January 30, 2015

Summary of Consolidated Financial Results
For the Third Quarter Ended December 31, 2014 [Japan GAAP]
Name of Company:
Stock Code:
Stock Exchange Listing:
URL:
Representative
Title:
Name:
Contact Person
Title:Name:
Phone:
Date of quarterly securities report (tentative):
Date of commencement of dividend payment (tentative):
Quarterly earnings supplementary explanatory documents:
Quarterly earnings presentation:

1.

KAGA ELECTRONICS CO., LTD.
8154
Tokyo Stock Exchange, First Section
http://www.taxan.co.jp/
President & COO
Ryoichi Kado
Director, Administration Headquarters
Eiji Kawamura+81-(0)3-5657-0111
February 12, 2015
None
None

(Yen in millions, rounded down)
Financial results for the first three quarters of the fiscal year ending March 2015 (April 1, 2014 – December 31, 2014)(1) Result of operations (Consolidated, year-to-date)(Percentage figures represent year on year changes)
Net sales

Operating income

Ordinary income

Million yen% Million yen% Million yen
First three quarters of FY3/2015
187,556
(0.5)
4,998
21.6
6,018
First three quarters of FY3/2014
188,460
20.1
4,109
4,506
Note: Comprehensive income: First three quarters of FY3/2015: 6,341 million yen (43.8%)
First three quarters of FY3/2014: 4,410 million yen (-%)
Net income per share
Yen
130.65
99.42

First three quarters of FY3/2015
First three quarters of FY3/2014

Net income% Million yen
33.6
3,691
2,809

%
31.4
-

Net income per share fully diluted
Yen-

Note: The percentage of ordinary income for the first three quarters of FY3/2014 is shown as “-“ because it exceeds 1,000% (1,180.8%),
and operating income and net income are also shown as “-“ since these income of previous period were negative figures.
(2) Financial Position (Consolidated)
Total assets
Million yen
131,675

As of December 31, 2014
126,028
As of March 31, 2014
Reference: Shareholders’ equity
As of December 31, 2014:
58,315 million yen
2.

Net assets

Equity ratio

Million yen
58,353%44.3

52,82541.9

As of March 31, 2014:

52,786 million yen

Dividends
End of 1Q
Yen-

End of 2Q
Yen
15.00
15.00

Dividend per share
End of 3Q
Yen-

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

End of FY
Yen
20.00

Full year
Yen
35.00

15.00

30.00

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

Forecast for the fiscal year ending March 2014 (Consolidated, April 1, 2014 to March 31, 2015)(Percentage figures represent year on year changes)
Net income
Net sales
Operating income
Ordinary income
Net income
per share
Million yen% Million yen% Million yen% Million yen%
Yen
252,000
(2.3)
5,600
9.7
6,500
11.2
4,000
3.2
141.56
Full year
Note: Change in the forecast from the latest announcement: Yes

*

Notes
(1) Changes in significant subsidiaries (Changes in specific 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 principles and estimates, and retrospective restatements(a) Changes due to revision of accounting standards: Yes(b) Changes other than in (a): None(c) Changes in accounting estimates: None(d) Retrospective restatements: None
Note: Please refer (3) Changes in accounting principles and estimates, and retrospective restatement in 2. Other
Information on page 3 of Supplementary Information.
(4) Number of shares outstanding (common stock)(a) Shares outstanding (including treasury stock)
As of December 31, 2014:
28,702,118

As of March 31, 2014:

28,702,118

As of March 31, 2014:

445,002(c) Average number of shares (quarterly consolidated cumulative period)
Period ended December 31, 2014:
28,256,838
Period ended December 31, 2013:

28,257,908(b) Treasury stock
As of December 31, 2014:

445,682* Description of quarterly review procedure implementation status
It is under the quarterly review procedure process based upon the Financial Instruments and Exchange Act at the time of disclosureof this report.
* Cautionary statement regarding forecasts of operating results and special notes
Forward-looking statements in these materials are based on information available to management at the time this report was
prepared and assumptions that management believes are reasonable. Actual results may differ significantly from these statements
for a number of reasons. Please refer (3) Forecast in 1. Results of Operations on page 3 of Supplementary Information for further
information.

