumulated
accumulated sales
sales results.
results.

changingchanging at
at aa dizzying
dizzying pace
pace duedue toto trade
trade friction
friction between
between the
the

apply
apply optical
optical design
design technology
technology andand otherother technologies,
technologies, andandIn
In Japan,Japan, we
we introduced
introduced aa high-end
high-end OLED
OLED TVTV andand expanded
expanded the
the

U.S.
U.S. andand China
China andand thethe ripple
ripple effects
effects onon thethe global
global economy.
economy.

automotive
automotive devices,
devices, EV
EV equipment,
equipment, medical
medical andand healthcare
healthcare

line-upline-up ofof products
products exclusively
exclusively sold
sold byby thethe Yamada
Yamada Denki
Denki

This
This andand otherother changes
changes makemake many
many aspects
aspects ofof thethe environment
environment

devices,
devices, andand otherother equipment.
equipment.

Group,
Group, andand succeeded
succeeded inin expanding
expanding ourour market
market share.
share.

unpredictable.
unpredictable. To
To respond
respond toto suchsuch rapid
rapid changes,
changes, we
we will
will enlist
enlistAnnualAnnual Report
Report 2019
2019

44

Business
Business Description
Description

Supplying simple, high-quality products
to the world
Funai
Funai ElectricElectric supplies
supplies simple,
simple, high-quality
high-quality products
products under
under aa broad
broad range
range ofof brands
brands inin fourfour businessbusiness segments—Display,segments—Display,
DigitalDigital Media,
Media, Office
Office Solutions,
Solutions, andand Development
Development andand New
New Businesses—andBusinesses—and has
has establishedestablished aa solid
solid position
position inin thethe global
globalconsumer
consumer electronics
electronics market.
market.
Since
Since our
our company
company waswas established,established, Funai
Funai ElectricElectric has
has
demonstrated
demonstrated thethe ability
ability toto develop
develop andand supply
supply products
products ofsuperior
ofsuperior
qualityquality andand cost-performance,
cost-performance, andand hashas built
built aa reputation
reputation ofof solidsolid
reliability
reliability inin thethe global
global digital
digital consumer
consumer electronics
electronics market.
market.
Today
Today we
we areare engaged
engaged inin aa broad
broad range
range ofof businesses
businesses inin
four
four businessbusiness segments:
segments: The
The Display
Display business,business, which
which provides
providesflat-screen
flat-screen televisions;televisions; thethe Digital
Digital MediaMedia business,business, which
which
providesprovides DVD
DVD andand BD
BD (Blu-ray(Blu-ray Disc)
Disc) related
related products;
products; thethePrinting
Printing Solutions
Solutions business,business, which
which provides
provides printer-related
printer-related
equipment;
equipment; andand Development
Development andand New
New Businesses,
Businesses, which
which
develops
develops andand manufactures
manufactures dental
dental CT
CT scanners,
scanners, products
products forfor
installation
installation inin vehicles,
vehicles, andand otherother high-quality
high-quality products.
products.
InIn ourour mainmain Display
Display business,business, we
we supply
supply four
four brands
brands ofofflat-panel
flat-panel televisions
televisions inin aa variety
variety ofof sizes
sizes fromfrom small
small toto large.
large. InIn
our
our Digital
Digital MediaMedia business,business, we
we supply
supply DVD
DVD andand BD
BD (Blu-ray(Blu-rayDisc)Disc) related
related products.
products. We
We supply
supply these
these products
products to
to JapanJapan
andand North
North America,
America, respectively.
respectively.
We
We areare recognizedrecognized forfor our
our price
price competitivenesscompetitiveness andandcapacity
capacity toto supply
supply these
these audiovisualaudiovisual products
products andand areare particularly
particularly
proud
proud ofof ourour top-ranked
top-ranked share
share among
among JapaneseJapanese manufacturers
manufacturers ininflat-panel
flat-panel televisions
televisions inin thethe North
North American
American market.
market.
Funai
Funai utilizes
utilizes thethe ink
ink cartridges
cartridges andand printerprinter products
products wewedeveloped
developed ourselves
ourselves inin ourour Printing
Printing Solutions
Solutions businessbusiness andand thethestrongstrong partnerships
partnerships with
with our
our OEM
OEM (consignment(consignment
manufacturing)
manufacturing) customers
customers inin ourour Development
Development andand New
New
Businesses
Businesses segment
segment toto develop,
develop, manufacture,
manufacture, andand sellsell highhighvalue-added
value-added products.
products.
We
We areare entering
entering aa severe
severe shakeout
shakeout period
period inin thethe global
globaldigitaldigital consumer
consumer electronics
electronics industry
industry as
as competitioncompetition stiffens
stiffensonon function,function, design,design, andand price
price with
with thethe riserise ofof Chinese,
Chinese,Taiwanese,
Taiwanese, andand Korean
Korean manufacturers.
manufacturers.
However,
However, itit isis precisely
precisely inin thisthis sort
sort ofof severe
severe environment
environmentthat
that we
we areare seizing
seizing thethe opportunity
opportunity to
to manifest
manifest thethe true
true value
value ofof
Funai
Funai Electric,
Electric, with
with our
our advanced
advanced in-housein-house development
development
capacity
capacity andand our
our formidable
formidable production
production system.
system. We
We will
will work
work
to
to increase
increase ourour brandbrand value
value andand expand
expand ourour market
market share
share bybyrapidlyrapidly developing
developing andand manufacturing
manufacturing products
products thatthat match
match thetheneeds
needs ofof consumers
consumers andand supplying
supplying products
products ofof superior
superior
qualityquality andand cost-performancecost-performance toto thethe global
global market.
market.

DigitalDigital MediaMedia BusinessBusiness

DVD/BD-related Products
Enticing
Enticing AV
AV users
users with
with aa high-definition
high-definition simultaneous
simultaneousrecordingrecording function
function

12.4%
12.4% ofof total
total sales
sales

In
In thethe North
North American
American market,
market, we
we havehave provided
provided 4K
4K UltraUltra HDHD Blu-ray
Blu-ray

13.1

Disk
Disk players
players since
since 2016.
2016. WeWe also
also launchedlaunched exclusive
exclusive sales
sales ofof aa
FUNAI-brand
FUNAI-brand 4K
4K Ultra-HD
Ultra-HD Blu-ray
Blu-ray Disc
Disc recorder
recorder inin Yamada
Yamada Denki
Denki

bn
bn yenyen

storesstores inin July
July 2018,2018, andand areare continuing
continuing toto expandexpand overall
overall sales
sales withwith¬flat-panel¬flat-panel televisions.
televisions.

(FY(FY 2018)
2018)

OfficeOffice Solutions
Solutions BusinessBusiness

Printer-related Products
Capitalizing
Capitalizing onon thethe diverse
diverse range
range ofof businessbusiness needs
needs
toto achieve
achieve expansion
expansion ofof thethe printerprinter businessbusiness

3.1%
3.1% ofof total
total sales
sales

Funai
Funai isis utilizing
utilizing thethe expertise
expertise itit has
has cultivatedcultivated in
in OEM
OEM forfor

3.3

inkjetinkjet printerprinter products
products since
since 1997
1997 toto expandexpand thethe businessbusiness
substantially.
substantially.

bn
bn yenyen

We
We manufacture
manufacture printer-related
printer-related products
products forfor various
various purposes
purposes ininthethe B2BB2B andand OEM
OEM segments,
segments, such
such asas proprietary
proprietary ink
ink cartridges
cartridges forfor(FY(FY 2018)2018)

industrial
industrial use
use thatthat employ
employ thermal
thermal inkjet
inkjet technology
technology andand thethe Nail
Nail Art
Art
Printer.
Printer. We
We havehave also
also enteredentered anan alliancealliance with
with P&G,
P&G, thethe world’s
world’s largest
largestmanufacturer
manufacturer ofof consumer
consumer daily
daily necessities,
necessities, andand will
will introduce
introduce

Display
Display BusinessBusiness

Flat-panel Televisions

products
products inin thethe beauty
beauty segment.
segment.

Development
Development andand New
New Businesses
Businesses

Dental CT Scanning Devices, Products
for Installation in Vehicles, and Other Products

79.6%
79.6% ofof total
total sales
sales

84

Meeting
Meeting aa wide
wide range
range ofof OEM
OEM needs
needs with
with optimal
optimaltechnology
technology andand optimal
optimal manufacturing
manufacturingbn
bn yenyen(FY(FY 2018)
2018)

4.9%
4.9% ofof total
total sales
sales

Funai
Funai ElectricElectric isis manufacturing
manufacturing dental
dental CT
CT scanningscanning devices
devices on
on

5.1

consignment
consignment forfor thethe U.S.
U.S. market.
market. We
We havehave also
also jointly
jointly developed
developed aa
bed
bed forfor nursing
nursing care
care with
with thethe medical
medical division
division ofof aa university
university in
in an
an

bn
bn yenyen

Globally
Globally recognizedrecognized high-definition
high-definition imaging,
imaging,aa new
new option
option inin OLED
OLED TVs
TVs inin JapanJapan

industry-academic
industry-academic partnershippartnership andand areare working
working on
on aa prototype.
prototype.
ThroughThrough this
this andand otherother products,
products, we
we areare meeting
meeting aa wide
wide range
range ofof(FY
(FY 2018)
2018)

needs
needs inin thethe medical
medical andand healthcare
healthcare segments
segments with
with superior
superior
technology.
technology. In
In addition
addition toto thethe above
above initiatives,
initiatives, we
we areare working
working on
on

Funai
Funai ElectricElectric maintains
maintains top-ranked
top-ranked share
share among
among JapaneseJapanesedevelopment
development ofof devices
devices forfor installation
installation inin vehicles
vehicles andand will
will provide
providemanufacturers
manufacturers inin thethe North
North American
American market
market where
where we
we sellsell three
three

components
components andand modules
modules thatthat areare basedbased onon ourour optical
optical technology,
technology,

brandsbrands (Philips,(Philips, SANYO,SANYO, andand Magnavox).
Magnavox). We
We also
also began
began exclusive
exclusivesuch
such asas metermeter panels
panels andand power
power inverters.
inverters.

sales
sales ofof FUNAI-brand
FUNAI-brand products
products at
at Yamada
Yamada Denki
Denki storesstores inin JapanJapanfromfrom 20172017 andand areare steadilysteadily expanding
expanding sales.
sales. During
During FY2019,
FY2019, which
which
marks
marks thethe third
third year
year ofof sales,sales, we
we introduced
introduced thethe world’s
world’s first
first OLED
OLED

BrandsBrands sold
sold globally
globallyTV
TV equipped
equipped with
with two
two 4K
4K tuners
tuners andand anan internalinternal hard
hard disk
disk drive
drive ininour
our 7020
7020 series.
series. This
This enables
enables users
users toto watchwatch aa 4K
4K broadcast
broadcast while
while
recordingrecording aa different
different 4K
4K broadcast.
broadcast. We
We will
will use
use this
this asas leverageleverage ininthethe future
future as
as we
we work
work toto improve
improve ourour brandbrand image
image even
even further
further andandexpandexpand share.
share.

55

BrandsBrands sold
sold inin North
North America
America

BrandsBrands carried
carriedPhilipsPhilips

Magnavox
Magnavox
AnnualAnnual Report
Report 2019
2019

66

Core Competence

Capturing the Needs of Markets around the World

World-Class Price CompetitivenessFunai Electric deploys a sales strategy based on the unique characteristics of each market in many locations around the world. In
the North American market, which is the largest market in the world, Funai has strengthened its relationship with leading massretailers to develop an accurate assessment of market needs, and maintains top share in the market. We also began exclusive salesof the FUNAI brand through Yamada Denki, the largest mass retailer of consumer electronics in Japan, from 2017.

Produce core components in-house, reduce the number of components, and design locally overseas in the optimal location.
Pursuit of cost-performance from the design stage onward has given Funai Electric world-class price competitiveness.

Funai’s sales strategy is to use our close relationships with sales
channels to accurately identify market needs and the latest
trends, and provide high-quality products with superior
cost-performance.
In LCD televisions, our core product, we hold top market*
share among Japanese manufacturers in the North American
market in terms of unit shipments. We also began exclusive
sales of FUNAI-brand products in Yamada Denki stores in theJapanese market from June 2017. Funai is steadily increasing
market presence by pursuing a product development and sales
strategy matched to the needs of the market. This includes thelaunch of an OLED TV that is equipped with 4K tuners andinternal hard disk drive which enables users to watch one 4K
broadcast while recording another 4K broadcast on one
television in July 2019, which marks the third year of sales.

In printer-related products, we launched the Nail Art Printer,a product that applies Funai’s thermal inkjet technology, and it
has received good reviews. In new businesses, we are pursuingdevelopment and production of nursing care and medical
equipment, and are also engaging in product development
aimed at next-generation needs through our alliance strategy,
under which we have entered alliances with FOMM Corporation,a venture firm that is developing compact electric vehicles;
P&G, the world’s largest manufacturer of consumer daily
necessities; and NTT Plala Inc., the provider of Hikari TV, thelargest video platform in Japan.
** 2014–2018:
2014–2018: Funai’s
Funai’s share
share ofof LCD
LCD television
television shipments
shipments inin North
North America
Americacomparedcompared toto otherother JapaneseJapanese manufacturers,
manufacturers, IHS
IHS Markit
Markit research.
research.

Funai Electric’s peerless price competitiveness was achieved
through our unique design concept of producing corecomponents in-house, reducing the number of components, andlocal design overseas. We brought the production of corecomponents in-house and reduced the number of parts. Design
work is performed at development sites in Malaysia, China, andother locations, and strengthening communication among theselocations has shortened development time, reduced labor hours,
and improved ef¬ficiency in local parts procurement.
We have built a production structure of manufacturing in the
optimal location to respond to the dizzying pace of changes in
the global environment. Shenzhen and Hong Kong have been
positioned as parts supply bases, and procure a stable supply ofparts from reliable suppliers. Mexico, which is the supply basefor large LCD televisions, has reduced fixed costs by going
fabless and established a production structure capable of swift
response to market changes.
A design flow that takes productivity into consideration andfocuses on the relentless pursuit of optimal cost-performance forthe entire company helps Funai products to emerge as winners
amid stiff price competition.

Three strengths
in design

Produce corecomponents
in-house

Improve costcompetitiveness

Reducethe number ofcomponents

Design locallyoverseas

Global sales locations
Global production locations
Sales locations

Production locations

Taking on the Challenge of Ceaseless Improvements in Productivity
Funai Electric continuously pursues improvements in productivity through its unique Funai Production System (FPS). FPS enables
Funai to provide high quality products with superior cost performance.

brand
brand

brand
brand

OLED
OLED TVs,
TVs,
othersothersTVs

FPS, Funai’s unique production system, detects problems in the
production process through intentional stress testing of the
production line (reducing the number of line workers, speedingup the belt conveyor), and taking steps to improve productivity
that encourage voluntary efforts to improve.

