A member of FASF
November 10, 2008

Summary of Consolidated Operating Results and Financial Position
For the First Half ended September 2008
Name of Company:
Stock Code:
Stock Exchange Listing:
URL:
Representative
Title:
Name:
Contact Person
Title:Name:
Tel:
Date of filing
Date of commencement ofdividend payment (tentative):

KAGA ELECTRONICS CO., LTD.
8154
Tokyo Stock Exchange, First Section
http://www.taxan.co.jp/
President & COO
Tomohisa Tsukamoto

Senior Managing Director, Finance & Administration Headquarters
Waichiro Shimoyama+81-(0) 3-4455-3111
November 13th, 2008
December 8th, 2008
(Yen in millions, rounded down)

1. Financial results for the first half ended September 2008 (April 1, 2008 ‐ September 30, 2008)(1) Results of operations (consolidated, year-to-date)(Percentage figures represent year on year changes)
Operating income
Ordinary income
Net income (Interim)
MillionYoYMillionYoYMillionYoY
yen Change %yen Change %yen Change %
3,224
3,444
952
2,876
1.8
2,887
(5.0)
765
(53.5)First half ended September 2008
First half ended September 2007

Net sales
MillionYoY
yen Change %141,192
136,139
7.9

First half ended September 2008
First half ended September 2007

Net income per
Net income per share,
share
fully diluted
Yen
Yen
33.95
26.72
-

(2) Financial position (Consolidated)
Total assets

Net assets

Million yen
136,637
130,423

Equity ratio

Million yen
54,37952,192First half ended September 2008
Fiscal year ended March 2008
Note: Shareholders’ equity
As of September 30, 2008 : 52,295 million yen
As of March 31, 2008:
52,140 million yen

Net assets per share

%
38.3
40.0

Yen
1,863.84
1,858.26

2. Dividends
Dividend per shareFirst quarter

Second quarter
Yen
25.00
25.00

Yen
Fiscal year ended March 2008
Fiscal year ending March 2009
Fiscal year ending March 2009 (Est.)
Note: No changes in dividend forecast for the first half-

Third quarter

End fiscal Year

Yen

Yen
25.00

-

Full year
Yen
50.00
-

25.00

50.00

3. Forecast for the fiscal year ending March 2009 (Consolidated, April 1, 2008 to March 31, 2009)
Net sales
Million%Full year
290,000(0.5)
Note: No change in full year earnings forecast

Operating profit
Million
6,000%(22.9)-1-(Percentage figures represent year on year changes)
Net income
Ordinary income
Net income
per share
Million% Million
%
Yen
6,200
(11.9)
2,400(34.9)
85.54

4. Others(1) Changes in significant subsidiaries (Changes in specific subsidiaries accompanied by changes in the scope of consolidation):
New: None
Excluded: None
(2) Use of simple method in accounting procedures and application of accounting procedures specific to the consolidated quarterly
financial statements: None
(3) Changes in accounting principles and procedures, presentation methods and other items in the preparation of the quarterly
consolidated financial statements (Presented in the section on Changes to the Basis of Presenting the Quarterly Consolidated
Financial Statements):(a) Changes due to revision of accounting standards: Yes(b) Changes other than in (a): Yes
Note: For details, see Page 5: Results of Operations and Financial Condition, Sub-section 4. Other items (3) Changes in accounting
principles, procedures, presentation methods, etc. for preparation of quarterly consolidated financial statements(4) Numbers of shares outstanding (common stock)(a) Shares outstanding (including treasury stock)
As of September 30, 2008:
28,702,118
As of March 31, 2008:
28,702,118(b) Treasury stock
As of September 30, 2008:
644,322
As of March 31, 2008:
643,305(c) Average number of shares (consolidated half cumulative)
Period ended September 30, 2008:
28,058,403
Period ended September 30, 2007:
28,656,384
Cautionary statement regarding forecasts of operating results and special notes
1.
Forecasts for the fiscal year ending March 2009 announced on May 12, 2008 was revised.
2.
The forecasts presented above are estimates based on information available to management at the time this report was
prepared. Actual results may differ from these forecasts due to changes in business conditions and other factors. For a moredetailed discussion of these factors, see Page 5: Results of Operations and Financial Condition, Sub-section 3.Forecast for
fiscal year ending March 20093.
Effective from the current fiscal year, the Company is using the “Accounting Standards for Quarterly Consolidated
Financial statements” (Accounting Standards Board of Japan Statement No. 12) and “Implementation Guidance for
Accounting Standards for Quarterly Consolidated Financial Statements” (Accounting Standards Board of Japan
Implementation Guidance No. 14). In addition, the quarterly consolidated financial statements have been prepared inaccordance with “Rules for Quarterly Consolidated Financial Statements.”-2-