Index for Supplementary Information
1.

2.

3.

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

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

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

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

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

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

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

Changes in accounting principles and estimates, and retrospective restatements: ....................................................3

Quarterly Consolidated Financial Statements ...............................................................................................................4(1)

Quarterly consolidated balance sheet........................................................................................................................4(2)

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

Notes to quarterly consolidated financial statement .................................................................................................8(Notes to ongoing concern assumptions) ............................................................................................................................8(Significant change in shareholders’ equity) ......................................................................................................................8(Segment information, etc.) ................................................................................................................................................81

1. Results of Operations(1)

Overview on consolidated business performance
During the first three quarters of the fiscal year, there was a recovery in corporate earnings and growth in the number ofjobs in Japan because of economic measures by the Japanese government and the Bank of Japan’s monetary easing.
However, the economic outlook is uncertain due in part to lackluster consumer spending following the consumption tax
hike and concerns about the impact on consumer prices of the rising cost of raw materials caused by the yen’s depreciation.
In the electronics industry, demand for PCs and consumer electronics remained weak. But overall demand in the industry
increased with growth fueled by strong demand for smartphones, tablets and other mobile devices and for automotive
devices. In addition, there was growth in emerging market sectors for electronics, such as the markets for environmental
and energy products and for health care products.
In this environment, the KAGA ELECTRONICS Group reinforced collaboration among group companies, worked onincreasing sales to major current customers, added new products and strengthened its overseas network. There were also
cost-cutting measures, such as moving the head office to lower rental expenses.
Consolidated net sales in the first three quarters decreased 0.5% from one year earlier to 187,556 million yen, operating
income increased 21.6% to 4,998 million yen, ordinary income increased 33.6% to 6,018 million yen, and net income
increased 31.4% to 3,691 million yen.
Business segment performance was as follows.
(a) Electronic components (Development, manufacture and sale of semiconductors, general electronic components andother products, electronic manufacturing service (EMS*), and other activities)
The volume of semiconductors for communication equipment in Japan decreased because of a change in distribution
channels. But sales were higher overseas for electronic components and semiconductors, EMS for electronic devices,
and in other sectors. The result was a 1.0% increase in segment sales to 146,698 million yen and a 39.8% increase inoperating income to 4,169 million yen.
* Abbreviation for Electronics Manufacturing Service which is a term used for the provision of product development andmanufacturing services on an outsourcing basis.

(b) Information equipment (Sales of PCs, PC peripherals, photographic and imaging products, original-brand products, andother products)
Sales of PCs increased due to replacement demand created by the end of Windows XP support in the fiscal year’s first
half. Sales of housing-related products and environmental-related items were strong, too. However, there was sluggish
demand for digital consumer electronics. As a result, segment sales decreased 4.6% to 30,173 million yen andoperating income was 406 million yen, down 1.9% from one year earlier.
(c) Software (Production of computer graphics, planning and development of amusement products, and other activities)
Activities in this segment focused mostly on the production of computer graphics for animation applications and on thedevelopment and sales of game software. However, orders for the development of electronic games declined. Segment
sales decreased 13.5% to 1,767 million yen and operating income was down 47.5% from one year earlier to 197
million yen.
(d) Others (Electronic device repairs and support, sales of sporting goods, and other activities)
Sales of arcade amusement machines in Japan and sales of golf products were both weak. As a result, segment sales
decreased 6.9% to 8,917 million yen and operating income was down 70.0% from one year earlier to 105 million yen.
(2)

Overview of financial condition
Assets, liabilities and net assets
Total assets as of December 31, 2014 were 131,675 million yen, 5,646 million yen higher than at the end of the previous
fiscal year. This was mainly due to an increase in cash and deposits.
Total liabilities were 73,322 million yen, an increase of 119 million yen compared with the end of the previous fiscal year.
The main reason was an increase in trade notes and accounts payable.
Net assets totaled 58,353 million yen, 5,527 million yen more than at the end of the previous fiscal year mainly because of
net income.