Continual improvement inproductivity through FPS
Perform
an intentionalline stress test

TVs

Resolvethe problems

DVDs,
DVDs,
BDs,
BDs, Printers
Printers

Repeatedly working through this cycle detects problems
with the current production system and fosters a mindset among
team members to take the initiative on improvement. This
enables continual improvements in productivity. Funai sees FPS
as the driver for achieving sustainable growth, and will make
Funai strong again by pursuing this even more ardently.

FPS

Detectproblems

Ink
cartridges
Take steps
to improve

7

AnnualAnnual Report
Report 201920198

Topics

2018–2019
Topic 1the iOS and Android formats and downloads various

Business Alliance with NTT Plala Inc.: Acceleration of
the Alliance Strategy I June 2019 I

photos and pattern designs, and enables people toenjoy sophisticated intricate designs via Funai’s thermal
inkjet technology.

In June 2019, Funai concluded a business allianceplatform that Funai has developed over many years withagreement with NTT Plala Inc., the provider of Hikari TV,

NTT Plala’s expertise in network communications

Japan’s largest video streaming platform. This follows

technology and video streaming services.

alliances with FOMM Corporation, a venture firm that is

In the future, we will work to create first-of-a-kinddeveloping compact electric vehicles, and P&G, thebusinesses that link people up with all types of goods

largest manufacturer of consumer daily necessities inand contents, with an eye toward 5G video streaming.

* Google, Google Assistant, Android and Android TV are
trademarks of Google LLC. All trademarks and copyrights are
attributable to the owner of the individual trademark or
copyright.
Nail
Nail Art
Art PrinterPrinter

the world. In the future, Funai will actively develop new
businesses through such corporate alliances. We will
use our alliance strategy to drive the creation of

Topic 3products that are the choice of customers around theworld even further.
Funai previously partnered with NTT Plala on airing

CSR Initiatives―A broad range of local and community activities ―the Hikari TV video streaming service run by NTT Plala on
Funai TVs sold exclusively at Yamada Denki stores. The
new business alliance agreement will strengthen the■ Locally-rooted contribution activities

and services that will serve as a platform for home life by■ Activities that contribute to and support
communities

integrating the imaging technology and global production

In the U.S., the Funai Group participates in the Children’s

taxpayers contribute a portion of their taxes to theMiracle Network, which supports hospitals that treat

hometown revitalization fund for the city of Daito inpediatric illnesses, and participates in charity projects.

Osaka, where our headquarters is located. We provided

relationship even further. We will provide new products

Topic 2

We have also supported Walmart and Sam’s Club inover 1,400 units in FY2018. We will continue to makeparticipating in the Sharing & Caring support for children

substantial contributions to the Daito City hometownin need during the holiday season, and donated Funai TV

revival tax contribution fund and strive to improve Funai’sand DVD products.

name recognition.

We hope that these activities will make children’s

Two smart home products receive the CES 2019
Innovation Award I January 2019 I

9Funai products are used as thank you gifts when

dreams come true and give them the strength andcourage to fight their illnesses, and that they willcontribute to the community in general by supporting
families, sponsors, and those who donate.

Two of Funai’s products, the Nail Art Printer and thestreaming services,

Kitchen Android TV, received CES 2019 Innovation

music playlists, andAwards (in the Smart Home division) in January 2019.

TV channels via■ Activities that contribute through sports

The CES Innovation Award is a distinguished award

voice operation.

NTT Plala and Funai sponsored the Hikari TV 4K FUNAI
Doubles Golf Tournament held on July 10. Drone

presented for consumer product designs and

The Nail Art

technologies that are particularly outstanding.

Printer is a device

images and wearable cameras were used to broadcast

The Google Assistant-equipped 24-inch Kitchenthat makes it easy forthis golf tournament, providing content that added new

Android TV (Philips brand) is designed to be placed inanyone to enjoy nailthe kitchen, which is the center of household activities.

art. It can be used at

It has two remote microphones equipped with the echohome, so it can substantially reduce the amount of timefans by enabling them to enjoy this golf tournament incanceller function, and can operate Google Assistant by

spent going to a nail salon to have a manicurist apply

4K definition.

voice. It enables people to access recipes, video

nail art. The printer links to a free app that is available inmethods of image-based expression. We were able to
Kitchen
Kitchen Android
Android TVTVpromote penetration of the FUNAI brand among golf

AnnualAnnual Report
Report 20192019 10Mid-term Business Plan

Management Policy for Fiscal Year 2019

We will Strive to Strengthen the Brand and Expand
Sales Channels to Create a Stable Revenue Base
From restoring profitability to greater stability . . .
We are working to build a stable revenue structure by identifying market trends for each product, reinforcing the productline-up, and creating new businesses.

Development and New Businesses

Display and Digital Media Businesses

Printing Solutions BusinessWe are strengthening the FUNAI brand to expand sales.

Funai will accelerate new business development
through alliances

We are actively rolling out products equippedwith Funai’s proprietary printer head technology.

■ Display BusinessWe expanded our Android TV line-up before the Chinese
manufacturers and will strengthen existing AV products andconcentrate management resources in growth markets in the
North American market, our core market. In the Japanesemarket, we will launch televisions with 4K internal tuners andother advanced BS-capable televisions at a reasonable pricethat is attractive to consumers. These will mainly be sold as
FUNAI-brand products sold exclusively through Yamada
Denki. In Mexico, we intend to recapture market share by
restructuring the business model and will strengthen the sales
structure. We will also strengthen initiatives aimed at cutting
after-service costs.

■ Products for Installation in Vehicles
We will begin mass production of backlight units for installationin vehicles from the second half of this fiscal year. The units
use Funai’s proprietary light balancing technology to achieve athin-profile, energy-saving, high-contrast unit for installation in
vehicles. We have also developed a meter panel that achieves
high visibility through the imaging and optical technology wehave cultivated in LCD televisions for the EV produced by
FOMM Corporation, with which we entered a capital andbusiness alliance year before last, and we are targeting mass
production. We are also engaged in advance development of avehicle power inverter for FOMM Corporation.

■ Full-scale Launch of Specialty Printers
The Nail Art Printer launched in the Japanese market on an
OEM basis at the end of 2018 were also launched for sale as
FUNAI-brand products from June of this year. New naildesigns and applications have been developed and we alsoplan to roll them out to Taiwan, China, Central & SouthAmerica, and elsewhere in the future.
We intend to introduce high-capacity inkjet printers andlabel printers, multipurpose printers, and other products thatuse Funai’s proprietary printer head technology to expand
sales in China.

■ Digital Media Business
The withdrawal of a major Korean manufacturer from the BD
player market in North America will lead to stiffer
competition over market share by the major manufacturers,
including Funai Electric. We will narrow our line-up in a bid torecapture market share. In the Japanese market, we will
work to expand share by launching a high-end 4K model.
Funai has not been involved much in the European andChinese markets thus far, but we see these as new markets
and will begin to expand sales.

■ Medical and Healthcare Devices
Funai has already begun selling dental CT scanners in the U.S.
and sales are expanding steadily. We will proceed forward withexpansion to the European market in the future in mind as well.
We have partnered with a Taiwanese manufacturer on theelectric beds we developed jointly with a major American
manufacturer and are now able to provide them at areasonable price. Funai is also planning to enter the Japanesemarket. We have also developed a mat to prevent bed sores
that can automatically change a person’s body position while
sleeping. This was jointly developed with the medical divisionof a Japanese university in an industry-academic partnershipand we are working on the prototype.

■ Business with Proctor & Gamble (P&G)
We will conduct a full-scale launch of the businesses in which
we are partnering with P&G, the world’s largest manufacturersof consumer daily necessities. The skincare device equippedwith our latest applied printer head technology is arevolutionary cosmetic device that integrates electronics andcosmetics. We intend to begin selling it in the U.S. from thesecond half of 2019. Funai has also developed a cartridge for
P&G’s electronic aromatic misting device that regularly mists apreset amount air freshener on a continuous basis. Trial sales
will begin this fiscal year.

Nail
Nail Art
Art PrinterPrinter

PanelsPanels11

Multipurpose
Multipurpose printers
printers

Backlight
Backlight units
units

AnnualAnnual Report
Report 20192019 12

Mid-term Business Plan

Finish the Bulk of Restructuring and
Set the Strategy for Sustainable Growth
FY2018 (Period 67)

FY2019 (Period 68)

Restore Profitability

Go Livewith New Businesses■ Expand market share■ Achieve penetration of
the FUNAI brand■ Launch new products

Move toward the sustainablegrowth stage■ Expand market sharefurther■ Commercialize the EV
business■ Go live with new
businesses■ Implement a full-scalelaunch of alliance business■ Commercialize themicrofluidics business

FY2018 Results

13

FY2020 (Period 69)

FY2019 Plan

Establish a Revenue Base to Restore
Profitability

Accelerate the Full-Scale Launch of New
Businesses through Alliances

We achieved our mission to move beyond the losses
in FY2018 and implemented three basic measures
aimed at establishing a revenue base, mainly torestore profitability.
The first was to expand market share. In North
America, which is our main market, we expandedbusiness with major mass retailers. In Japan, we
expanded sales by introducing high-end
FUNAI-brand products.
The second was to achieve penetration of the
FUNAI brand. We deployed effective advertisements
through a partnership agreement with the Los
Angeles Angels, a major league team, and linked thisto sales expansion by increasing penetration of the
FUNAI brand.
The third was to launch new products. Funai
launched the Nail Art Printer equipped with printerhead technology, among other new products. We also
accelerated the start-up of development in the
medical and in-vehicle device areas, and began
EV-related development.

In FY2019, the environment will remain extremely severe
for existing businesses impacted by trade friction
between the U.S. and China. We will use the businessbase that we restored to profitability last fiscal year to
conduct a full-scale launch of new businesses.
We will go live with businesses that we developed
last fiscal year and will begin mass production of theworld’s first backlight units for installation in vehicles inthe vehicle-related segment. We will also begin serious
development of a power inverter and metal unit.
In medical and healthcare devices, we will work to
expand sales of dental CT scanners and enter the electric
bed market in Japan and expand our sales channels.
We will commercialize the microfluidics technology
which applies our proprietary printer head technology,
and will work to implement full-scale roll-out of the
Nail Art Printer and other specialty printers for skincare, air freshening, and other purposes. We will also
develop global business through our alliance with
P&G, an international brand and major manufacturerof consumer daily necessities.
AnnualAnnual Report
Report 20192019 14

History

A parallel chronology of product development
and the history of Funai Electric

1960

2010

2019-

2011 ● FUNAI ELECTRIC R&D (SHENZHEN) CO., LTD. established in China
as a research and development center.

Nail Art Printers2013 ● FUNAI ELECTRIC CEBU, INC. (formerly, Lexmark International(Philippines), Inc.) acquired from Lexmark.

2018-● FUNAI ELECTRIC PHILIPPINES INC. established in the Philippines
as a production subsidiary.

FUNAI organic
light-emitting
diode TVs

● FUNAI LEXINGTON TECHNOLOGY CORPORATION establishedin the United States as a research and development center.

1961 ● FUNAI ELECTRIC CO., LTD. established in Ikuno Ward, Osaka City.
1962 ● Representative office established in Chicago, the United States.

2015 ● FUNAI NORTH AMERICA, INC. established in the United States
as a holding company.

1964 ● CHUGOKU FUNAI ELECTRIC CO., LTD. established as a production subsidiary in Hiroshima Prefecture.

2009-

2016 ● FUNAI MANUFACTURING, S.A. DE C.V. established
as a manufacturing subsidiary in Mexico.

1968 ● FUNAI ELECTRIC COMPANY OF TAIWAN established as a production subsidiary in Taiwan.

Blu-ray Disc Recorders

2008-

1969 ● Construction of new headquarters building completed in Daito City, Osaka Prefecture.
2017 ● Exclusive sale of FUNAI-brand televisions andBlu-ray Disc recorders at Yamada Denki began.

1970
1980
1990

Blu-ray Disc
Players

2004-2008● Hideaki Funakoshi becomes President & CEO.
1970 ● FUNAI AMERICA ELECTRIC SERVICE CORP. established in the United States as a sales subsidiary.

Digital Still
Cameras● Tetsuro Funai, the company founder passed away.

1977 ● Training started which formed the basis for establishing the Funai Production System (FPS).

2004-

2018 ● FUNAI COEPORATION, INC.
and P&F USA, INC. are merged(under the name of FUNAI CORPORATION, INC.)

DVD Recorders

2002LCD TVs

1983 ● Tokyo Branch Office opened.

2002-2007

1999-

Projectors

DVD Players

1991 ● FUNAI CORPORATION, INC. established in the United States as a sales subsidiary.

2000Laser Beam Printers

1992 ● HIGHSONIC INDUSTRIAL LTD. (now FUNAI ELECTRIC (H.K.), LTD.) established in Hong Kong.

1997-

1996 ● FUNAI SERVICE CO., LTD. established as a domestic
service subsidiary.

Inkjet Printers1999 ● Listed on the Second Section of the Osaka
Securities Exchange.

1988-2003
1987-1995

2000

CRT TVs

1983-1995

2003 ● FUNAI (THAILAND) CO., LTD. established as a production
subsidiary in Thailand.

TV/VCR Combos

1985-1995

Air Conditioners

Microwave Ovens

1983-2013
VHS Videos

2006 ● FUNAI SERVICE CORPORATION established in the United States
as a service subsidiary.

1971-1995
1980-1982

Cassette
Car Stereos

2007 ● BROADTEC TV R&D CENTER SDN. BHD. (now FUNAI MALAYSIA R&D SDN. BHD.)
established in Malaysia as a research and development center.

CVC VCRs

1969-1981

1968-1979

Home Stereos

2008 ● P&F USA, INC. established in the United States as a sales subsidiary for
Philips-brand products.
2009 ● P&F MEXICANA, S.A. DE C.V. established in Mexico as a sales subsidiary for
Philips-brand products.

1994-2002
1985-2007

Cordless
Telephones● Huang Jiang Plant (Dongguan City, Guangdong Province) started
operation as a consignment production plant in China.

1963-1966
1959-1970
Transistor
Radios15

Auto Bakeries

1986-20092000 ● Listed on the First Section of the Tokyo Stock Exchange andOsaka Securities Exchange.

Faxes

8-Track Car
Stereos

Open
Reel-to-reelTape Recorders

AnnualAnnual Report
Report 20192019 16

Company’s Outline

FUNAI ELECTRIC (H.K.), LTD.

FUNAI SERVICE CORPORATIONFUNAI ELECTRIC R&D (SHENZHEN) CO., LTD.

