February 6, 2019

Summary of Consolidated Financial Results
for the Third Quarter Ended December 31, 2018 [Japan GAAP]
Name of Company:
Stock Code:
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Date of filing of quarterly securities report (tentative):
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Quarterly earnings supplementary explanatory documents:
Quarterly earnings presentation:

KAGA ELECTRONICS CO., LTD.
8154
Tokyo Stock Exchange, First Section
https://www.taxan.co.jp/
President & COO
Ryoichi Kado
Managing Director, Administration Headquarters
Eiji Kawamura+81-(0)3-5657-0111
February 14, 2019
YesNone(Yen in millions, rounded down)
1. Financial results for the third quarter of the fiscal year ending March 2019 (April 1, 2018 – December 31, 2018)(1) Result of operations (Consolidated, year-to-date)(Percentage figures represent year on year changes)
Profit attributable
Net sales
Operating income
Ordinary income
to owners of parent
Million yen%

Million yen%

Million yen%

Million yen%

Third quarter ended December 2018

173,782

(0.2)

5,748

(13.1)

6,000(15.4)

4,875(11.5)

Third quarter ended December 2017

174,047

3.9

6,613

27.7

7,093

29.0

5,510

13.3

Note: Comprehensive income: 3Q of FY3/2019: 4,081 million yen (-41.0%)

3Q of FY3/2018:6,916 million yen (37.9%)

Earnings per share(diluted)

Earnings per share
Yen

Yen

Third quarter ended December 2018

177.69－

Third quarter ended December 2017200.86－(2) Financial Position (Consolidated)
Total assets

Net assets

Equity ratio

Million yen

Million yen%

As of December 31, 2018

152,885

72,937

47.7

As of March 31, 2018

128,75570,631

54.8

Reference: Shareholders’ equity As of December 31, 2018: 72,852 million yen As of March 31, 2018: 70,556 million yen

2. Dividends
Dividend per share

1Q

2Q

3Q

Year-end

Full yearYen

Yen

Yen

Yen

Yen

Fiscal year ended March 2018
Fiscal year ending March 2019
Fiscal year ending March 2019 (Forecast)

-

30.00
35.00

-

40.00

70.00

40.00

75.00

Notes: Change in the dividend forecast from the latest announcement: None
Breakdown of interim dividend for FY3/18: Ordinary dividend: 25.00 yen; Extraordinary dividend: 5.00 yenBreakdown of year-end dividend for FY3/18: Ordinary dividend: 35.00 yen; Extraordinary dividend: 5.00 yen
Breakdown of interim dividend for FY3/19: Ordinary dividend 30.00 yen; 50th anniversary commemorative dividend 5.00 yen

3. Forecast for the fiscal year ending March 2019 (Consolidated, April 1, 2018 – March 31, 2019)(Percentage figures represent year on year changes)
Profit attributable toEarnings per
Net sales
Operating income
Ordinary income
owners of parent
share
Full year

Million yen%

Million yen%

Million yen%

Million yen%

Yen

290,00022.9

7,700(5.2)

8,000(8.5)

7,300

12.5

266.04

Note: Change in the forecast from the latest announcement: None

* Notes(1) Changes in significant subsidiaries (Changes in specified subsidiaries accompanied by changes in the scope of consolidation ): None
(2) Use of accounting methods specifically for the preparation of the quarterly consolidated financial statements: None
(3) Changes in accounting policies, estimates, and retrospective restatement: None(a) Changes due to revision of accounting standards: None(b) Changes other than (a): None(c) Changes in accounting estimates: None(d) Retrospective restatement(4) Number of shares outstanding (common stock)(a) Shares outstanding (including treasury shares)
As of December 31, 2018:(b) Treasury shares
As of December 31, 2018:

28,702,118

As of March 31, 2018:

28,702,118

1,254,819

As of March 31, 2018:

1,267,393

Period ended December 31, 2017:27,435,262(c) Average number of shares (quarterly consolidated during the period)
Period ended December 31 2018:27,437,214* The quarterly audit procedures by a certified public accountant or auditing firm are not applicable to this Quarterly FinancialResults report.

* Cautionary statement regarding forecasts of operating results and special notes(Caution regarding forward-looking statements)
Forward-looking statements in these materials are based on information available to management at the time this report
was prepared and assumptions that management believes are reasonable. Actual results may differ significantly from thesestatements for a number of reasons. For conditions as assumption for earnings forecast and cautionary statement regarding
use of the forecast, please see “1. Results of Operations, (3) Qualitative information on consolidated earnings forecast”.