2

(3)

Forecast(a) Consolidated forecast for the fiscal year ending March 2015 (April 1, 2014 – March 31, 2015)
Net Sales

OperatingincomeOrdinary
incomeNet income
per share

Net income

Million yen

Million yen

Million yen

Million yen

Yen

Previous forecast (A)260,000

5,300

6,000

4,000

141.56

Revised forecast (B)252,000

5,600

6,500

4,000

141.56

Difference (B-A)(8,000)

300

500

-

-

Difference (%)

(3.1)

5.7

8.3

-

-

257,852

5,106

5,847

3,877

137.22(Ref.) Previous fiscal year
(Fiscal year ended March 2014)(b) Reason for revisions
The forecast for consolidated results of operations in the current fiscal year has been revised as shown in the abovetable. The sales forecast has been lowered slightly mainly because of declines in sales in Japan of electronic
components and semiconductors used in amusement equipment and in EMS sales. The operating income and ordinary
income forecasts are higher because of an improvement in the gross profit margin and a decrease in selling, general andadministrative expenses.

2. Other Information(1)

Changes in significant subsidiaries:
None

(2)

Use of accounting methods specifically for the preparation of the quarterly consolidated financial statements:
None

(3)

Changes in accounting principles and estimates, and retrospective restatements:
Changes in accounting policy(Application of accounting standard for retirement benefits)
Beginning at the start of the first quarter of the fiscal year ending on March 31, 2015, the Company is using AccountingStandard for Retirement Benefits (ASBJ Statement No. 26, May 17, 2012) and Guidance on Accounting Standard for
Retirement Benefits (ASBJ Guidance No. 25, May 17, 2012) as prescribed in paragraph 35 of this accounting standard andparagraph 67 of this guidance. The method for setting the discount rate has been changed from a method based ondetermining a base value for the number of years approximating to employees’ average remaining service period to amethod using a simple weighted average discount rate that reflects the anticipated payment period for accrued retirement
benefits and the amounts to be paid in for each period.
For the application of the accounting standard for retirement benefits, in accordance with the transitional handlingprescribed in paragraph 37 of this standard, the effect of the change in the method for calculating retirement benefit
liabilities and service cost as of the beginning of the current period is included in retained earnings.
As a result, at the beginning of the current period, retirement benefit liabilities decreased 292 million yen and retained
earnings increased 188 million yen. However, effects on the first three quarters operating income, ordinary income andincome before income taxes and minority interests were negligible.

33. Quarterly Consolidated Financial Statements(1)

Quarterly consolidated balance sheet(Million yen)
Fiscal year ended March 2014
(As of March 31, 2014)ASSETS
Current assets
Cash and deposits
Notes and accounts receivable-trade
Short-term investment securities
Merchandize and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts

Third quarter ended December 2014
(As of December 31, 2014)

14,19260,667
114
16,378
848
3,991
993
5,836
(93)

16,61860,211
108
18,925
1,198
5,076
505
5,934
(54)

102,930

108,523

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

5,737
1,711
1,004
4,038
133

5,552
2,078
851
4,040
11

Total property, plant and equipment

12,625

12,534

715
486
332

643
442
110

1,533

1,195

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

5,377
562
4,015
(1,017)

5,959
454
4,042
(1,035)

Total investments and other assets

8,938

9,421

Total current assets

Intangible assets
Goodwill
Software
Other
Total intangible assets

Total noncurrent assets
Total assets

4

23,09823,151126,028

131,675

(Million yen)
Fiscal year ended March 2014 Third quarter ended December 2014
(As of March 31, 2014)(As of December 31, 2014)
LIABILITIESCurrent liabilities
Notes and accounts payable-trade
Short-term loans payable
Income taxes payable
Other

41,695
12,172
1,525
8,016

45,116
10,864822
7,501

63,41064,304

Other

4,681
1,437
1,954
1,719

3,610
1,481
1,653
2,272

Total noncurrent liabilities

9,792

9,017

Total liabilities

73,20273,322NET ASSETS
Shareholder’s equity
Capital stock
Capital surplus
Retained earnings
Treasury stock

12,133
13,912
27,414(536)

12,133
13,91230,305(537)

52,92355,814

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

161
0
5
(304)