FUNAI LEXINGTONTECHNOLOGY CORPORATIONFUNAI ELECTRIC CO., LTD.
headquarters
FUNAI SERVICE CO., LTD.
FUNAI GENERAL SERVICE CO., LTD.
GRAPHIC
CO., LTD.

FUNAI (THAILAND) CO., LTD.
FUNAI MALAYSIA R&D SDN. BHD.

TOKYO
BRANCH OFFICECHUGOKU FUNAIELECTRIC CO., LTD.

FUNAI ELECTRIC PHILIPPINES INC.

P&F MEXICANA, S.A. DE C.V.
FUNAI MANUFACTURING, S.A. DE C.V.
FUNAI TRADING CORP.
FUNAI CORPORATION, INC.

FUNAI ELECTRIC CEBU, INC.

Name

FUNAI ELECTRIC CO., LTD.

Established

August 1961

Head office

7-7-1 Nakagaito, Daito, Osaka 574-0013

Executives
Members of the Board Hideaki Funakoshi

TEL +81-72-870-4303 FAX +81-72-871-1112

Representative
Director andPresident and CEO

Offices and subsidiaries

Offices

Production subsidiaries

Development subsidiaries

Director and Officer

FUNAI ELECTRIC CO., LTD. headquarters

CHUGOKU FUNAI ELECTRIC CO., LTD.

FUNAI ELECTRIC R&D (SHENZHEN) CO., LTD.

Motoyoshi Adachi

Director and Officer

TOKYO BRANCH OFFICEFUNAI MANUFACTURING, S.A. DE C.V.

FUNAI MALAYSIA R&D SDN. BHD.

105.5 bn yen (as of Mar. 31, 2019)

Makoto Ueshima

Director and Officer

FUNAI ELECTRIC (H.K.), LTD.

2,383 (consolidated, as of Mar. 31, 2019)

Mitsuo Yonemoto

Outside Director

FUNAI LEXINGTON TECHNOLOGYCORPORATION

Atsushi Shirakami

Outside Director

FUNAI CORPORATION, INC.

FUNAI ELECTRIC CEBU, INC.

Outside Director(Audit and Supervisory
Committee Members)

Fumiaki Kidera

Director

FUNAI TRADING CORP.

FUNAI ELECTRIC PHILIPPINES INC.

Hiroyuki Yamada

Outside Director

Takahiro Tanaka

Outside Director

P&F MEXICANA, S.A. DE C.V.

Officers

Hisaharu Oura

Officer

URL https://www2.funai.co.jp/en/index.html

Takeshi Ito

Capital31.3 bn yen (as of Mar. 31, 2019)

Net sales
Employees

Business category Electrical equipment
Principal
Display Businessbusinesses
Digital Media Business

LCD TVs
DVD players/recorders
Blu-ray Disc players/
recorders

Printer Solutions
Business

Printers

Development andNew Businesses

Other devices

Sales subsidiaries

FUNAI (THAILAND) CO., LTD.

Other subsidiaries
FUNAI SERVICE CO., LTD.
FUNAI GENERAL SERVICE CO., LTD.
GRAPHIC CO., LTD.
FUNAI SERVICE CORPORATION

Ink cartridges

AnnualAnnual Report
Report 20192019 18

Corporate Governance1) Basic Philosophy on Corporate Governance
The Funai Electric Group’s basic philosophy on corporate governance is to continuously increase corporate value by increasing
the transparency of management to shareholders, consumers, vendors, local communities, employees, and other internal andexternal stakeholders and by responding to changes in the business environment by ensuring management soundness andefficiency and striving for prompt decision-making.
On the basis of this philosophy, the Group has introduced an executive officer system to ensure expeditious decisionmaking and establish a system for prompt business execution. The Group is also strengthening CSR activities. We haveformulated the Funai Group Code of Conduct, which regulates the conduct of all officers and employees of the Funai Group,and the Funai Group Procurement Policy, which is based upon the Code of Conduct, and established the CSR Committee as anorganization to promote corporate social responsibility.

2) Description of the Management Organization in the Fiscal Year under Review
The Group adopts an audit and supervisory committee governance structure, establish the Board of Directors, Audit andSupervisory Committee and Accounting Auditor as corporate governance system. The purpose is to further strengthen the
supervisory function of the Board of Directors and enhance corporate governance by auditing of Directors who are Audit andSupervisory Committee members having voting rights on the Board of Directors. The Group has also introduced an executive
officer system to establish a system for prompt business execution. We have also ensured objectivity and transparency in important
decision-making processes by establishing the Nomination Committee, Compensation Committee, and Internal Investment and
Loan Committee as discretionary advisory bodies to the Board of Directors other than the Audit and Supervisory Committee.
Corporate Governance Organization
Ordinary General Meeting of Shareholders
Nominate/Dismiss/Non-reappointment

Nominate/Dismiss

Nominate/Dismiss
Accounting audit report

Account audit(Optional Committees)
Nomination Committee
Audit and Supervisory Committee
ReportCoordination

Board of Directors
ReportCompensation Committee

Nominate/Dismiss/Direction

Internal Investment and Loan Committee

President and Representative Director

Internal Control Committee

Director Responsible for Business/Executive Director
ReportReportAudit OfficeInternal Audit• Internal Investment and Loan Committee
The Internal Investment and Loan Committee consists of directors and executive officers appointed by the president. It ensures
the transparency and objectiveness of the decision-making process regarding major investment and loan projects by discussing
the details of individual projects from a group-wide perspective.
Internal Investment and Loan Committee consists of the following five members.
Chairman
Hideaki Funakoshi		Representative Director and President & CEO
Committee
Takeshi Ito		
Director and Officer
Committee
Motoyoshi Adachi		Director and Officer
Committee
Makoto Ueshima		
Director and Officer
Committee
Hisaharu Oura		Officer

Command/Order

Respective business divisions/subsidiaries
Coordination

a. Board of Directors
The Funai Electric Group Board of Directors consists of nine members: six directors who are not Audit and Supervisory
Committee members (including two outside director) and three directors who are Audit and Supervisory Committee members(two of whom are outside directors). At the same time as the Group strives for prompt decision-making by inside directors
knowledgeable about the Group’s business matters, participation in Board of Directors decision-making by outside directors
with no special interest in the Group ensures management soundness and transparency. In the Board of Directors, outside
directors account for one-third of the total number of directors. It is a system that can make more objective, fair and fairdecisions. Meetings of the Board of Directors are held, in principle, at least once every three months, and extraordinary
meetings are held as necessary.

19• Compensation Committee
The Compensation Committee consists of directors appointed by the Board of Directors. It ensures the transparency andobjectiveness of the compensation decision process by deciding compensation and other payments for directors who are
not Audit and Supervisory Committee members and executive officers under authority delegated by the Board of Directors.
Compensation and other payments for corporate auditors are determined by consultation among the corporate auditors.
The Compensation Committee consists of the following six members, including three independent outside director.
Chairman
Hideaki Funakoshi		Representative Director and President & CEO
Committee
Takeshi Ito		
Director and Officer
Committee
Makoto Ueshima		
Director and Officer
Committee
Mitsuo Yonemoto		Outside Director
Committee
Hiroyuki Yamada		Outside Director Audit and Supervisory Committee Member
Committee
Takahiro Tanaka		
Outside Director Audit and Supervisory Committee Member

Account Auditor

Coordination

Audit/
Direction

Advisory Bodies• Nomination Committee
The Nomination Committee consists of directors who are not Audit and Supervisory Committee members appointed by
the Board of Directors. As an advisory body to the Board of Directors, it ensures the transparency and objectiveness of thecandidate selection process by recommending candidates for director to the Board of Directors.
The Board of Directors consists of the following five members, including one independent outside director.
Chairman
Hideaki Funakoshi		Representative Director and President & CEO
Committee
Takeshi Ito		
Director and Officer
Committee
Motoyoshi Adachi		Director and Officer
Committee
Makoto Ueshima		
Director and Officer
Committee
Mitsuo Yonemoto		Outside Director

b. Audit and Supervisory Committee
The Audit and Supervisory Committee consists of three directors, including two, who are outside directors. No special interest
exists between these outside directors and the Funai Electric Group. In principle, the Audit and Supervisory Committee meetsonce a month.

c. Accounting auditor
The Company has appointed Deloitte Touche Tohmatsu LLC as independent auditors.

Annual Report 201920

Management Discussion and Analysis
Business Performance in the Fiscal Year ended March 31, 2019
During the fiscal year under review (April 1, 2018 to March 31, 2019), in the
United States, the Group’s mainstay market, the economy is trending firmly,
reflecting an increase in private consumption and capital investment, andimprovement in the employment and income environment. Despite thisoverall tone, the pace of economic growth slowed at one point due to thegovernment shutdown. Going forward, sufficient consideration should begiven to risks stemming from uncertainties related to U.S. government policy,
including trade issues, such as U.S.-China trade friction, and a potential change
in the Federal Reserve Board’s monetary tightening policy.
In Europe, there is a growing risk that rivalry with the EU will reignite,
including turmoil triggered by Brexit negotiations and the budget deficit in
Italy which is set to breach EU rules. In light of this, the outlook for the EU
economy remains murky.
Meanwhile, in Japan, the economy is modestly recovering, owing to
an improvement in employee and incomes, as well as a rebound in private
consumption. On top of this, special demand is anticipated owing to the Tokyo
Olympic and Paralympic Games, which will be held in July 2020. However, there
is a concern that private consumption and investment are brittle due to growing
risk of an economic downturn reflecting uncertainties related to overseas
economic trends and government policies, including trade issue trends andimpact, and the economic outlook for countries in Asia, including China.
Amid this backdrop, the Group worked steadily to achieve its vision—to
become a company that creates products that are the choice of people aroundthe world. The vision was promoted in the FY2018 management policy as ameasure to shed losses. As its basic strategy, the Group tackled (1) market
share expansion in North America, (2) Funai brand penetration in Japan, and (3)new business development.

Net Sales
Consequently, the Group booked net sales of ¥105,549 million (down of 18.9%
year on year). The overall decline reflects negative trends in North America,
the Group’s mainstay sales market. Sales in North America faltered due toongoing inventory adjustments along distribution channels, especially in thefirst quarter of the period under review, and sales of surplus inventory tookprecedence, mainly at large mass merchandisers. In addition, sales decreased
as a result of efforts to select and focus existing businesses. However, sales
did increase at large mass merchandisers in the United States and in Canada
owing to the development of new business partners. This paves the way for
future expansion in market share. In Japan, sales to Yamada Denki Co., Ltd.,
with which the Group has an exclusive distribution agreement, were in linewith plans.

Operating income
In the profit front, the Group posted operating income of ¥682 million(operating loss of ¥10,885 million in the previous fiscal year). Operating
income improved sharply year on year reflecting a decline in component costs,
including those for LCD panels, the Group’s review of its business model andunprofitable product sales, and a certain scale of benefit from a reduction in
manufacturing and selling, general and administrative expenses.

Net Sales(Years ended March 31)(¥ billion)

133.8

130.1
105.5

Profit attributable to owners of the parent
Profit attributable to owners of the parent stood at ¥2,613 million (a net
loss attributable to owners of the parent of ¥24,709 million in the previous
fiscal year). This mainly reflects the posting of income taxes-deferred (profit)
associated with the merger of sales companies in North America.

Sales Composition by Region(Year ended March 31, 2019)

1.3%

32.1%

Net Sales by Geographical Area

66.2%

Japan

2017

2018

2019

Operating Income (Loss)(¥ million)

682(6,775)(10,885)
2017

2018

2019

Net Income (Loss) Attributable to
Owners of the Parent(¥ million)

2,613

Following suit from the previous fiscal year, sales trended mainly in line with plansowing primarily to the market launch of new FUNAI brand products, including
high-end organic electroluminescent display (OELD) TVs, through Yamada Denki
from July 14, 2018. Consequently, the Company posted net sales of ¥36,624
million (up 1.2% year on year) and segment income (operating income) of ¥637
million (segment loss of ¥5,634 million in the previous fiscal year).

Americas
In the fiscal year under review, the Company started off the year hindered bysurplus inventory issues which inundated the entire market in North America,
mirroring trends seen in the previous fiscal year. Sales of new LCD TV sales
faltered due to priority placed on the disposal of surplus inventories by large
mass merchandisers. In addition, sales also dropped due to a decrease indemand for DVD and BD related equipment reflecting impact of online video
distribution services. Consequently, net sales amounted to ¥68,083 million(down 26.8% year on year) and segment income (operating income) was ¥160
million (segment loss of ¥965 million in the previous fiscal year).

Japan
EuropeAmericas*
Asia*Including sales of Central and South America

Sales by Region(¥ billion)

0.1
92.9

2018

36.2

69.9

2019

130.1

0.9

0.4

33.9

105.5

1.3
Americas

Europe

Japan

Asia

Sales Composition by Products

Asia(Year ended March 31, 2019)

3.1%

Sales of LCD TV terminated after a review of unprofitable products andcomponent sales increased. Consequently, net sales amounted to ¥819 million(down 4.0% year on year). Segment income (operating income) was ¥709
million (segment loss of ¥3,948 million in the previous fiscal year).

Europe

4.9%

92.0%

Sales of ink-cartridges for ink-jet printers declined owing to a review of hardware(ink-jet printer) sales. Consequently, net sales amounted to ¥22 million (down
82.5% year on year) and segment income (operating income) was ¥64 million(segment loss of ¥83 million in the previous fiscal year).

(6,745)

0.4%

Audiovisual
Printing Solutions
OthersNet Sales by Product Group
Audiovisual Equipment(24,709)
2017

2018

2019

In the audiovisual equipment segment, sales decreased in comparison with theprevious year, due to a reduction in LCD-TV sales due to impact from inventory
adjustments along distribution channels in North America, and particularly
due to a fall in sales of DVD and BD related products due to lower demandfor DVD players and the emergence of low-priced products sold by Chinese
manufacturers, and impact from a withdrawal from consumer electronics by an
OEM partner in Japan. As a result, net sales amounted to ¥97,059 million (down
20.8% year on year).

Sales by Products(¥ billion)

5.1
2017

115.2

133.8
3.3

2018

130.1

122.6

4.2

3.3
2019

97.1

13.5

105.5
5.1

Audiovisual
Printing Solutions
Others21

Annual Report 201922

Management Discussion and Analysis
Information Equipment
In the information equipment segment, net sales amounted to ¥3,306 million(down 0.8% year on year). This reflects a sales decrease of roughly ¥1.7 billion,
due to the curtailment of unprofitable ink jet printers in North America, anda shift to FY2019 of the launch of new product sales - CISS (large-capacity
cartridge ink-jet printers) to China and multi-functional printers. Meanwhile,
sales rose for commercial-use ink cartridges owing to continued marketing of
ink cartridges for ink jet printers and an expansion in sales of label and nail art
printers.