(How to obtain supplementary materials on quarterly financial results)
The Company also plans to post the supplementary materials on quarterly financial results, on its website promptly
after announcing financial results.

Index for Supplementary Information
1. Results of Operations ....................................................................................................................................................................2(1) Overview of consolidated business performance ..................................................................................................................2(2) Overview of financial conditions ..........................................................................................................................................3(3) Qualitative information on consolidated performance forecast.............................................................................................3
2. Quarterly Consolidated Financial Statements and Major Notes ...................................................................................................4(1) Quarterly consolidated balance sheet....................................................................................................................................4(2) Quarterly consolidated statements of income and comprehensive income ...........................................................................6For the third quarter (April 1, 2018 - December 31, 2018)...............................................................................................6(3) Notes to quarterly consolidated financial statements ............................................................................................................8(Notes to going concern assumptions)..............................................................................................................................8(Significant change in shareholders’ equity) ....................................................................................................................8(Segment information, etc.)..............................................................................................................................................81

1. Results of Operations(1) Overview of consolidated business performance
In the third quarter of the fiscal year ending March 31, 2019, the Japanese economy witnessed a continued gradual
recovery as a result of factors including an improvement in the employment and wage environment and strong corporate
earnings. Nonetheless, the future continues to look uncertain due to factors that include a slowdown in the Chinese
economy stemming from the prolongation of trade friction between the US and China and resulting concerns over adownturn in the global economy.
In such conditions, based on our corporate philosophy of “Everything we do is for our customers,” the Group further
expanded its overseas production bases in response to calls from existing customers, while in Japan, the Group focused its
efforts on expansion of EMS(Note) business by pushing forward with enhancement of domestic production facilities andfunctions, and other measures. Furthermore, in the face of a tight supply and demand situation, which has become tangible
since the latter half of the previous fiscal year in certain electronic components, such as power semiconductors andcondensers, utmost efforts were made to curtail its effect on the Group’s business activities, such as by leveraging theGroup’s comprehensive capabilities as an independent general trading company for procuring parts and making proposals
on alternative products, despite the difficult conditions for the automotive and air conditioning devices business.
As a result of the foregoing, consolidated net sales of the Group decreased by 0.2% year on year to 173,782 million yen.
In terms of income, operating income decreased by 13.1% to 5,748 million yen, ordinary income decreased by 15.4% to6,000 million yen, and profit attributable to owners of parent decreased by 11.5% to 4,875 million yen.
Although net sales were affected, particularly by a temporary decline in unit sales due to production adjustments andmodel switching at major customers, the EMS business generally enjoyed robust orders, so net sales remained mostly
unchanged year on year. On the other hand, profits recorded decreases due to factors including upfront expenses of new
overseas sites that were at their start-up phase. Income taxes decreased due to the impact of tax effect accounting.
(Note) Electronics Manufacturing Service: Provision of product development and manufacturing services on a contracting basis.

Business segment performance was as follows.
(1) Electronic parts (Development, manufacture and sale of semiconductors, general electronic parts, the electronics
manufacturing service [EMS], and other activities)
In this business, the EMS business for automotive and air conditioning devices maintained steady performance whilebusiness for medical equipment was slow due to model switching and the resulting production adjustments at major
customers. Components sales business remained sluggish notably for home electric appliances from the effect ofproduction adjustments at major customers. As a result, consolidated net sales in the third quarter of the fiscal year ending
March 31, 2019 decreased by 3.2% to 124,893 million yen and segment income declined by 16.2% to 3,780 million yen.
(2) Information equipment (Sales of PCs, PC peripherals, home electric appliances, photograph and imaging products,
original brand products, and other products)
In this segment, although the commercial facilities-related LED installation business continued a robust trend, sales in
the housing-related home electric appliances business decreased as a result of factors including delivery date adjustments
by customers. In PC sales, although sales were strong for individuals, sales were sluggish for corporate customers. As aresult, consolidated net sales in the third quarter of the fiscal year ending March 31, 2019 decreased by 6.8% to 32,374
million yen and segment income declined by 19.3% to 1,339 million yen.
(3) Software (Computer graphics video production, planning and development of amusement products, and other activities)
In this business, orders for production of computer graphics animation and development of game software were robust.
As a result, consolidated net sales in the third quarter of the fiscal year ending March 31, 2019 increased by 26.1% to 1,943
million yen and segment income increased by 33.2% to 122 million yen.
(4) Others (Repair and support for electronics equipment, manufacture and sales of amusement equipment, sales of sports
goods, and other activities)
In this business, sales of arcade amusement machines continued strong. In addition, while the PC products and PC
peripherals recycling business performed strongly, sales of golf products remained sluggish. As a result, consolidated net
sales in the third quarter of the fiscal year ending March 31, 2019 increased by 67.4% to 14,570 million yen and segment
income increased by 75.8% to 415 million yen.