Results of Operations(1) Analysis of results of operations
During the first half of the current fiscal year, the global economy began to weaken as the economic outlook became
even more uncertain. Major causes are financial market turmoil that began with the U.S. subprime loan crisis, therapid increase in the cost of crude oil and other resources, and the worldwide drop in stock prices. Signs of slowing
growth have started to emerge even in eastern Asia, and especially India and China, a region where economic
growth has been strong.
The Japanese economy has been weakening, too. There are increasing indications of a decline in economic growth,
including lackluster private-sector capital expenditures and a downturn in consumer spending.
In the electronics industry, manufacturers in Japan and other countries took numerous actions to launch new
products and conduct high-profile marketing campaigns to target expected demand associated with the Beijing
Olympics. However, this demand failed to emerge. Following the Olympics, sales of digital home electronics, cell
phones and all other categories of electronic products have been sluggish. In addition, the difficulty of raising prices
to reflect the higher cost of raw materials is exerting pressure on profit margins.
In this environment, the companies of the KAGA ELECTRONICS Group worked even more closely together andfocused on operating more efficiently. At the same time, group companies worked on handling more new products
and expanding their sales routes.
First half consolidated net sales increased 3.7% to 141,192 million yen, operating income increased 12.1% to 3,224
million yen, ordinary income increased 19.3% to 3,444 million yen and net income increased 24.4% to 952 million
yen.
Performance by geographic segment was as follows.
1) JapanConsumer spending in Japan declined because of financial market volatility and rising prices linked to the higher
cost of raw materials. The result was a downturn in shipments of high-end digital home electronics and otherproducts. This caused a decline at the KAGA ELECTRONICS Group in the volume handled of semiconductors andelectronic components used in these products. However, first half performance benefited from strong orders forelectronic components and EMS* components used in amusement equipment. Furthermore, sales in Japan include acontribution from a subsidiary newly consolidated in the first half of this fiscal year. Overall, sales in Japan
increased 5.4% to 121,537 million yen and operating income increased 37.5% to 2,407 million yen.
* Electronics Manufacturing Service is a term used for companies that design, test, manufacture, distribute, andprovide return/repair services.
2) North America
In the United States, the economy continues to be severely impacted by the subprime loan crisis and other events. In
addition, consumer spending is flat. These difficult market conditions caused a decline in orders at group companies
for semiconductors used in digital home electronics and components used in amusement equipment. Sales fell
68.0% to 311 million yen and the operating loss was 52 million yen compared with a 71 million yen loss one year
earlier.
3) Europe
Just as in the United States, consumer spending in Europe was flat as the economy in this region remained weak.
Despite these challenges, the Group received a large volume of orders in the EMS business for components used inclimate control equipment and other products. The result was a 330.2% increase sales to 2,659 million yen andoperating income of 20 million yen compared with a 160 million yen loss one year earlier.