Total Assets(Years ended March 31)(¥ billion)

108.6
80.2

83.2

Cash Flows
Cash and cash equivalents on a consolidated basis as of March 31, 2019 increased by ¥2,893 million from the end of theprevious fiscal year to ¥33,544 million. The change is mainly attributable to profit before income taxes, a decrease in tradereceivables and an increase in trade payables.
Cash flows during the fiscal year under review and factors affecting cash flows are as follows.

Cash Flows from Operating Activities
Net cash used in operating activities was ¥3,507 million in the fiscal year under review. (Net cash used in operating activitieswas ¥5,369 million in the previous fiscal year.) The primary reason of this is mainly attributable to profit before income taxes, adecrease in trade receivables and an increase of trade payables, while a decrease in other payables.

Others Products
In other equipment segment, automotive backlight unit sales expanded, LCD
module sales grew, and sales increased for medical and healthcare-related
products, such as CT for dental clinics and bed modules for the nursing carefield. As a result, net sales amounted to ¥5,183 million (up 22.7% year on year).

2017

2018

2019

29.5

29.2

Total Liabilities(¥ billion)

Financial Position

32.0

Current Assets
Total current assets as of March 31, 2019 increased by ¥2,647 million from theend of the previous fiscal year to ¥69,958 million.
The change is mainly attributable to increases of ¥3,026 million cash andcash equivalents due to an increase of collections of trade receivables and ¥1,217
million inventory of raw materials and supplies due to an increase of purchaseof raw materials such as LCD panels and to decreases of ¥2,229 million tradereceivables due to a decrease of sales and collections of trade receivables.

Net cash used in investing activities was ¥775 million in the fiscal year under review. (Net cash provided by investing activitieswas ¥2,174 million in the previous fiscal year.) The primary reason of this is mainly attributable to a decrease in time deposits
and purchases of property, plant and equipment, while an increase in time deposits and proceeds from sales of property, plantand equipment.

Cash Flows from Financing Activities
Net cash used in financing activities was ¥239 million in the fiscal year under review. (Net cash used in financing activities was¥584 million in the previous fiscal year.) The primary reason of this is mainly attributable to repayments of lease obligations.

Business and Other Risks
Risks that may have a significant impact on the Group’s financial situation and operating results are outlined below.

(1) The Funai Group’s Management Policy
2017

Fixed asset
Fixed asset as of March 31, 2019 increased by ¥380 million from the end of theprevious fiscal year to ¥13,335 million.
The increase is due to an increase of deferred tax assets.

Cash Flows from Investing Activities

2018

2019

Total Equity(¥ billion)

The Group has adopted a policy of providing high-quality, low-cost products to consumers based upon optimized production andsales systems on a global scale. We manufacture and sell our principal products, such as flat-screen TVs, DVD and printers-related
products in addition to other products (In-vehicle backlight, CT for dental clinics, etc.). Price competition in these product areas isintense. Additionally, the life cycle of digital products is short and the competition to develop new technologies and functions is
also growing more intense. Accordingly, these factors may affect the Group’s financial condition and business results.

76.7

Current Liabilities
Total current liabilities as of March 31, 2019 increased by ¥1,279 million from theend of the previous fiscal year to ¥28,121 million.
The change is mainly attributable to an increase of ¥3,810 million in trade
payables and a decrease of ¥2,084 million in other payables. The main reason
for the increase in trade payables was an increase of purchase of raw materials
and the decrease in other payables was a license fee.

50.7

Long-Term Liabilities
Long-term liabilities as of March 31, 2019 decreased by ¥1,591 million from theend of the previous fiscal year to ¥1,114 million.
The change is mainly attributable to a decrease of ¥997 million inretirement allowance for directors and executive officers.

Total Equity
Total equity as of March 31, 2019 increased by ¥3,340 million from the end of
the previous fiscal year to ¥54,057 million.
The change is mainly attributable to an increase of ¥696 million in foreign
currency translation adjustments and an increase of ¥2,613 million in retained
earnings.

2017

2019

Shareholders’ Equity Ratio
(%)

70.4

ii) New technologies
In the consumer electronics business, market needs are becoming more diverse; the Group needs to improve the quality,
volume, and speed of its new product development.
To address these issues, the Group will improve its technical capabilities, focusing mainly on new business fields, throughpartnerships with other companies and universities, and personnel development. The Company also may consider mergers
and acquisitions depending on the situation. However, a diversification of market needs or technological innovation beyond our
expectations may affect the Group’s financial condition and business results.

64.9
63.2
2017

23

2018

54.0

i) Product cost and market prices
The Group’s primary target is customers of mass merchandisers such as Walmart, and therefore we must deliver low prices.
Consequently, the Group is working to reduce costs through measures such as establishing production systems in optimal
locations, pursuing further application of the Funai Production System (FPS), the unique productivity improvement systemdeveloped by the Company, and utilizing internal production of parts and centralized purchasing. However, the consumer
electronics business is intensely competitive and when parts and raw materials prices rise, cost pressures may affect theGroup’s financial condition and business results.

2018

2019

Annual Report 201924

Management Discussion and Analysisiii) Defects relating to products and services
The Group’s departments responsible for quality management and technologies play the primary role in the effort to maintainand improve quality. In addition, the Group has established service companies in Japan and overseas. However, if there aretroubles with repair or replacement of our products, the impact of the warranty costs and/or the decrease of social credibility
may have negative impacts for the Group’s financial condition and business results.
iv) Intellectual property rights
So-called “patent trolls” have been very active in recent years. They have no products of their own, but attempt to generate
income from patent royalties by filing lawsuits using intellectual property rights acquired from third parties. This is a worrisome
trend for all companies in manufacturing and sales industries. As a result of these activities, we may need to make highcompensatory payments that may affect the Group’s financial condition and business results.
v) Corporate acquisitions and Business alliances
The Group may pursue corporate acquisitions and business alliances to improve its profit and efficiently boost sales. However forvarious reasons, in the event that the synergies fall short of initial expectations, we fail to reach agreement on an acquisition, oraffiliate relationships cannot be maintained, this may affect the Group’s financial position, business results and growth forecasts.

(2) Impact of overseas market trendsi) Dependence on the Americas (the United States, Mexico and other) market
A high proportion of the Group’s net sales comes from overseas markets. In particular, the Americas market accounted for
66.2% of net sales in this fiscal year, and Walmart group alone accounted for 50.8% of these net sales.
If economies in the Americas and Walmart group suddenly enter recession, this may affect the Group’s financial condition
and business results.
ii) Foreign currency risk
The Group determines production sites for its principal products upon consideration of optimal production location and sales
systems.
LCD TVs are produced in Thailand and Mexico and printers-related products, Ink cartridges and DVD/BD-related products
are produced in the Philippines.
The Group purchases products from overseas production subsidiaries and sells them to overseas sales subsidiaries mainly
in North America. Domestic sales are sells directly to OEM supply partners.
Although the majority of the Group’s sales are conducted in U.S. dollars, some transactions are conducted in Mexican
pesos and yen. In addition, the majority of the Group’s purchasing transactions are conducted in U.S. dollars. Although sales andpurchase transactions conducted in U.S. dollars are not affected by currency fluctuations, expenses denominated in U.S. dollars
relating to sales transactions conducted in Mexican pesos or yen are affected by currency fluctuations.
Since foreign currency-denominated assets and liabilities are converted to yen using the exchange rates on the settlement
date, significant currency fluctuations may affect the Groups financial condition and business results.

(3) Other risksi) Legal regulations
In each country, the Group is subject to a variety of local legal regulations, concerning commercial transactions, importing andexporting, intellectual property rights, product liability, environmental protection, consumer protection, financial transactions,and corporate taxation. Changes to these legal regulations, or the ways in which they are interpreted by the authorities, could
affect the Group’s financial position and business performance.
ii) Litigation
There are litigation risks relating to the Group’s business. A major lawsuit or other legal action could affect the Group’s financial
position and business performance.

25iii) Information control
The Group has internal systems to prevent information leaks and protect itself against viruses. However, factors such as
operational mistakes or new viruses may preclude the complete avoidance of information leaks and system shutdowns
completely. Such events could affect the Group’s financial position and business results.
iv) Retirement benefit obligations
The Group and its consolidated domestic subsidiaries have defined benefit corporate pension systems, which are based on
actuarial assumptions on the pension assets, such as rates of return and discount rates. The Group’s financial position andbusiness results could be affected if there are any changes in these assumptions, if the pension assets decrease due to thedeterioration in the investment environment, or if changes in the pension system cause future retirement benefit expenses
to increase.
v) Financing
If the Group’s financing is limited due to deteriorating business performance, the cost of finance could increase. This could
affect the Group’s financial position and business performance.
vi) Important information about going concern assumption
Given the Group recorded a significant operating loss, ordinary loss, loss attributable to owners of the parent and negative
operating cash flow in the previous consolidated fiscal year, at this stage there are events and circumstances that castsignificant doubt on the Company’s viability as a going concern.
There are no significant concerns about fundraising as the current balance of cash and deposits will sufficiently satisfy
working capital needs for the time being.
In addition, the Group formulated a medium-term management policy, for which FY2018 is the first year of implementation.
In line with the basic policy, the Group posted operating cash flow of ¥3,507 million. Moreover, the Company aims to gradually
implement measures in line with the following policies for each of its businesses going forward. In light of this, the Group
believes that a resolution of the matter can be achieved.
(a) Display business- Further expand market share at new mass retailers and enhance total competitiveness such as quality and cost.
- Reduce returns and discards by strengthening efforts to the North American Christmas sales battle and improving internal andexternal service business processes.
- The Japanese market sells TVs with built-in advanced BS tuners, and gains market share in the Mexican market by
restructuring business models.
(b) Digital Media business- Develop a niche strategy with BD players that other companies withdrew in the North American market and capture market share.
- Strengthen cooperation with OEMs in the Japanese market and strengthen lineup of FUNAI brand products.
(c) Printing solution business- Improve profitability by expanding sales of OEM and own brand of nail art printer.
- Expand sales of label printers and high-capacity inkjet printers.
- Expand sales by bringing to market derivative products that make use of microfluidics (micro fluid control technology).
(d) New business- Expanded sales channels for automotive backlights (existing edge type and new direct type).
- Sales expansion of medical and healthcare related module products in addition to dental CT and securing of revenue base.
- Strengthen alliance strategy through EV business and start mass production and sales of new products for commercial display.

Annual Report 201926

Five-Year Summary

Consolidated Balance Sheet
Millions of
U.S. dollars(Notes 1 and 2)

Millions of Japanese yen (Note 1)
Years ended March 31

2015

2016

2017

2018

2019

2019

Net Sales

216,553

170,041

133,838

130,130

105,549$950.89(659)(10,539)(6,775)(10,885)

682

$6.14

31

(33,839)(6,745)(24,709)

2,613$23.54

Total Equity

123,218

84,43976,65650,71754,057$487.00

Total Assets

188,902

154,191

108,685

80,26583,293$750.39

Shareholders’ Equity

122,014

83,32876,50750,69954,025$486.71

Net Cash Provided by (Used in)Operating Activities

16,897(7,549)(13,329)(5,369)3,507$31.60Operating Income (Loss)Net Income (Loss)

Net Cash (Used in) Provided by
Investing Activities
Free Cash Flow*(17,360)

11,805

13,266(2,174)(775)($6.98)

(463)

4,256

(63)

(7,543)2,732$24.61FUNAI ELECTRIC CO., LTD. and Consolidated Subsidiaries
March 31, 2019
Thousands of U.S.
dollars (Note 1)

Millions of Japanese yen

2019

2018

2019

¥ 33,544¥ 30,650$ 302,201

1,872

1,739

16,870		 Trade (Note 13)

7,724

9,953

69,589		Other

1,490

1,583

13,429

		 Allowance for doubtful accounts(718)(1,021)(6,471)25,25823,609227,552

786

795

7,082

69,95867,310630,254ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 13)
Time deposits (Note 13)
Receivables:

Inventories (Note 3)
Prepaid expenses and other current assets
		 Total current assets
PROPERTY, PLANT AND EQUIPMENT:

Capital Investment

3,275

2,462

3,070

2,156

1,424

$12.83

Land (Note 4)

2,955

3,479

26,622

Depreciation Expense

5,855

4,498

4,098

2,258

974

$8.78

Buildings and structures (Note 4)

13,38913,012

120,626

Machinery, equipment and other (Note 4)

21,112

21,992

190,202

Return on Assets (%)

0.02(19.73)(5.13)

26.15

3.20

Lease assets (Notes 4 and 11)

616

595

5,552

Return on Equity (%)

0.03(32.96)(8.44)(38.85)

4.99

Construction in progress

57

17

521

Debt/Equity Ratio (%)

9.11

14.54

0.99

0.63

0.96

38,13139,097

343,526(29,972)(30,903)(270,021)

8,159

8,193

73,504

279

291

2,513

994

994

8,961

Long-term loans

29

196

265

Long-term prepaid expenses (Note 4)

474

502

4,278

Assets for retirement benefits (Note 7)

1,881

1,840

16,952

Deferred tax assets (Note 12)

1,201

689

10,821Other assets (Note 4)

383

484

3,458

Allowance for doubtful accounts

(68)

(239)

(618)

5,176

4,761

46,634¥83,293¥80,265$750,393

Japanese yen

		 Total property, plant and equipment
U.S. dollars

Accumulated depreciation
Net property, plant and equipment

2015

2016

2017

2018

2019

2019

3,576.14

2,442.28

2,242.38

1,485.96

1,583.46$14.26Net Income (Loss) per Share

0.92(991.81)(197.70)(724.21)

76.59

$0.69

INVESTMENTS AND OTHER ASSETS:

Cash Dividends per Share

35

30

10

0

0

$0.00

Investment securities (Notes 5 and 13)

Shareholders’ Equity per Share

Notes: 1.	From the current fiscal year, the Company rounded down Japanese yen figures less than a million to the nearest million yen and U.S.
dollar figures less than a thousand to the nearest thousand dollars, except for per share data.
2. The exchange rate of ¥111=U.S.$1.00 (the approximate rate of exchange at March 31, 2019) is used for the above calculations.
*Net cash provided by operating activities plus net cash provided by investment activities.

	Investments in and advances to unconsolidated subsidiaries andassociated companies

		 Total investments and other assets
TOTAL
See notes to consolidated financial statements.