2(2) Overview of financial conditions
Assets, liabilities and net assets
Total assets as of December 31, 2018 increased 24,129 million yen from March 31, 2018 to 152,885 million yen.
Current assets increased by 21,397 million yen to 125,467 million yen. This is primarily attributed to an increase of24,202 million yen in “Other” due to factors such as advance payments related to the acquisition of shares in FujitsuElectronics Inc.
Non-current assets increased by 2,732 million yen to 27,418 million yen. This is primarily attributed to increases of 814
million yen in deferred tax assets, 759 million yen in investment securities, and 576 million yen in construction in progress.
Liabilities increased by 21,824 million yen to 79,948 million yen. This is primarily attributed to an increase of 24,145million yen in short-term loans payable.
Net assets increased by 2,305 million yen to 72,937 million yen. This is largely a result of recording 4,875 million yen in
profit attributable to owners of parent.

(3) Qualitative information on consolidated performance forecast
There are no changes to the consolidated performance forecast for the fiscal year ending March 31, 2019 from thatannounced in “Summary of Consolidated Financial Results for the First Half Ended September 30, 2018” dated November
6, 20183

2. Quarterly Consolidated Financial Statements and Major Notes(1) Quarterly consolidated balance sheet(Million yen)
Fiscal year ended March 2018
(As of March 31, 2018)

Third quarter ended December 2018
(As of December 31, 2018)ASSETS
Current assets
Cash and deposits

30,803

24,669Notes and accounts receivable - trade45,80943,448

Electronically recorded monetary claims - operating

4,032

4,470

295

225

15,06018,416575

725

Securities
Merchandise and finished goods
Work in process
Raw materials and supplies

3,818

5,653

Other

3,807

28,009

(133)

(150)

104,069

125,467

Buildings and structures, net

4,870

4,610

Machinery, equipment and vehicles, net

2,583

3,102

709

850

4,036

4,036

10

587

12,21013,187

Goodwill

317

281

Software

515

629

Other

46

42

Total intangible assets

878

952

Investment securities

8,688

9,447

Deferred tax assets

530

1,345

Guarantee deposits

657

651

Insurance funds

943

946

Other

1,363

1,407

Allowance for doubtful accounts

(587)

(520)

Total investments and other assets

11,595

13,277

Total non-current assets

24,68527,418

128,755

152,885

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

Tools, furniture and fixtures, net
LandConstruction in progress
Total property, plant and equipment
Intangible assets

Investments and other assets

Total assets

4

(Million yen)
Fiscal year ended March 2018
(As of March 31, 2018)

Third quarter ended December 2018
(As of December 31, 2018)

LIABILITIESCurrent liabilities
Notes and accounts payable - trade

36,39235,789

Short-term loans payable

5,385

29,531

Accrued expenses

3,711

2,979

901

902

Income taxes payable

247

2

Other3,068

3,104

Total current liabilities

49,70772,309Long-term loans payable

3,161

2,194

Deferred tax liabilities

1,276

1,219

Provision for directors’ retirement benefits

1,264

75

Net defined benefit liability

1,737

1,675

Asset retirement obligations

175

178

Other

800

2,295

8,416

7,638

58,123

79,948

Capital stock

12,133

12,133

Capital surplus

13,853

13,865Retained earnings

45,183

48,134

Treasury shares(2,042)(2,023)

Total shareholders’ equity

69,127

72,110

Valuation difference on available-for-sale securities

1,504

439

Deferred gains or losses on hedges(16)(0)

Foreign currency translation adjustment

148490Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeNon-controlling interests

(208)

(187)