-3-4) East Asia
Economic growth continued in this region along with strong corporate earnings, particularly in India and China. But
growth in this region is beginning to slow because of the weakening global economy. One result was a decline inorders in the EMS business for components used in office equipment, climate control equipment and other products.
Sales decreased 1.5% to 30,767 million yen and operating income decreased 39.4% to 818 million yen.
Net sales by product category
Business

Information equipment
EMS
Semiconductors
General electronic components
Others
Total

Second quarter FY2008
For the first half ended Sept. 2007
AmountPct. share
28,301
20.8
42,431
31.2
29,84321.9
16,62612.2
18,93613.9
136,139
100.0(million yen)
Second quarter FY2009
For the first half ended Sept 2008
AmountPct. share
31,32322.2
44,02931.1
30,00921.3
19,611
13.9
16,21811.5
141,192
100.0

Information equipment
In this segment, the Group concentrated on increasing sales of PCs and peripherals to current customers, targeting
demand associated with the Beijing Olympics to increase sales of digital editing equipment for TV broadcasters, andincreasing sales of security system products and other new products. The result was a 10.7% increase in sales to
31,323 million yen.
EMS
Overseas, there was a decline in sales in China for EMS operations serving Japanese manufacturers of officeequipment mainly because of lower production by client companies. In Japan, performance was supported by strong
orders for the manufacture of components for amusement equipment. Total segment sales increased 3.8% to 44,029
million yen.
Semiconductors
There was a decline in the volume of sound ICs sold to overseas cell phone manufacturers, which used to purchaselarge volumes of these ICs. This decrease was offset by strong orders for semiconductors used in televisions andamusement equipment. The addition of new products, including devices from overseas semiconductor companies,
and measures to increase the number of customers were responsible for the growth in orders. Overall, segment sales
increased 0.6% to 30,009 million yen.
General electronic components
In this segment, there was an increase in sales of electronic components used in PCs because of activities aimed at
capturing more orders for these parts. There was also an increase in orders for electronic components used inamusement equipment. The result was an 18.0% increase in sales to 19,611 million yen.
OthersThere was a substantial decline in the volume of chemical film and other photography products handled. Segment
sales decreased 14.4% to 16,218 million yen.
*Year-on-year changes in sales are provided for reference.

-4-

2. Analysis of financial condition
Assets totaled 136,637 million yen at the end of the first half, 6,213 million yen more than at the end of the previous
fiscal year. Increases in merchandise and manufactured products and in buildings and structures were largely
responsible for this increase.
Net assets increased 2,187 million yen to 54,379 million yen and the equity ratio decreased 1.7 point to 38.3%.
Cash flows
There was a net decrease of 20 million yen in cash and cash equivalents to 13,990 million yen at the end of the firsthalf.
Net cash provided by operating activities was 3,806 million yen due to a decrease in notes and accounts
receivable-trade and other items.
Net cash used in investing activities was 2,568 million yen because of payments for the purchase of property, plantand equipment and other items.
Net cash used in financing activities was 1,111 million yen because of dividend payments and other items.

3. Forecast for fiscal year ending March 2009
(1) Revisions to consolidated forecast for fiscal year ending March 2009 (April 1, 2008 – March 31, 2009)(Million yen)
Net sales
Operating
Ordinary
Net income
incomeincomePrevious forecast (A)295,000
6,750
7,100
4,100
Revised forecast (B)290,000
6,000
6,200
2,400
Difference (B) – (A)(5,000)(750)(900)(1,700)Pct. change (%)(1.7)(11.1)(12.7)(41.5)(Ref.) Previous fiscal year
291,331
7,786
7,040
3,684
(2) Reasons for revisions
Japan’s economy is expected to continue weakening because of turmoil in global financial market sparked by the
U.S. subprime loan crisis, the high cost of crude oil and other raw materials, and the effects of a stronger yen andfalling stock prices.
The KAGA ELECTRONICS Group is taking many actions to achieve growth. However, the recent rapid increase in
the yen’s value along with expected demands by customers for cost reductions and reductions in customers’
production volume are posing challenges. In addition, synergies from the seven companies that joined the Group in
the current fiscal year are not yet making a contribution to operating results. Performance is also affected by delaysin the introduction of AV products. As a result, KAGA ELECTRONICS expects sales and earnings to be less than in
the original forecast. In addition, the net income forecast has been reduced because of a first half investment security
valuation loss and other items.
In response to this challenging operating environment, Group companies are seeking to capture more synergies
through collaboration among all group members. Another goal is expanding the range of products handled by adding
new products and more trading rights. In addition, the Group is working on operating more efficiently in order toimprove operating results.