27

Annual Report 201928

Consolidated Balance Sheet

Consolidated Statement of Operations
FUNAI ELECTRIC CO., LTD. and Consolidated Subsidiaries
Year Ended March 31, 2019
Thousands of U.S.
dollars (Note 1)

Millions of Japanese yen

LIABILITIES AND EQUITY

2018

2019

2019
NET SALESCURRENT LIABILITIES:Current portion of long-term debt (Note 6)

¥217

¥236

$1,958COST OF SALES (Note 10)
Gross profit

Payables:Thousands of U.S.
dollars (Note 1)

Millions of Japanese yen

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 10)

		 Trade (Note 13)

15,61811,808140,708

		 Other (Note 13)

8,287

10,372

74,663

Income taxes payable

126

664

1,136

OTHER INCOME (EXPENSES):

Operating income (loss)

2019

2018

2019

¥105,549¥130,130$950,897

91,849121,529

827,468

13,7008,600

123,428

13,01819,485

117,282682(10,885)

6,146

Other current liabilities

3,872

3,761

34,883

Interest and dividend income

402

248

3,622

Total current liabilities

28,121

26,842

253,350

Interest expense

(10)

(67)

(91)

Foreign exchange gain (loss) – net

539(1,107)

4,859

Long-term debt (Note 6)

102

282

920

Income from rental of property, plant and equipment

66

62

595

Liability for retirement benefits (Note 7)

61

1,029

552

Loss on sales or disposal of property, plant and equipment – net

(0)

(9)

(3)

Long-term payables – other

333

744

3,003

(320)

(225)

(2,883)

Deferred tax liabilities (Note 12)

617

650

5,564

1,114

2,705

10,040

LONG-TERM LIABILITIES:

Total long-term liabilities
COMMITMENTS AND CONTINGENT LIABILITIES(Note 11)
EQUITY (Notes 8, 9 and 16):

Compensation expenses
Gain on sales of investments in unconsolidated subsidiary and		associated company

29

Gain on liquidation of subsidiary

163

Loss on impairment of long-lived assets (Note 4)(177)

Compensation for damages

(51)

1,472
(12,586)(1,598)(466)

Common stock:

Gain on reversal of stock acquisition rights

4

146

36

Authorized, 80,000,000 shares; issued,

Other – net

84

60

759

Other income (expenses) – net

699(13,450)

6,301

1,381

(24,335)

12,447

Current

(310)

257

(2,795)

Deferred

(921)

116

(8,299)

		 Total income taxes(1,231)373(11,095)

NET INCOME (LOSS)

2,613(24,709)

23,542NET INCOME (LOSS) ATTRIBUTABLE TO OWNERS OF THE PARENT¥2,613¥ (24,709)$23,542

		 36,130,796 shares in 2019 and 2018
Capital surplus
Stock acquisition rights
Retained earnings

31,30731,307

282,050

33,60333,603

302,731

31

17

282

24,583

21,970221,475

Treasury stock – at cost		 2,011,830 shares in 2019 and 2,011,829 shares in 2018(24,341)(24,341)(219,292)

Accumulated other comprehensive income:		 Unrealized gain on available-for-sale securities
		 Foreign currency translation adjustments
		 Defined retirement benefit plans
Total

1

13

10

(11,609)(12,305)(104,589)

480

451

4,333

(11,127)(11,840)(100,245)

INCOME (LOSS) BEFORE INCOME TAXESINCOME TAXES (Note 12):

Japanese yen

PER SHARE OF COMMON STOCK (Notes 2.v and 15):
Basic net income (loss)

Total equity

54,05750,717

487,001

TOTAL¥83,293¥80,265$750,393

U.S. dollars¥76.59¥ (724.21)$0.69

See notes to consolidated financial statements.

See notes to consolidated financial statements.

29

Annual Report 201930

Consolidated Statement of Comprehensive Income

Consolidated Statement of Changes in Equity

FUNAI ELECTRIC CO., LTD. and Consolidated Subsidiaries
Year Ended March 31, 2019FUNAI ELECTRIC CO., LTD. and Consolidated Subsidiaries
Year Ended March 31, 2019
Millions of Japanese yen

2018

2019

Thousands of U.S.
dollars (Note 1)

Thousands

2019

Number ofshares ofcommonstock
outstanding¥2,613¥ (24,709)$ 23,542

Unrealized (loss) gain on available-for-sale securities

(12)

1

(110)

Foreign currency translation adjustments

859(1,099)7,745

Defined retirement benefit plans

29

340

263

Total other comprehensive income (loss)

876

(757)

7,898

¥3,490¥ (25,467)$ 31,441

NET INCOME (LOSS)OTHER COMPREHENSIVE INCOME (LOSS) (Note 14):COMPREHENSIVE INCOME (LOSS)

Millions of Japanese yen
Accumulated
other comprehensive income

BALANCE, APRIL 1, 2017

Commonstock

34,119¥31,307

Capitalsurplus¥33,603

Stockacquisitionrights¥149

Net loss attributable to		 owners of the parent

Owners of the parent¥ (25,467)$ 31,441

Definedretirement
benefit plans¥11¥(11,206)

¥111

Total
equity¥76,656(24,709)
(341)

(0)

Net change in the year

(0)

(131)
34,11931,30733,603

17

21,970(24,341)

1(1,099)

340

(889)

13

(12,305)451

50,717

2,613
(0)

2,613
(0)

Net change in the year
BALANCE, MARCH 31, 2019

Foreigncurrencytranslation
adjustments¥(24,341)(0)

Purchase of treasury stock¥ 3,490

Unrealized
gain onavailable-forsale
securities(341)

Purchase of treasury stock

Net income attributable to		 owners of the parent

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:¥47,020

Treasurystock(24,709)

Cash dividends, ¥10.00
		per share

BALANCE, MARCH 31, 2018

Retainedearnings(0)

13
34,119¥31,307¥33,603¥ 31¥24,583¥ (24,341)

(12)

696

29

726

¥1

¥ (11,609)¥ 480¥54,057

See notes to consolidated financial statements.
Thousands of U.S. dollars (Note 1)
Accumulated othercomprehensive income

BALANCE, MARCH 31, 2018

Commonstock

Capitalsurplus$ 282,050$ 302,731

Stockacquisitionrights$159

Net income attributable to owners
		 of the parent

Unrealized
gain onavailable-forsale
securities

Treasurystock$197,932 $ (219,292)

Foreigncurrencytranslation
adjustments

Definedretirement
benefit plans$121 $ (110,862)$4,06923,542

Purchase of treasury stock
123$282,050$302,731

$282

Total
equity$456,910
23,542(0)

Net change in the year
BALANCE, MARCH 31, 2019

Retainedearnings

(0)
(110)

$221,475 $ (219,292)

6,272

263

6,548

$10 $ (104,589)$4,333$487,001

See notes to consolidated financial statements.

31

Annual Report 201932

Consolidated Statement of Cash Flows

Notes to Consolidated Financial Statements

FUNAI ELECTRIC CO., LTD. and Consolidated Subsidiaries
Year Ended March 31, 2019FUNAI ELECTRIC CO., LTD. and Consolidated Subsidiaries
Year Ended March 31, 2019
Thousands of U.S.
dollars (Note 1)

Millions of Japanese yen

OPERATING ACTIVITIES:
Income (loss) before income taxes
Adjustments for:		 Income taxes – paid
		 Income taxes – refund		 Depreciation and amortization
		 Loss on sales or disposal of property, plant and equipment
		 Loss on impairment of long-lived assets
		 Gain on sales of investment securities in unconsolidated
			 subsidiaries and associated companies
Changes in assets and liabilities:
		 Decrease in trade receivables
		 (Increase) decrease in inventories
		 Increase (decrease) in trade payables
		 (Decrease) increase in other payables
		 (Decrease) increase in net defined benefit liability
		 Decrease in provision for directors' retirement benefits
		 (Decrease) increase in allowance for doubtful accounts
		 Other – net
Total adjustments
Net cash provided by (used in) operating activities
INVESTING ACTIVITIES:Payments for time deposits
Proceeds from time deposits
Proceeds from sales of property, plant and equipment
Purchases of property, plant and equipment
Purchases of intangible assets
Proceeds from sales of investment in unconsolidated
		 subsidiaries and associated companies
Purchases of investment securities
Payments for loans receivable
Proceeds from collection of loans receivable
Other – net
Net cash used in investing activities
FINANCING ACTIVITIES:
Repayments of lease obligations
Purchase of treasury stock
Dividends paid
Net cash used in financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON
CASH AND CASH EQUIVALENTS
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR
See notes to consolidated financial statements.

33

2019

2018

2019

¥

1,381

¥ (24,335)$ 12,447

(381)
235
974
0
177

(320)
411
2,258
9
12,586(3,436)
2,124
8,781
3
1,598

(29)
2,419
(685)
3,589
(2,291)
(0)
(997)
(641)
(273)
2,126
3,507

5,386
1,421
(6,214)
3,368
18
(21)
212
(123)
18,966(5,369)21,798(6,178)32,340(20,644)(1)(8,989)(5,780)(2,462)
19,15431,601(1,025)942
606(1,360)(13)(1,364)737
167(2,100)(299)(9,241)
8,493
5,464(12,261)
(126)

336
(2)
19
59
(775)

(157)
(0)
568
(61)
(2,174)

(23)
173
535
(6,985)(2,158)
(0)

(239)

(243)
(0)
(341)
(584)

400

(192)

3,610

2,893
30,650¥33,544(8,320)38,971¥30,650

26,069276,132$302,201

(239)
(0)

(2,158)

1. BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in theJapanese Financial Instruments and Exchange Act and its related accounting regulations and in accordance with accounting
principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to the application anddisclosure requirements of International Financial Reporting Standards (“IFRS”).
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to theconsolidated financial statements issued domestically in order to present them in a form that is more familiar to readers outside
Japan. In addition, certain reclassifications have been made in the 2018 consolidated financial statements to conform to theclassifications used in 2019.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which Funai Electric Co.,
Ltd. (the “Company”) is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts areincluded solely for the convenience of readers outside Japan and have been made at the rate of ¥111 to $1, the approximate
rate of exchange at March 31, 2019. Such translations should not be construed as representations that the Japanese yenamounts could be converted into U.S. dollars at that or any other rate.
Additionally, the Company rounded down Japanese yen figures to the nearest million and U.S. dollar figures to the nearest
thousand, except for per share data.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation — The consolidated financial statements as of March 31, 2019, include the accounts of the Company and its
18 (20 in 2018) significant subsidiaries (collectively, the “Group”).
		
Under the control and influence concepts, those companies over whose operations the Company, directly or indirectly,
is able to exercise control are fully consolidated and those companies over which the Group has the ability to exercise
significant influence are accounted for using the equity method.
		
There are no unconsolidated subsidiaries which are accounted for using the equity method as of March 31, 2019and 2018. Investments in the remaining unconsolidated subsidiaries and associated companies are stated at cost. If theequity method of accounting had been applied to the investments in these companies, the effect on the accompanying
consolidated financial statements would not be material.
		All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized
profit included in assets resulting from transactions within the Group is also eliminated.
b. Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements —Under Accounting Standards Board of Japan (“ASBJ”) Practical Issues Task Force (“PITF”) No. 18, “Practical Solution on
Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements,” the accounting
policies and procedures applied to a parent company and its subsidiaries for similar transactions and events under similar
circumstances should, in principle, be unified for the preparation of the consolidated financial statements. However, financial
statements prepared by foreign subsidiaries in accordance with either IFRS or the generally accepted accounting principles
in the United States of America (Financial Accounting Standards Board Accounting Standards Codification or “FASBASC”) tentatively may be used for the consolidation process, except for the following items that should be adjusted in the
consolidation process, so that net income is accounted for in accordance with Japanese GAAP, unless they are not material:(a) amortization of goodwill; (b) scheduled amortization of actuarial gain or loss of pensions that has been recorded in theequity through other comprehensive income; (c) expensing capitalized development costs of research and development(R&D); and (d) cancellation of the fair value model accounting for property, plant, and equipment and investment properties
and incorporation of the cost model accounting.
c. Unification of Accounting Policies Applied to Foreign Associated Companies for the Equity Method — ASBJ
Statement No. 16, “Accounting Standard for Equity Method of Accounting for Investments,” requires adjustments to bemade to conform the associate’s accounting policies for similar transactions and events under similar circumstances tothose of the parent company when the associate’s financial statements are used in applying the equity method, unless it isimpracticable to determine such adjustments. In addition, financial statements prepared by foreign associated companies inaccordance with either IFRS or generally accepted accounting principles in the United States of America tentatively may be
used in applying the equity method if the following items are adjusted, so that net income is accounted for in accordancewith Japanese GAAP, unless they are not material: (a) amortization of goodwill; (b) scheduled amortization of actuarial
gain or loss of pensions that has been recorded in equity through other comprehensive income; (c) expensing capitalized

Annual Report 201934

development costs of R&D; and (d) cancellation of the fair value model accounting for property, plant, and equipment andinvestment properties and incorporation of the cost model of accounting.
d. Business Combinations — Business combinations are accounted for using the purchase method. Acquisition related
costs, such as advisory fees or professional fees, are accounted for as expenses in the periods in which the costs are
incurred. If the initial accounting for a business combination is incomplete by the end of the reporting period in which
the business combination occurs, an acquirer shall report in its financial statements provisional amounts for the items
for which the accounting is incomplete. During the measurement period, which shall not exceed one year from theacquisition, the acquirer shall retrospectively adjust the provisional amounts recognized at the acquisition date to reflect
new information obtained about facts and circumstances that existed as of the acquisition date and that would haveaffected the measurement of the amounts recognized as of that date. Such adjustments shall be recognized as if theaccounting for the business combination had been completed at the acquisition date. A parent’s ownership interest ina subsidiary might change if the parent purchases or sells ownership interests in its subsidiary. The carrying amount of
noncontrolling interest is adjusted to reflect the change in the parent’s ownership interest in its subsidiary while the parent
retains its controlling interest in its subsidiary. Any difference between the fair value of the consideration received or paid
and the amount by which the noncontrolling interest is adjusted is accounted for as capital surplus as long as the parent
retains control over its subsidiary.
e. Cash Equivalents — Cash equivalents are short-term investments that are readily convertible into cash and exposed toinsignificant risk of changes in value.
		Cash equivalents include time deposits, certificates of deposit, commercial paper, and bond funds, all of which matureor become due within three months of the date of acquisition.
f.

Allowance for Doubtful Accounts — The allowance for doubtful accounts is stated in amounts considered to beappropriate based on the companies’ past credit loss experience and an evaluation of potential losses in the receivables
outstanding.

g. Inventories — Inventories of the Company and its consolidated domestic subsidiaries are mainly stated at the lower ofcost, determined using the average method for merchandise, finished products and work in process and using the first-in,
first-out method for raw materials, or net selling value.
		Inventories of consolidated foreign subsidiaries are mainly stated at the lower of cost, determined using the first-in,
first-out method, or net selling value.
h. Investment Securities — Investment securities are classified and accounted for depending on management’s intent. All
investment securities are classified as available-for-sale securities. Marketable available-for-sale securities are reported at fairvalue, with unrealized gains and losses, net of applicable taxes, reported as a separate component of equity.
		