585
93
2,077
(254)

Total accumulated other comprehensive income

(137)

2,501

39

37

Total current liabilities
Noncurrent liabilities
Long-term loans payable
Provision for directors' retirement benefits
Net defined benefit liability

Total shareholder’s equity

Minority interests
Total net assets
Total liabilities and net assets

552,82558,353126,028

131,675

(2)Quarterly consolidated statements of income and consolidated statements of comprehensive income
For the first three quarters (April 1, 2014 – December 31, 2014)(Million yen)
Third quarter ended December 2013
(April 1, 2013 - December 31, 2013)

Third quarter ended December 2014
(April 1, 2014 - December 31, 2014)

Net sales
Cost of sales

188,460
164,066

187,556
163,352

Gross profit

24,39424,204

Selling, general and administrative expenses

20,284

19,205

Operating income

4,109

4,998

44
76
175
44
272

114
89
250
455
263

613

1,172

98
66
52

88
1
62

Non-operating income
Interest income
Dividend income
Commission fee
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expense
Loss on investments in partnership
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of noncurrent assets
Gain on sales of investment securities
Other
Total extraordinary income
Extraordinary losses
Loss on retirement of noncurrent assets
Loss on valuation of investment securities
Impairment loss
Loss on liquidation of subsidiaries and affiliates
Office transfer expenses
Settlement package
Other

217

152

4,506

6,018

4
5
-

7
24
1

9

33

23
45
44
91
80
16

5
166
20
4
64
6

301

268

Income before income taxes and minority interests

4,213

5,783

Income taxes-current
Income taxes-deferred

1,305
89

1,339
742

Total income taxes
Income before minority interests

1,394
2,818

2,082
3,701

9

9

2,809

3,691

Total extraordinary losses

Minority interests in income
Net income6

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

Third quarter ended December 2014
(April 1, 2014 - December 31, 2014)

9

9

2,818

3,701

431

424

20
1,140

92
2,072

-

50

1,592

2,640

4,410

6,341

4,398

6,330

12

10

Minority interests in income (loss)
Income (loss) before minority interests
Other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net oftax
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to owners of
the parent
Comprehensive income attributable to minority
interests

7

(3)Notes to quarterly consolidated financial statement(Notes to ongoing concern assumptions)
None(Significant change in shareholders’ equity)
None(Segment information, etc.)
Segment information
I. For the first three quarters ended December 2013 (April 1, 2013 – December 31, 2013)
1. Information about sales and income (loss) by reportable segments
Reporting segments(Million yen)Amount on the quarterly
consolidated statements
of income andAdjustments
consolidated statements(Note 1)of comprehensive
income(Note 2)

Electronic
components

Informationequipment

Software

OthersTotal

Net salesof which to outside
customersof which intersegment

145,213

31,623

2,043

9,579

188,460-

188,460

1,094

496

4,468

1,741

7,800

(7,800)-

Total

146,308

32,1196,512

11,321

196,261(7,800)188,460

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

8II. For the first three quarters ended December 2014 (April 1, 2014 – December 31, 2014)
1. Information about sales and income (loss) by reportable segments
Reporting segments(Million yen)Amount on the quarterly
consolidated statements
of income andAdjustments
consolidated statements(Note 1)of comprehensive
income(Note 2)

Electronic
components

Informationequipment

Software

OthersTotal

146,698

30,173

1,767

8,917

187,556-

187,556

806

457

3,160

1,617

6,041

(6,041)-

147,504

30,630

4,928

10,534

193,598(6,041)

187,556

Net salesof which to outside
customersof which intersegment
Total

Segment income
4,169
406
197
105
4,878
119
4,998
(loss)
Note: 1. Adjustment of segment income of 119 million yen includes 119 million yen of elimination of inter-segment
trade.
2. Segment income includes adjustments to match operating income as presented in the consolidated statementof income and statement of comprehensive income.
2. Information about impairment losses on fixed assets and goodwill by reportable segments(Significant impairment losses on fixed assets)
Omitted because insufficiently significant(Major changes in goodwill)
Omitted because insufficiently significant(Significant gain on bargain purchase)
Omitted because insufficiently significant

9