4. Others(1) Changes in significant subsidiaries (Changes in specific subsidiaries accompanied by changes in the scope of
consolidation)None(2) Simplified accounting methods and special accounting treatment used only for preparation of quarterly
consolidated financial statements
None(3) Changes in accounting principles, procedures, presentation methods, etc. for preparation of quarterly-5-consolidated financial statements
1. Beginning with the current fiscal year, the “Accounting Standard for Quarterly Financial Reporting” (AccountingStandards Board of Japan Statement No. 12) and the “Guidance on Accounting Standard for Quarterly Financial
Reporting” (ASBJ Guidance No. 14) have been applied. In addition, the quarterly consolidated financial
statements are prepared in accordance with “Rules for Quarterly Consolidated Financial Statements.”
2. Beginning with the first quarter of the current fiscal year, valuations of inventories held for sale in the ordinary
course of business are determined in accordance with “Accounting Standard for Measurement of Inventories”(ASBJ Statement No. 9). Previously inventories were valued primarily based on the cost method using thespecific identification method or the cost method using the moving-average method. As a result, inventories are
now valued primarily based on the cost method using the specific identification method (in which the book valuesof inventories are reduced to reflect declines in profitability) or the cost method using the moving-average method(in which the book values of inventories are reduced to reflect declines in profitability). This change resulted in adecrease of 68 million yen each in first half gross profit, operating income, ordinary income and income before
income taxes. The effect on business segments is shown in the business segment information section.
3. Beginning with the first quarter of the current fiscal year, the “Practical Solution on Unification of Accounting
Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (ASBJ Practical Issues Task
Force No. 18) has been applied and the consolidated financial statements revised as necessary. This change did
not have a significant effect on earnings.
4. Financial leases other than leases where ownership is transferred were previously accounted for using accounting
methods for rental transactions. Beginning with the current fiscal year, the Group has applied “AccountingStandard for Lease Transactions” (ASBJ Statement No. 13) and “Guidance on Accounting Standard for Lease
Transactions” (ASBJ Guidance No. 16) before the required application of this standard. As a result, financial
leases other than leases where ownership is transferred are now accounted for using accounting methods
applicable to ordinary buying and selling transactions. This change did not have a significant effect on earnings.

-6-

5. Quarterly Consolidated Financial Statements(1) Quarterly balance sheets

First half ended September 2008
(As of September 30, 2008)(Million yen)
Fiscal year ended March 2008
(As of March 31, 2008)

Cash and cash equivalent

14,00014,021

Notes and account receivable-trade72,33572,53067

84

18,35015,998

902

506

4,354

3,672

735

570

Others

8,182

5,924

Allowance for doubtful receivables

(184)

(161)

118,742

113,147

Buildings and structures, net

2,259

1,012

Machinery, equipment and vehicles, net

1,809

1,919

653

552

1,324

1,324

16

606

6,064

5,415

Goodwill

992

745

Software875

593

Others

194

219

2,062

1,559

Investment securities

5,902

6,596

Deferred tax assets

201

213

Others

4,873

4,637

Allowance for doubtful receivables(1,209)(1,146)

Total investments and other assets

9,768

10,301

17,894

17,276

136,637

130,423(ASSETS)
Current assets

Marketable securities
Merchandize and finished goods
Goods in progress
Raw materials and other supplies
Deferred tax assets

Total current assets
Fixed assets
Property, plant and equipment

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

Total intangible assets
Investments and other assets

Total fixed assets
Total assets-7-

First half ended September 2008
(As of September 30, 2008)

Fiscal year ended March 2008
(As of March 31, 2008)

Notes and accounts payable-trade

58,017

56,109

Short-term bank loans

13,682

11,697

Income tax payable

1,617

2,238

89

137

Others

4,772

4,278

Total current liabilities

78,17874,461

400

625

1,276

1,159

1,075

1,004

1,327

980

4,079

3,769

82,25878,231

Paid-in capital

12,133

12,133

Capital surplus

13,912

13,912Retained earnings

27,61927,413

Treasury stock

(844)