Nonmarketable available-for-sale securities are stated at cost determined by the moving-average method. For otherthan-temporary declines in fair value, investment securities are reduced to net realizable value by a charge to income.
Property, Plant and Equipment — Property, plant and equipment are stated at cost. Depreciation of property, plant, andequipment of the Company and its consolidated domestic subsidiaries is computed substantially using the declining-balancemethod, while the straight-line method is applied to buildings acquired after April 1, 1998, and building improvements andstructures acquired after April 1, 2016 at rates based on the estimated useful lives of the assets. Depreciation of property,
plant, and equipment of consolidated foreign subsidiaries is principally computed using the straight-line method at rates
based on the estimated useful lives of the assets. The range of useful lives is principally from three to 50 years for buildings
and structures and from one to 20 years for machinery, equipment, and other.
		
Lease assets are depreciated using the straight-line method over the respective lease periods.

l.

Long-Lived Assets — The Group reviews its long-lived assets for impairment whenever events or changes in circumstanceindicate the carrying amount of an asset or asset group may not be recoverable. An impairment loss is recognized if thecarrying amount of an asset or asset group exceeds the sum of the undiscounted future cash flows expected to result fromthe continued use and eventual disposition of the asset or asset group. The impairment loss would be measured as theamount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the sum of the
discounted cash flows from the continued use and eventual disposition of the asset, or the net selling price at disposition.

m. Retirement and Pension Plans — The Company and certain consolidated subsidiaries have noncontributory funded defined
benefit pension plans and unfunded retirement benefit plans for employees. Certain consolidated foreign subsidiaries also
have defined contribution pension plans.
		
The Group accounts for the liability for retirement benefits based on the projected benefit obligations and plan assets
at the consolidated balance sheet date. The projected benefit obligations are attributed to periods on a benefit formula basis.
Actuarial gains and losses and past service costs that are yet to be recognized in profit or loss are recognized within equity(accumulated other comprehensive income), after adjusting for tax effects and are recognized in profit or loss. Actuarial
gains and losses are amortized using the straight-line method over a period within the average remaining years of serviceof the employees (10 years) starting from the following period. Past service cost is amortized using the straight-line method
over a period within the average remaining years of service of the employees (10 years).
		Retirement allowances for Directors and Executive Officers are recorded as a liability at the amount that would be
required if all Directors and Executive Officers retired at each consolidated balance sheet date.
n. Asset Retirement Obligations — An asset retirement obligation is recorded for a legal obligation imposed either by law orcontract that results from the acquisition, construction, development, and normal operation of a tangible fixed asset and isassociated with the retirement of such tangible fixed asset.
		
The asset retirement obligation is recognized as the sum of the discounted cash flows required for the future asset
retirement and is recorded in the period in which the obligation is incurred if a reasonable estimate can be made. If areasonable estimate of the asset retirement obligation cannot be made in the period the asset retirement obligation isincurred, the liability should be recognized when a reasonable estimate of asset retirement obligation can be made. Upon
initial recognition of a liability for an asset retirement obligation, an asset retirement cost is capitalized by increasing thecarrying amount of the related fixed asset by the amount of the liability. The asset retirement cost is subsequently allocatedto expense through depreciation over the remaining useful life of the asset. Over time, the liability is accreted to its present
value each period. Any subsequent revisions to the timing or the amount of the original estimate of undiscounted cash
flows are reflected as an adjustment to the carrying amount of the liability and the capitalized amount of the related asset
retirement cost.
o. Stock Options — The Company measures the cost of stock options granted to Directors, Executive Officers andemployees of the Company, Executive Officers and employees of the subsidiaries based on the fair value at the date of
grant and recognizes the compensation expense over the vesting period as consideration for receiving goods or services.
In the consolidated balance sheet, stock options are presented as stock acquisition rights as a separate component ofequity until exercised.

ij.

Patents — Patents are carried at cost, less accumulated amortization, which is computed using the straight-line method
over the estimated useful lives.

k. Other Intangible Assets — Intangible assets are stated at cost. Amortization of intangible assets of the Company and its
consolidated subsidiaries is computed using the straight-line method. Amortization of software for internal use is computed
using the straight-line method over the estimated useful life (five years).

35

p. Research and Development Costs — Research and development costs are charged to income as incurred.
q. Leases — All finance lease transactions are capitalized by recognizing lease assets and lease obligations in the balance sheet.
r.

Income Taxes — The provision for income taxes is computed based on pretax income and included in the consolidated
statements of operations. The asset and liability approach is used to recognize deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets andliabilities. Deferred taxes are measured by applying currently enacted income tax rates to the temporary differences.

		
On February 16, 2018, the ASBJ issued ASBJ Statement No. 28, “Partial Amendments to Accounting Standard forTax Effect Accounting,” which requires deferred tax assets and deferred tax liabilities to be classified as investments andother assets and long-term liabilities, respectively. Deferred tax assets were previously classified as current assets andinvestments and other assets, and deferred tax liabilities were previously classified as current liabilities and long-term
liabilities under the previous accounting standard. The revised accounting standard is effective for annual periods beginningon or after April 1, 2018. The Company retrospectively applied the revised accounting standard effective April 1, 2018, anddeferred tax assets of ¥468 million which were previously classified as current assets as of March 31, 2018, have been
reclassified as investments and other assets in the accompanying consolidated balance sheet.

Annual Report 201936

Notes to Consolidated Financial Statements
		“Accounting Standard for Tax Effect Accounting” as defined in Paragraphs 3 to 5 of the Partial Amendment to
Accounting Standard for the Tax Effect Accounting Note 8 (excluding the total amount of valuation allowance.) and Note
9 have been added in the Note on Tax Effect Accounting. However the contents pertaining to the previous fiscal year are
not presented in accordance with the transitional treatment stipulated in Note 7 of the Partial Amendment to AccountingStandards for the Tax Effect Accounting.
s. Foreign Currency Transactions — All short-term and long-term monetary receivables and payables denominated in foreign
currencies are translated into Japanese yen at the exchange rates at the balance sheet date. The foreign exchange gains andlosses from translation are recognized in the consolidated statements of operations to the extent that they are not hedged
by forward exchange contracts.
t. Foreign Currency Financial Statements — The balance sheet accounts of the consolidated foreign subsidiaries aretranslated into Japanese yen at the current exchange rate as of the balance sheet date, except for equity, which is translated
at the historical rate.
		
Differences arising from such translation are shown as “Foreign currency translation adjustments” under accumulated
other comprehensive income as a separate component of equity.
		
Revenue and expense accounts of consolidated foreign subsidiaries are translated into Japanese yen at the averageexchange rate.
u. Derivatives and Hedging Activities — The Group uses derivative financial instruments to manage its exposures tofluctuations in foreign currency exchange rates and interest rates. Foreign exchange forward contracts and interest rate
swaps are utilized by the Group to reduce foreign currency exchange and interest rate risks. The Group does not enter into
derivatives for trading or speculative purposes.
		
Derivative financial instruments are recognized as either assets or liabilities and measured at fair value, and gains andlosses on derivative transactions are recognized in the consolidated statements of operations.
v. Per Share Information — Basic net income (loss) per share (“EPS”) is computed by dividing net income (loss) attributable
to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted net
income per share is not disclosed as the Company recognizes net loss per share and/or the effect of including potential
common shares as anti-dilutive.
		
Cash dividends per share presented in the accompanying consolidated statements of operations are dividends
applicable to the respective years, including dividends to be paid after the end of the year.
w. New Accounting Pronouncementsa) Leases — In January 2016, IFRS 16, “Leases,” was issued. For lessees, IFRS 16 requires most leases to be recognizedon the balance sheet (under a single model), eliminating the distinction between operating and finance leases. On the other
hand, it remains largely unchanged for lessors and the distinction between operating and finance leases is retained. IFRS 16
supersedes International Accounting Standards (“IAS”) 17, “Leases,” and related interpretations.
		
Under IFRS 16, a lessee recognizes a right-of-use asset and a lease liability. The right-of-use asset is treated similarly toother non-financial assets and is depreciated accordingly. The lease liability is initially measured at the present value of thelease payments payable over the lease term, discounted at the rate implicit in the lease if that can be readily determined, andthe liability accrues interest. Under IFRS 16, lessors classify leases as operating or finance in nature, as under current IAS 17.
		IFRS 16 must be applied for periods beginning on or after January 1, 2019, with earlier adoption permitted if IFRS 15,“Revenue from Contracts with Customers,” has also been applied.
		
In February 2016, the FASB issued an accounting standards update which requires lessees to recognize most leaseson their balance sheets, but recognize expenses on their income statements in a manner similar to current guidance. For
lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. This
guidance is effective for annual reporting periods beginning after December 15, 2018, and early adoption is permitted.
		
The foreign subsidiaries expect to apply the new standards on leases effective April 1, 2019, and are in the process ofmeasuring the effects of applying the new standards in future applicable periods.
b) Revenue recognition — On March 30, 2018, the ASBJ issued ASBJ Statement No. 29, “Accounting Standard for Revenue
Recognition,” and ASBJ Guidance No. 30, “Implementation Guidance on Accounting Standard for Revenue Recognition.”
The core principle of the standard and guidance is that an entity should recognize revenue to depict the transfer of promised
goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. An entity should recognize revenue in accordance with that core principle by applying
the following steps:

37

Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
		
The accounting standard and guidance are effective for annual periods beginning on or after April 1, 2021. Earlier
application is permitted for annual periods beginning on or after April 1, 2018.
		
The foreign subsidiaries expect to apply the new standards on revenue recognition effective April 1, 2018 andthereafter, and the Company expects to apply the accounting standard and guidance for annual periods beginning on or after
April 1, 2021. The Company is in the process of measuring the effects of applying the accounting standard and guidance infuture applicable periods.

3. ACCOUNTING CHANGE
The Company applied IFRS 15, “Revenue from Contracts with Customers,” effective April 1, 2018, at consolidated overseas
subsidiaries excluding the United States.
The impact from adoption of this amendment was immaterial for the year ended March 31, 2019.

4. INVENTORIESInventories at March 31, 2019 and 2018, consisted of the following:Thousands of
U.S. dollars

Millions of Japanese yen

Merchandise and finished products
Work in process
Raw materials and supplies
		Total2019¥13,517681
11,059¥25,2582018¥13,251516
9,841¥23,6092019$121,777
6,139
99,635$227,552

5. LONG-LIVED ASSETS
When the Group conducts an impairment test, the Group categorizes business assets on the basis of management accounting
in the consolidated group. Idle assets are evaluated individually.
During the fiscal year ended March 31, 2019, the Group recorded losses on impairment in the following asset groups:
Use

Business assets
Business assets

Business assets

Business assets

Location

FUNAI ELECTRIC CO.,LTD.
(Daito City, Osaka)
FUNAI ELECTRIC PHILIPPINES INC.
(Batangas, the Philippines)
FUNAI ELECTRIC CEBU, INC.
(Cebu, the Philippines)
FUNAI LEXINGTON TECHNOLOGYCORPORATION(Kentucky, USA)
Total

Type

Millions ofJapanese yen

Thousands of
U.S. dollars

Long-term prepaid expenses

¥37

$334

Machinery, equipment and other

88

797

Buildings and structures
Machinery, equipment and other
Software (included in “Other
assets” in “Investment and otherassets”)

3
33

34
299

3

33

Machinery, equipment and other

10

98

¥177

$1,598The Company reduced the book values of the business assets on which the profitability had declined significantly to theirrecoverable amounts and recorded losses on impairment of long-lived assets of ¥177 million ($1,598 thousand) as other income(expenses).
The recoverable amounts of the assets were determined at their net selling price. The net selling amounts of buildings
and structures were based on the appraised value which were reasonably calculated by real estate appraisers. The net selling
amounts of other assets were considered as zero.

Annual Report 201938

Notes to Consolidated Financial Statements
6. INVESTMENT SECURITIES

During the fiscal year ended March 31, 2018, the Group recorded losses on impairment in the following asset groups:
Use

Business assets

Location

FUNAI ELECTRIC CO.,LTD.
(Daito City, Osaka)

Business assets

FUNAI ELECTRIC (H.K.) LTD.
(New Territories, Hong Kong)

Business assets

FUNAI THAILAND CO., LTD.
(Nakhon Ratchasima, Thailand)Business assets

Business assets

Business assets

Business assets

Business assets

Business assets

Business assets

Business assets

Type

FUNAI ELECTRIC PHILIPPINES INC.
(Batangas, the Philippines)

FUNAI ELECTRIC CEBU, INC.
(Cebu, the Philippines)
FEP REAL ESTATE, INC.
(Makati, the Philippines)

Machinery, equipment and other
Lease assets
Patents
Long-term prepaid expenses
Software (included in “Other assets” in“Investment and other assets”)
Buildings and structures
Machinery, equipment and otherLand
Buildings and structures
Machinery, equipment and other
Software (included in “Other assets” in“Investment and other assets”)
Buildings and structures
Machinery, equipment and other
Software (included in “Other assets” in“Investment and other assets”)
Buildings and structures
Machinery, equipment and other
Software (included in “Other assets” in“Investment and other assets”)

FUNAI TRADING CORP.
(California, USA)FUNAI LEXINGTON TECHNOLOGYCORPORATION(Kentucky, USA)FUNAI MANUFACTURING,
S.A. DE C.V.
(Tijuana, Mexico)

Buildings and structures
Machinery, equipment and other
Lease assets (included in “Other assets” in“Investment and other assets”)
Buildings and structures
Machinery, equipment and other
Software (included in “Other assets” in“Investment and other assets”)
Buildings and structures
Machinery, equipment and other
Software (included in “Other assets” in“Investment and other assets”)

75
42
650
56
596
594

Total

474
549
34
539
661

Unrealized gains

Securities classified as:
Available-for-sale:		Equity securities

293
5
61

¥1

¥36

¥35

¥13

¥49

2018

Securities classified as:
Available-for-sale:		Equity securities

Thousands of U.S. dollars
Cost

Unrealized gains

Unrealized losses

Securities classified as:
Available-for-sale:		Equity securities

$321

$10

$332

Available-for-sale securities whose fair values are not readily determinable as of March 31, 2019 and 2018, were as follows:

2019
Available-for-sale:
Equity securities

2018
¥242

¥242

$2,181

7. LONG‑TERM DEBT
Long-term debt at March 31, 2019 and 2018, consisted of the following:

2019
Obligations under finance leases
Less current portionLong-term debt, less current portion

¥319
(217)
¥102

Buildings and structures

13

Machinery, equipment and other9

Annual maturities of obligations under finance leases at March 31, 2019, were as follows:

8

Year Ending March 31¥12,586

2019

There are no sales transactions of available-for-sale securities during the year ended March 31, 2019 and 2018.