1,428

742

75

84

Total net assets

70,631

72,937

128,755

152,885

Provision for directors’ bonuses

Non-current liabilities

Total non-current liabilities
Total liabilities
NET ASSETS
Shareholders’ equity

Accumulated other comprehensive income

Total liabilities and net assets5(2) Quarterly consolidated statements of income and comprehensive income
For the third quarter (April 1, 2018 – December 31, 2018)(Million yen)
Third quarter ended December 2017 Third quarter ended December 2018
(April 1, 2017 – December 31, 2017) (April 1, 2018 – December 31, 2018)
Net sales

174,047

173,782

Cost of sales

149,805

149,758

Gross profit

24,242

24,023

Selling, general and administrative expenses

17,62818,275

Operating income

6,613

5,748

Interest income

78102

Dividends income

110

144

Commission fee

133

152

Foreign exchange gains

80－Other235

254

Total non-operating income

638

653

Interest expenses

99134

Share of loss of entities accounted for using equity method

4468

Foreign exchange losses

－122

Other

1375

Non-operating income

Non-operating expenses

158

401

7,093

6,000

Gain on sales of non-current assets

2611

Gain on sales of investment securities

591

214

Gain on sales of shares of subsidiaries

467－

Gain on transfer of business

127

Total extraordinary income

1,098

233

Loss on retirement of non-current assets

85

Loss on sales of investment securities

232

Loss on valuation of investment securities

133

462

Impairment loss

224

9

Loss on valuation of golf club membership65

Other

02

Total extraordinary loss

397487

Profit before income taxes

7,795

5,746

Income taxes - current

1,254

1,460

Income taxes - deferred

1,015(599)

Total income taxes

2,269

861

Profit

5,525

4,884

Profit attributable to owners of parent

5,510

4,875

14

9

Total non-operating expenses
Ordinary income
Extraordinary income

Extraordinary loss

Profit attributable to non-controlling interests

6

(Million yen)
Third quarter ended December 2017 Third quarter ended December 2018
(April 1, 2017 – December 31, 2017) (April 1, 2018 – December 31, 2018)
Other comprehensive income
Valuation difference on available-for-sale securities

771(1,069)

015

Foreign currency translation adjustment

559

266

Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income ofassociatesaccounted for using equity method60

20－(37)

1,391(803)Comprehensive income

6,916

4,081

Comprehensive income attributable to owners of parent

6,900

4,072

168

Deferred gains or losses on hedges

Total other comprehensive income

Comprehensive income attributable to non-controlling interests7(4) Notes to quarterly consolidated financial statements(Notes to going concern assumptions)Not applicable(Significant change in shareholders’ equity)
Not applicable(Segment information, etc.)
Segment information
I. For the third quarter ended December 2017 (April 1, 2017 – December 31, 2017)
Information about net sales and income (loss) by reportable segments(Million yen)
Reportable segments
Adjustment(Note 1)

Consolidated(Note 2)

174,047－

174,047

449

2,767

(2,767)

－

2,197

9,151

176,815(2,767)174,047

91

236

6,497

115

6,613

Electroniccomponents

Informationequipment

SoftwareOthers

Total

129,058

34,745

1,541

8,702

793

867

656

129,851

35,613

4,509

1,659

Net sales:
Sales to externalcustomers
Inter-segment sales
or transfers
Total
Segment incomeNotes:

1. Adjustment in segment income of 115 million yen includes 115 million yen for elimination of inter-segment trade.
2. Segment income is adjusted for operating income on the quarterly consolidated statements of income and comprehensive income.

II. For the third quarter ended December 2018 (April 1, 2018 – December 31, 2018)
Information about net sales and income (loss) by reportable segments(Million yen)
Reportable segments
Adjustment(Note 1)

Consolidated(Note 2)

173,782－

173,782

3,305

6,587

(6,587)－2,403

17,875

180,370(6,587)

173,782

122

415

5,657

91

5,748

Electronic
components

Informationequipment

Software

Others

Total

Sales to externalcustomers

124,893

32,374

1,943

14,570Inter-segment sales
or transfers

2,151

670

460

127,045

33,045

3,780

1,339

Net sales:

Total
Segment income
Notes:

1. Adjustment in segment income of 91 million yen includes 91 million yen for elimination of inter-segment trade.
2. Segment income is adjusted for operating income on the quarterly consolidated statements of income and comprehensive income.

8