(843)

Total Shareholders’ equity

52,821

52,615

Valuation difference on available-for sales
securities

99

36

Deferred gain or losses on hedges(3)2Foreign currency translation adjustments

(622)

(514)

Total valuation and translation adjustments

(525)

(475)

Minority interests

2,083

51

Total net assets

54,37952,192

136,637

130,423(LIABILITIES)Current liabilities

Allowance for directors’ and corporate auditors’ bonuses

Long-term liabilities
Long-term bank loans
Allowance for retirement benefits for employees
Allowance for retirement benefits for directors andcorporate auditors
OthersTotal long-term liabilities
Total liabilities(NET ASSETS)
Shareholders’ equity

Valuation and translation adjustment

Total liabilities and net assets-8-(2) Quarterly statements of income
For the first half ended September 2008 (April 1, 2008 – September 30, 2008)(Million yen)First half ended September 2008
(April 1, 2008 – September 30, 2008)
Net sales

141,192

Cost of sales

124,297

Gross profit

16,895

Selling, general and administrative expenses

13,670Operating income

3,224

Non-operating income
Interest income

81

Dividend income

58

Exchange income

13

Others250

Total non-operating income

404

Non-operating expenses
Interest expense

68

Others117

Total non-operating expenses

185

Ordinary income

3,444

Extraordinary income
Gain on forgiveness of debt

34

Gain on liquidation of subsidiaries

16

Others15

Total extraordinary income

66

Extraordinary losses
Loss on retirement of fixed assets

79

Loss on revaluation of investment securities

864

Loss on impairment of fixed assets

37

Others106

Total extraordinary losses

1,087

Income before income taxes and minority interests

2,423

Income, residential and enterprise taxes

1,680

Income tax adjustment(191)

Total taxes

1,489

Minority interest in income/loss of consolidated subsidiaries(18)

Net income

952

-9-

For the second quarter ended September 2008 (July 1, 2008 – September 30, 2008)(Million yen)
Second quarter ended September 2008
(July 1, 2008 – September 30, 2008)
Net sales

76,752

Cost of sales

67,959Gross profit

8,793

Selling, general and administrative expenses

6,936

Operating income

1,857

Non-operating income
Interest income

44

Dividend income

10

Others141

Total non-operating income

196

Non-operating expenses
Interest expense

31

Exchange loss

36

Others29

Total non-operating expenses

96

Ordinary income

1,957

Extraordinary income
Gain on forgiveness of debt

34

Gain on liquidation of subsidiaries

16

Others6

Total extraordinary income

57

Extraordinary losses
Loss on retirement of fixed assets

10

Loss on revaluation of investment securities

742

Loss on impairment of fixed assets

37

Others32

Total extraordinary losses

823

Income before income taxes and minority interests

1,191

Income, residential and enterprise taxes

966

Income tax adjustment(268)

Total taxes

697

Minority interest in income/loss of consolidated subsidiaries

16

Net income

476- 10 -

(3) Quarterly statements of cash flows(Million yen)First half ended September 2008
(April 1, 2008 – September 30, 2008)
Operating activities
Income before income taxes and minority interest

2,423

Depreciation

745

Goodwill amortization

128

Increase/(decrease) in allowance for doubtful receivable

83

Interest and dividend income(140)Interest expense

68

Loss/(gain) on revaluation of investment securities

864

Decrease/(increase) in notes and accounts receivable-trade

3,318

Decrease/(increase) in inventories(1,621)

Decrease/(increase) in non-trade receivables(1,286)

Increase/(decrease) in notes and accounts payable

533

Others

1,099

Sub total

6,216

Decrease/(increase) in advance payments(178)

Interest and dividend received

132Interest paid

(61)

Income taxes paid

(2,271)Others(31)

Cash flow from operations

3,806

Investing activities
Payment for purchase of property, plant and equipment(1,509)Proceeds from sales of property, plant and equipment