59
202

13

Thousands of
U.S. dollars

Millions of Japanese yen

Millions of Japanese yen

4

Fair value

2019

55

3

Fair value

¥35

42
8
5

Unrealized losses

2019

33

The Company reduced the book values of the business assets on which the profitability had declined significantly to theirrecoverable amounts and recorded losses on impairment of long-lived assets of ¥12,586 million as other income (expenses).
The recoverable amounts of the assets were determined at their net selling price. The net selling amounts of buildings,
structures and land were based on the appraised value which were reasonably calculated by real estate appraisers. The net
selling amounts of other assets were considered as zero.

39

Cost

1

Software (included in “Other assets” in“Investment and other assets”)
Machinery, equipment and other
Software (included in “Other assets” in“Investment and other assets”)

P&F MEXICANA, S.A. DE C.V.
(Mexico, Mexico)

Millions of Japanese yen

¥148
4
2,451
4,883

Land

FUNAI CORPORATION, INC.
(New Jersey, USA)The costs and aggregate fair values of investment securities at March 31, 2019 and 2018 were as follows:

Millions ofJapanese yen

2020
2021
2022
2023
2024
Total

Thousands of
U.S. dollars

2018

2019

¥518

$2,878(236)(1,958)

¥282

$920

Millions ofJapanese yen

Thousands of U.S.
dollars

¥217
77
12
7
4
¥319

$1,958
696
115
67
39
$2,878Annual Report 201940

Notes to Consolidated Financial Statements
8. RETIREMENT AND PENSION PLANS(4) The components of net periodic benefit costs for the years ended March 31, 2019 and 2018, were as follows:

The Company and certain consolidated subsidiaries have severance payment plans for employees, Directors, and Executive
Officers. Under most circumstances, employees terminating their employment are entitled to retirement benefits determinedbased on the rate of pay at the time of termination, years of service, and certain other factors. Such retirement benefits are
made in the form of a lump-sum severance payment from the Company or from certain consolidated subsidiaries and annuity
payments from a trustee. Employees are entitled to larger payments if the termination is involuntary, by retirement at the
mandatory retirement age, by death, or by voluntary retirement at certain specific ages prior to the mandatory retirement age.
The Company and certain consolidated subsidiaries have noncontributory funded defined benefit pension plans for
employees. Certain consolidated foreign subsidiaries also have defined contribution pension plans. Some consolidated
subsidiaries use the simplified method to calculate retirement benefit obligations.
The liability for retirement benefits at March 31, 2019 and 2018 for Directors and Executive Officers is ¥27 million ($250
thousand) and ¥1,025 million, respectively. The retirement benefits for Directors are paid subject to the approval by theshareholders.
(1) The changes in defined benefit obligation for the year ended March 31, 2019 and 2018, were as follows:
Thousands of
U.S. dollars

Millions of Japanese yen

2019
Balance at beginning of year
Current service cost
Interest cost
Benefits paid
Actuarial gains
OthersBalance at end of year

¥6,300
367
85
(566)
(107)
11
¥6,0902018$56,759

399

3,313

87

766

(641)

(5,107)

(148)

(964)

14

105

¥6,300$54,872

2018

2019

¥367
85
(108)
16
(1)
9
¥368

Service cost
Interest cost
Expected return on plan assets
Recognized actuariallosses
Amortization of prior service cost
OthersNet periodic benefit costs

2019

¥399
87

766

(107)

(976)

163

146

(1)

(13)

40

82

¥582

$3,318

Thousands of
U.S. dollars

Millions of Japanese yen

¥59
(1)

2018
¥498
(1)

2019
$538
(13)

¥58

¥496

$525

2019
Actuarial gains
Prior service costTotal(6)	Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect of defined
retirement benefit plans as of March 31, 2019 and 2018, were as follows:
Thousands of
U.S. dollars

Millions of Japanese yen(2) The changes in plan assets for the year ended March 31, 2019 and 2018, were as follows:
Thousands of
U.S. dollars

Millions of Japanese yen

2019
Balance at beginning of year
Expected return on plan assets
Benefits paid
Contributions from the employer
Actuarial (gains) losses
OthersBalance at end of year

¥8,136
108
(566)
320
(63)
4
¥7,93920182019¥ 8,117$73,303

107

976

(641)

(5,107)

396

2,885

186

(572)

(29)
¥ 8,13636$71,522(3)	Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined benefit
obligation and plan assets was as follows:
Millions of Japanese yen

Thousands of
U.S. dollars

Plan assets
Funded defined benefit obligation
Net asset arising from defined benefit obligation2019¥7,823(5,941)¥1,881

2018¥8,022(6,181)¥1,8402019$70,482(53,529)$16,952

Funded defined benefit obligation
Plan assets
Net liability arising from defined benefit obligation¥ (149)115¥ (33)¥ (118)114¥ (3)$ (1,342)
1,040$ (302)

Unrecognized actuarial gains
Unrecognized prior service cost
Total

2019
¥667
2
¥670

2018
¥608
4
¥612

2019
$6,01726$6,04320192018(7) Plan assets(a) Components of plan assets
		 Plan assets as of March 31, 2019 and 2018, consisted of the following:
Debt investments
Equity investments
Loans receivable / short-term fund
Others
Total

59%
20%
0%
21%
100%

56%
21%
2%
21%
100%

(b) Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering the long-term rates of return that are expectedcurrently and in the future from the various components of the plan assets.
(8) Assumptions used for the years ended March 31, 2019 and 2018, were set forth as follows:
2018

2019

41

$3,313(5)	Amounts recognized in other comprehensive income (before income tax effect) in respect of defined retirement benefit
plans for the years ended March 31, 2019 and 2018, were as follows:2019¥6,588

Thousands of
U.S. dollars

Millions of Japanese yen

Discount rate
Expected rate of return on plan assets
Expected rates of pay raises
Lump sum election rate

1.4%
1.3%
5.5%
76.9%

1.4%
1.3%
5.6%
75.5%

Annual Report 201942

Notes to Consolidated Financial Statements
9. EQUITY
Japanese companies are subject to the Companies Act of Japan (the “Companies Act”). The significant provisions in the
Companies Act that affect financial and accounting matters are summarized below:(a) Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end
dividend upon resolution at the shareholders’ meeting. For companies that meet certain criteria, such as (1) having a Boardof Directors, (2) having the independent auditors, (3) having an Audit & Supervisory Board, and (4) the term of service of
the Directors being prescribed as one year rather than the normal two-year term by its articles of incorporation, the Boardof Directors may declare dividends (except for dividends-in-kind) at any time during the fiscal year if the company hasprescribed so in its articles of incorporation. With respect to the third condition above, the Board of Directors of companies
with (a) board committees (namely, an appointment committee, compensation committee and audit committee), or (b)an audit and supervisory committee (as implemented under the Companies Act effective May 1, 2015) may also declare
dividends at any time because such companies, by their nature, meet the criteria under the Companies Act. The Company
is organized as a company with an audit and supervisory committee, effective June 25, 2015. The Company meets all theabove criteria, and accordingly, the Board of Directors may declare dividends (except for dividends-in-kind) at any time during
the fiscal year.
		Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles
of incorporation of the company so stipulate. The Companies Act provides certain limitations on the amounts available
for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to theshareholders, but the amount of net assets after dividends must be maintained at no less than ¥3 million.
(b) Increases/Decreases and Transfer of Common Stock, Reserve, and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (acomponent of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity
account charged upon the payment of such dividends, until the aggregate amount of legal reserve and additional paid-in
capital equals 25% of the common stock. Under the Companies Act, the total amount of additional paid-in capital and legal
reserve may be reversed without limitation. The Companies Act also provides that common stock, legal reserve, additional
paid-in capital, other capital surplus, and retained earnings can be transferred among the accounts within equity undercertain conditions upon resolution by the shareholders.
(c) Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolutionof the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution
to the shareholders, which is determined using a specific formula. Under the Companies Act, stock acquisition rights arepresented as a separate component of equity. The Companies Act also provides that companies can purchase both treasury
stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component ofequity or deducted directly from stock acquisition rights.

(2) The stock option activity is as follows:
The number of stock options
2014
stock option(Shares)Year ended March 31, 2018
Nonvested
March 31, 2017 – Outstanding
		Granted
		Canceled
		Vested
March 31, 2018 – Outstanding
VestedMarch 31, 2017 – Outstanding

26,400		Vested		Exercised		Canceled
March 31, 2018 – Outstanding(10,800)
15,600Year ended March 31, 2019
Nonvested
March 31, 2018 – Outstanding
		Granted
		Canceled
		Vested
March 31, 2019 – Outstanding
VestedMarch 31, 2018 – Outstanding
		Vested		Exercised		Canceled
March 31, 2019 – Outstanding

2016
Stock option(Shares)2017
Stock option(Shares)

174,000(41,000)

170,000(9,500)133,000

160,500

133,000

160,500(14,000)

133,000
146,500
15,600133,000(3,200)12,400(19,800)
113,200

10. STOCK OPTIONS(1) The stock options outstanding for the fiscal year ended March 31, 2019, are as follows:
Stock option

43

Persons granted

Number ofoptions granted

Date of grant

Exercise
price

Exercise period

2014 stock option

Three Directors
Two Executive Officers
Two Executive Officers of
120,000 shares October 10, 2014a subsidiary
One employee of a
subsidiary¥1,296($12)

From September 1, 2016
to August 31, 2023

2016 stock option

Four Directors
One Executive Officer
50 employees
Two employees of a
subsidiary

174,000 shares January 30, 2017

¥1,019($ 9)

From September 1, 2018
to August 31, 2023

2017 stock option

Two Directors
Two Executive Officers
122 employees

170,000 shares

¥947
($ 9)

From September 1, 2019
to August 31, 2024

November 29,
2017

Annual Report 201944

Notes to Consolidated Financial Statements
The price information of the stock option is as follows:2014
Stock Option

Exercise price¥1,296($12)

b. From September 1, 2017 to August 31, 2023
c. From September 1, 2018 to August 31, 2023
d. From September 1, 2019 to August 31, 2023
e. From September 1, 2020 to August 31, 2023
f. From September 1, 2021 to August 31, 2023
g. From September 1, 2022 to August 31, 2023

¥236
($2)
¥280
($3)
¥330
($3)
¥353
($3)
¥359
($3)
¥359
($3)
¥356
($3)
2016
Stock Option

Exercise price

11. R&D COSTS
R&D costs charged to income were ¥5,582 million ($50,289 thousand) and ¥6,242 million for the years ended March 31, 2019and 2018, respectively.

Average stock price at exercise
Fair value price at grant datea. From September 1, 2016 to August 31, 2023

(3) Estimated method of number of vested options
Since it is difficult to estimate the number of canceled options reasonably, the Company estimates the number of canceled
options as zero.

¥1,019($9)

12. LEASESThe Group leases certain machinery and vehicles.
The minimum rental commitments under noncancelable operating leases at March 31, 2019 and 2018, were as follows:

Due within 1 year
Due after 1 year
Total

b. From September 1, 2019 to August 31, 2023
c. From September 1, 2020 to August 31, 2023
d. From September 1, 2021 to August 31, 2023
e. From September 1, 2022 to August 31, 2023

¥188
($2)
¥199
($2)
¥206
($2)
¥212
($2)
¥216
($2)

¥947
($9)

Average stock price at exercise
Fair value price at grant datea. From September 1, 2019 to August 31, 2024
b. From September 1, 2020 to August 31, 2024
c. From September 1, 2021 to August 31, 2024
d. From September 1, 2022 to August 31, 2024
e. From September 1, 2023 to August 31, 2024

45

¥199
($2)
¥213
($2)
¥233
($2)
¥246
($2)
¥258
($2)

2018
¥454
899
¥1,3542019$5,166
19,736$24,903(1)	The Company and its domestic subsidiaries are subject to Japanese national and local income taxes, which, in theaggregate, resulted in a normal effective statutory tax rate of approximately 30.6% for the years ended March 31, 2019 and2018, respectively.
The tax effects of significant temporary differences and tax loss carryforwards, which resulted in deferred tax assets
and liabilities at March 31, 2019 and 2018, were as follows:
Thousands of
U.S. dollars

Millions of Japanese yen

2019

2017
Stock Option

Exercise price

2019
¥ 573
2,190
¥2,764

13. INCOME TAXES

Average stock price at exercise
Fair value price at grant datea. From September 1, 2018 to August 31, 2023

Thousands of
U.S. dollars

Millions of Japanese yen

Deferred tax assets:
Liability for retirement benefits
Accounts payable – other
Allowance for doubtful accounts
Accrued employees’ bonuses
Impairment loss on investment securities
Inventories
Loss on impairment of long-lived assets
Tax loss carryforwards
Other
Total of tax loss carryforwards and temporary differences
Less valuation allowance for tax loss carryforwards
Less valuation allowance for temporary differences
Total valuation allowance		TotalDeferred tax liabilities:
Reserve for reduction entry of property assets
Prepaid pension cost
Other		Total
Net deferred tax assets

2018
¥320
1,499
361
146
20
351
2,622
18,953
1,441
25,716

2019

¥13
1,601
178
151
20
291
1,900
17,9691,604
23,734(17,489)(4,829)(22,319)
1,414(24,966)
749$117
14,423
1,603
1,360
180
2,621
17,117
161,882
14,450213,819(157,558)(43,504)(201,072)
12,738

50
573
207
831
¥583

53
561
95
709
¥ 39

450
5,162
1,864
7,486
$5,252The main component of changes in valuation allowance is a decrease in valuation allowance for tax loss carryforwards.

Annual Report 201946

Notes to Consolidated Financial Statements(2) The expiration of tax loss carryforwards, the related valuation allowances, and the resulting net deferred tax assets as ofMarch 31, 2019, was as follows:
Millions of Japanese yen
1 yearor less

2019
Deferred tax assets relating to
tax loss carryforwards (Note A)
Less valuation allowances for
tax loss carryforwards
Net deferred tax assets relating
to tax loss carryforwards(Note B)After
1 yearthrough
2 yearsAfter
2 years
through
3 yearsAfter
3 years
through
4 yearsAfter
4 years
through
5 yearsAfter
5 years

Total

¥239

¥2,508¥657¥165¥14,398¥17,969¥(239)¥(2,508)¥(657)¥(165)¥(13,919)¥(17,489)

¥479

¥479

Thousands of U.S. dollars
2019

2019
Deferred tax assets relating to
tax loss carryforwards (Note A)
Less valuation allowances for
tax loss carryforwards
Net deferred tax assets relating
to tax loss carryforwards(Note B)

1 yearor lessAfter
1 yearthrough
2 yearsAfter
2 years
through
3 yearsAfter
3 years
through
4 yearsAfter
4 years
through
5 yearsAfter
5 years

Total$2,158$22,596$5,920$1,490$129,719$161,885$(2,158)$ (22,596)$(5,920)$(1,490)$(125,400)$(157,566)$4,319$4,319

1. Status of Financial Instruments(1) Group Policy for Financial Instruments
The Group obtains financing from banks and invests funds in short-term deposits. The Group has a policy of not using
derivatives for speculation purposes.
(2) Nature and Extent of Risks Arising from Financial Instruments and Risk Management for Financial Instruments
Trade receivables, such as trade notes and trade accounts, are exposed to customer credit risk.
		