127

Payment for purchase of intangible assets(379)

Payment along with exchange of stock related to changes in thescope of consolidation(441)

Short term loans provided(667)

Short term loans collected

358

Others(56)

Cash flow from investing activities(2,568)Financing activities
Increase/(decrease) in short-term bank loans, net(377)

Payment of dividends by parent company(700)

Others(33)

Cash flow from financing activities(1,111)

Effect of exchange rate changes on cash and cash equivalents(147)

Increase (decrease) in cash and cash equivalents(20)

Cash and cash equivalents, beginning of period

14,011

Cash and cash equivalents, end of period

13,990- 11 -

Effective from the current fiscal year, the Company is using the “Accounting Standards for Quarterly
Consolidated Financial statements” (Accounting Standards Board of Japan Statement No. 12) and“Implementation Guidance for Accounting Standards for Quarterly Consolidated Financial Statements”(Accounting Standards Board of Japan Implementation Guidance No. 14). In addition, the quarterly consolidated
financial statements have been prepared in accordance with “Rules for Quarterly Consolidated Financial
Statements.”(4) Notes to ongoing concern assumptions
None(5) Segment Information
Operating segment information
For the second quarter ended September 2008 (July 1, 2008 – September 30, 2008)
Operating segment information is not presented since the KAGA ELECTRONICS Group has been engaged in asingle sector generally described as the manufacturing and sale of electronics merchandise and products.
For the first half ended September 2008 (April 1, 2008 – September 30, 2008)
Operating segment information is not presented since the KAGA ELECTRONICS Group has been engaged in asingle sector generally described as the manufacturing and sale of electronics merchandise and products.
Geographical segment information
For the second quarter ended September 2008 (July 1, 2008 – September 30, 2008)(Million yen)
Japan

North
America

Europe

East
Asia

Total

Eliminations
orConsolidated
Corporate

Net sales(1) (of which to outside customers)

62,32277

1,175

13,17776,752−76,752(2) (of which inter-segment)

4,454

65

23

2,996

7,540

(7,540)−66,777143

1,199

16,17384,293(7,540)76,752

1,429

(23)

(5)

479

1,880

(22)

1,857

Total
Operating income (loss)

For the first half ended September 2008 (April 1, 2008 – September 30, 2008)(Million yen)
Japan

North
America

Europe

East
Asia

Total

Eliminations
orConsolidated
Corporate

Net sales(1) (of which to outside customers)(2) (of which inter-segment)
Total
Operating income (loss)

113,585

179

2,608

24,819141,192−

141,192

7,952

131

50

5,948

14,083(14,083)−

121,537

311

2,659

30,767

155,276(14,083)

141,192

2,407

(52)

20

818

3,194

30

3,224

Notes: 1. Countries and regions are classified according to geographical proximity.
2. Countries and regions outside Japan are broken down into the following geographical areas.
(1) North America: United States(2) Europe: United Kingdom, Czech Republic, Russia(3) East Asia: Hong Kong, Singapore, Taiwan, Korea, China, Malaysia, Thailand
3. Change in accounting(Accounting standards on inventories)
Effective from the current fiscal year the company has adapted the “Accounting Standard on
Inventory Evaluation” (Corporate Accounting Standard, No 9, July 5th, 2006). As a result, theoperating profit decreased by 68 million yen in Japan compared with the case where the previous- 12 -

standard was applied.
Overseas sales
For the second quarter ended September 2008 (July 1, 2008 – September 30, 2008)(Million yen)
North America
I Overseas sales
II Consolidated sales
III Share of overseas sales in total sales (%)

609
−
0.8

Europe1,383−
1.8

East Asia
20,058
−
26.1

Total
22,05176,75228.7

For the first half ended September 2008 (April 1, 2008 – September 30, 2008)(Million yen)
North America
I Overseas sales
II Consolidated sales
III Share of overseas sales in total sales (%)