To avoid such risk, the Group has stipulated sales management rules and manages trading terms and credit lines by
each customer.
		Investment securities, mainly equity instruments, are exposed to market risk. With regard to the risks, the market
values and the financial positions of the issuers are reviewed periodically and reported to the Internal Investment and Loan
Committee.
		
Most payables, such as trade notes and trade accounts, become due and payable within one year.
		
The Group has a policy of not using derivatives. However, as floating-rate loans are exposed to interest rate risk, theGroup may utilize derivatives (interest rate swap agreements) as hedging instruments according to individual loan contracts.
To trade in derivatives, such derivatives are executed and managed in accordance with Group internal rules. To mitigate
credit risk, the Group enters into transactions solely with financial institutions with high ratings.
		Trade receivables and loans are exposed to liquidity risks. The Group manages these risks by having each company
perform monthly financial planning.
2. Fair Value of Financial Instruments
Fair values of financial instruments are based on quoted prices in active markets. If quoted prices are not available, anotherrational valuation technique is used instead. The list below does not contain financial instruments whose fair values are notreadily determinable.
Millions of Japanese yen

Note A: Deferred tax assets relating to tax loss carryforwards is the amount of tax loss carryforwards multiplied by the effective statutory tax
rate.
Note B: Net deferred tax assets for tax loss carryforwards is considered recoverable as a result of the taxable income forecast based on future
profitability of the Display business in the Americas.

(3) A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in theaccompanying consolidated statement of operations for the year ended March 31, 2019, was as follows (the reconciliation
for the year ended March 31, 2018, was not presented because of net loss for the period):
2019

Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Nontaxable dividends received
Inhabitant tax on per capita basis
Lower income tax rates applicable to income in certain foreign countries
Change in valuation allowance
Other – net
Actual effective tax rate

14. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES

30.6 %
4.1(11.3)
0.6
6.9(121.7)
1.6(89.1) %Carrying amount2019
Cash and cash equivalents¥33,544¥33,544

Time deposits

1,872

1,872

Receivables – trade

7,724

7,724

Investment securities

36

36

Total

¥43,178¥43,178

Payables – trade¥15,618¥15,618

Payables – other
Total

8,287

8,287

¥23,906¥23,906
Millions of Japanese yen

Carrying amount

Unrealized
gain/loss

Fair value

2018¥30,650¥30,650

Time deposits

1,739

1,739

Receivables – trade

9,953

9,953

Cash and cash equivalents

49

49

Total

¥42,393¥42,393

Payables – trade¥11,808¥11,808

Investment securities

47

Unrealized
gain/loss

Fair value

Payables – other

10,372

10,372

Total¥22,180¥22,180

Annual Report 201948

Notes to Consolidated Financial Statements(c) Maturity analysis for financial assets and securities with contractual maturities

Thousands of U.S. dollars
Carrying amount

Unrealized
gain/loss

Fair value

Millions of Japanese yen
1 yearor less

2019
Cash and cash equivalents$302,201$302,201

Time deposits

16,87016,8702019

Receivables – trade69,58969,589Cash and cash equivalents

Investment securities

332

332

Total

$388,993

Payables – trade$140,708

Payables – other
Total

1,872

$388,993

Receivables – trade

7,724$140,708

Total

74,66374,663$215,371

AssetsCash and cash equivalents, time deposits, and receivables – trade
The carrying values of cash and cash equivalents, time deposits, and receivables – trade approximate fair value because of theirshort maturities.

1,739

Receivables – trade

9,953

Total

¥42,344

1 yearor less

After 1 year
through
5 years

After 5 years
through
10 years

After
10 years

2019
Cash and cash equivalents(b) Financial instruments whose fair value cannot be reliably determined
Millions of Japanese yen

49¥30,650

Thousands of U.S. dollars

Liabilities
Payables – trade, and payables – other
The carrying value of payables approximates fair value because of their short maturities.		

¥1,236¥43,141

Time deposits

Investment securities
Investment securities are measured at the quoted market prices on a stock exchange for the equity instruments.
Fair value information for investment securities is included in Note 5.

2019

After
10 years

2018
Cash and cash equivalents

Investments in equity instruments that do not have aquoted market price in an active market

After 5 years
through
10 years¥33,544

Time deposits$215,371

After 1 year
through
5 years2018¥1,236

Thousands of
U.S. dollars$302,201

Time deposits

16,870Receivables – trade69,589

Total$388,661

Please see Note 6 for annual maturities of obligations under finance leases.

2019$11,136

Annual Report 201950

Notes to Consolidated Financial Statements
15. OTHER COMPREHENSIVE INCOME (LOSS)

17. SUBSEQUENT EVENTSThe components of other comprehensive income (loss) for the years ended March 31, 2019 and 2018, were as follows:
Millions of Japanese yen

2018

2019
Unrealized (loss) gain on available-for-sale securities:(Loss) gain arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect		TotalForeign currency translation adjustments:
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect		TotalDefined retirement benefit plans:
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect		Total
Total other comprehensive income (loss)

Reduction of capital reserve

Thousands of
U.S. dollars¥ (12)¥1$ (110)

(12)

1

(110)

¥ (12)¥1$ (110)¥1,023(163)859¥ (1,099)(1,099)$9,219(1,473)
7,745

¥859

¥ (1,099)$7,745

¥334
162
496
(156)
¥340
¥ (757)

¥43
14
58
(29)
¥29
¥876

$392
133
525
(262)
$263
$7,898

16. NET INCOME (LOSS) PER SHARE
Information on basic net EPS for the years ended March 31, 2019 and 2018, was as follows:
Millions ofJapanese yen

Thousands ofshares

Net income (loss)
attributable to Ownersof the Parent

Weighted-average
SharesJapanese yen

U.S. dollars

EPS

For the year ended March 31, 2019:
Basic EPS		Net income available to common shareholders
For the year ended March 31, 2018:
Basic EPS		Net loss available to common shareholders

The Company resolved to reduce its capital reserve at the Annual Shareholders’ Meeting held on June 26, 2019.

2019¥2,613

34,118¥76.59¥ (24,709)

34,119¥ (724.21)

Diluted net income per share is not disclosed due to no outstanding potentially dilutive securities for the year ended March 31, 2019.
Diluted net income per share is not disclosed due to the net loss for the year ended March 31, 2018.

$0.69

1. Purpose of reduction of capital reserve
In order to ensure flexibility and mobility in future financial strategies, the Company reduced the capital reserve and transferred
it to other capital surplus.
2. Outline of reduction of capital reserve
In accordance with Article 448, Paragraph 1 of the Companies Act, the capital reserve was reduced and transferred to othercapital surplus.
(1) Reduced reserve
Capital reserve¥ 3,000 million ($ 27,027 thousand)(2) Increased surplus
Other capital surplus¥ 3,000 million ($ 27,027 thousand)

3. Effective date of reduction in capital reserve(1) Date of the Resolution of the Board of Directors’ Meeting(2) Date of the Resolution of the Annual Shareholders’ Meeting(3) Date of the announcement of petition of objection by creditors(4) Final date of petition of objection by creditors(5) Effective date

May 13, 2019
June 26, 2019
June 27, 2019
July 27, 2019
July 29, 201918. SEGMENT INFORMATION
Under ASBJ Statement No.17, “Accounting Standard for Segment Information Disclosures,” and ASBJ Guidance No. 20,“Guidance on Accounting Standard for Segment Information Disclosures,” an entity is required to report financial anddescriptive information about its reportable segments. Reportable segments are operating segments or aggregations ofoperating segments that meet specified criteria. Operating segments are components of an entity about which separate
financial information is available and such information is evaluated regularly by the chief operating decision maker in deciding
how to allocate resources and in assessing performance. Generally, segment information is required to be reported on thesame basis as is used internally for evaluating operating segment performance and deciding how to allocate resources tooperating segments.
(1) Description of Reportable Segments
The Group’s reportable segments are those for which separate financial information is available and regular evaluation by theCompany’s management is being performed in order to decide how resources are allocated among the Group. The Groupis engaged in the manufacture and sale of consumer electronics products. Mainly, the Company operates in Japan, FUNAICORPORATION, INC. operates in the Americas, FUNAI (THAILAND) Co., LTD. operates in Asia, and FUNAI ELECTRIC EUROPE
Sp.zo.o. operates in Europe. Each overseas subsidiary is an independent management unit, which develops product strategies
and business activities in its respective region. Therefore, the Group consists of four geographic segments based on the
manufacturing and sales structures: “Japan,” “Americas,” “Asia,” and “Europe.”(2) Methods of Measurement for the Amounts of Sales, Profit (Loss), Assets, and Other Items for Each Reportable Segment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2, “Summary of Significant
Accounting Policies.” Sales prices between the segments are set on an arm’s-length basis.

51

Annual Report 201952

Notes to Consolidated Financial Statements
Note A Components of reconciliations are as follows:(3) Information about Sales, Profit (Loss), Assets, and Other Items
Millions of Japanese yen

2019
Japan

Sales:
Sales to external customers
Intersegment sales or transfers
Total
Segment profit (Note B)
Segment assets
Other
Depreciation
Increase in property, plant		and equipment and		intangible assets
Impairment losses of assets

Americas

Asia

Europe¥36,624
61,580¥98,205¥637
69,613¥68,0836,424¥74,508¥160
25,640¥819
62,850¥63,670¥709
28,395

340

26

170
¥37

¥22

Total

Reconciliations Consolidated(Note A)
(Note B)

¥105,549
130,856¥236,406¥1,571125,064(130,856)¥ (130,856)¥(889)(41,770)¥105,549¥682
83,293

615

982

(8)

974

173

1,152

1,495

¥(46)

1,449

¥10

¥129

¥177

¥22
¥64
¥1,414¥105,549¥177

Millions of Japanese yen

2018
Japan

Sales:
Sales to external customers
Intersegment sales or transfers
Total
Segment loss (Note B)
Segment assets
Other
Depreciation
Increase in property, plant		and equipment and		intangible assets
Impairment losses of assets

Americas

Asia

EuropeTotal

Reconciliations Consolidated(Note A)
(Note B)¥ (735)(772)
1,254¥ (253)¥ (34)(128)(726)¥ (889)20182018¥20,635(44)(70,921)¥ (50,330)

2019
2019
¥24,771(770)(65,771)¥ (41,770)$ (310)(1,159)(6,543)$ (8,013)
Thousands of
U.S. dollars

Millions of Japanese yen

Segment assets
Corporate assets (*2)
Adjustment of inventory
Elimination of intersegment assets and liabilities, etc.
Total

2019

2019
2019
$223,164(6,944)(592,532)$ (376,311)(*1) Corporate expenses are mainly general and administrative expenses not attributable to any reportable segment.
(*2) Corporate assets mainly consist of cash surpluses (cash and cash equivalents and time deposits) and long-term-investments (investments
securities etc.) that are not attributable to any reportable segment.
Note B Segment loss is adjusted to operating profit (loss) in the consolidated statements of operations.

¥36,199
83,389¥119,589¥ (5,634)
76,258¥92,949
2,293¥95,243¥(965)
24,892¥853
98,355¥99,209¥(3,948)
28,038

¥127
¥127
¥(83)
¥1,407¥130,130184,038(184,038)¥314,169 ¥ (184,038)¥(10,631)¥ (253)
130,595(50,330)

706

110

1,442

2,258

815

164

1,445

2,425

¥7,564¥745¥4,276¥12,586¥130,130¥130,130¥ (10,885)
80,265
2,258

¥(16)

(4) Related Information
1. Information about each product and service
Millions of Japanese yen

2019
Audiovisualequipment

Sales to external customers

Japan

Americas

Asia

Europe$200

Sales to external customers¥122,569

Reconciliations Consolidated(Note A)
(Note B)

$950,897
1,178,888 (1,178,888)$2,129,786 $ (1,178,888)$14,160$(8,013)
1,126,704(376,311)¥3,306¥5,183

Total¥105,549

2018
Audiovisualequipment

Total

Other

Millions of Japanese yen¥12,586$329,950
554,781$884,732$5,739627,148$613,361
57,882$671,243$1,447
230,992$7,385566,225$573,610$6,389255,817

3,069

238

5,547

8,855

(73)

8,781

1,536

1,558

10,37813,473$(418)

13,055$334$98$1,165$1,598$200$584$12,747¥97,059

Informationequipment

2,408

2019

53

2018

2019
Segment loss
Elimination of intersegment transactions
Corporate expenses (*1)
Adjustment of inventory
Total

Thousands of U.S. dollars

Sales:
Sales to external customers
Intersegment sales or transfers
Total
Segment profit (Note B)
Segment assets
Other
Depreciation
Increase in property, plant		 and equipment and		intangible assets
Impairment losses of assets

Thousands of
U.S. dollars

Millions of Japanese yen

Other¥3,334¥4,225

Total¥130,130

Thousands of U.S. dollars

2019$950,897$950,897$6,146750,393

Informationequipment

Audiovisualequipment

Sales to external customers$874,411

Informationequipment$29,790

Other$46,696

Total$950,897$1,598Annual Report 201954

Notes to Consolidated Financial Statements
2. Information about geographical areasa. SalesNote: Sales are classified by country or region based on the location of customers.
Millions of Japanese yen
2019
Americas
Japan

USA

Mexico

Other

Asia

EuropeTotal¥33,930¥66,183¥636¥3,084¥1,321¥392¥105,549

Millions of Japanese yen
2018
Americas
Japan

USA

Mexico

Other

Asia

EuropeTotal¥33,897¥89,020¥2,844¥2,438¥1,391¥538¥130,130

Thousands of U.S. dollars
2019
Americas
Japan

USA

Mexico

Other

Asia

EuropeTotal$305,679$596,250$5,738$27,784$11,906$3,537$950,897

b. Property, plant and equipment
Millions of Japanese yen
2019
Asia
Japan

AmericasPhilippines

Thailand

Other

Total

¥4,390¥132¥2,628¥894¥112¥8,159Millions of Japanese yen
2018
Asia
Japan

AmericasPhilippines

Thailand

Other

Total

¥4,528¥2¥3,097¥564¥0¥8,193

Millions of Japanese yen
2019
Asia
Japan

AmericasPhilippines

Thailand

Other

Total

$39,554$1,195$23,681$8,061$1,011$73,504

3. Information about major customers
Sales
Millions of Japanese yen
Name of Customer

WAL-MART STORES, INC.
YAMADA DENKI CO., LTD.

55

2019
¥53,601¥16,2812018¥77,979¥17,115

Thousands of
U.S. dollars

2019$482,895$146,682

Related segment nameAmericasJapan