1,011
−
0.7

Europe3,143−
2.2

East Asia
36,100
−
25.6

Total
40,255
141,192
28.5

Notes: 1. Countries and regions are classified according to geographical proximity.
2. Countries and regions outside Japan are broken into the following geographical area:(1) North America: United States(2) Europe: United Kingdom, Czech Republic, Russia(3) East Asia: Hong Kong, Singapore, Taiwan, Korea, China, Malaysia, Thailand
3. Overseas sales refer to sales posted by the Company and its consolidated subsidiaries in countries andregions outside Japan(6) Notes on significant change in shareholder equity
None- 13 -

Appendix
Financial summary of the first half ended September 2007 (April 1, 2007 – September 30, 2007)(1) Quarterly Statements of income(Million yen)First half ended September 2007
(April 1, 2007 – September 30, 2007)
Amount%136,139100.0
119,310
87.6

Account
I. Net sales
II. Cost of sales
Gross profit
III. Selling, general and administrative expenses

16,828
13,951

12.4
10.3

Operating income
IV. Non-operating income
1. Interest income
2. Commission income
3. Dividend income
4. Insurance premium income
5. Others

2,876

2.1

136
63
67
55
159

482

0.4

V. Non-operating expenses
1. Interest expense
2. Discount of sales
3. Exchange loss
4. Equity in income/loss of unconsolidated subsidiaries
5. Others

60
2
244
36
128

471

0.4

2,887

2.1

Ordinary income
VI. Extraordinary income
1. Gain on sale of fixed assets
2. Gain on sale of investment securities
3. Reversal of provision for retirement allowance for directors
4. Others

13
13
31
10

68

0.1

VII. Extraordinary losses
1. Loss on retirement of fixed assets
2. Loss on revaluation of investment securities
3. Provision of allowance for doubtful receivables
4. Others

147
20
334
155

659

0.5

2,297

1.7

1,590
(59)
765

1.1
(0.0)
0.6

Income before income taxes and minority interests
Income, residential and enterprise taxes
Income tax adjustment
Minority interest in income/loss of consolidated subsidiaries
Net income- 14 -

1,459
131

(2) Quarterly statement of cash flow
(Million yen)First half ended September 2007
(April 1, 2007 – September 30, 2007)

Account

AmountI. Cash flow from operations
Income before income taxes and minority interest

2,297

Depreciation

665

Goodwill amortization

115

Increase in retirement allowance for employees

44

Decrease in retirement allowance for directors(184)

Increase in accrued bonus for directors

83

Increase in allowance for doubtful receivable

328

Interest and dividend income(205)

Interest expense

62

Gain on sale of investment securities(13)

Decrease in notes and accounts receivable-trade

2,449

Increase in inventories(686)

Decrease in notes and accounts payable(4,377)

Decrease in other current assets

1,242

Decrease in other current liabilities(85)

Others(551)

Sub total

1,183

Increase in advance payments(43)Interest and dividend received

212

Interest paid

(64)

Income taxes paid

(2,125)

Others181

Cash flow from operations(655)- 15 -

First half ended September 2007
(April 1, 2007 – September 30, 2007)

Account

AmountII. Cash flow from investing activities
Payment for purchase of property, plant and equipment(634)

Proceeds from sales of property, plant and equipment

700

Payment for purchase of intangible assets(181)

Payment for purchase of investment securities(847)

Proceeds from sales of investment securities

164

Payment for purchase of affiliates' securities(150)

Payment along with exchange of stock related to changes
in the scope of consolidation(2)

Increase in short term loans(38)

Decrease in short term loans

104

Others65

Cash flow from investing activities(818)

III. Cash flow from financing activities
Increase/(decrease) in short-term bank loans, net

3,085

Repayment of long-term borrowing(1,320)

Payment for acquisition of treasury stocks, net
Payment of dividends by parent company

(2)
(704)

Payment of dividends to minority shareholders(7)

Others(15)

Cash flow from financing activities

1,034

IV. Effect of exchange rate changes on cash and cash equivalents

46

V. Decrease in cash and cash equivalents(394)

VI. Cash and cash equivalents, beginning of period

14,558VII. Cash and cash equivalents, end of period

14,164- 16 -

(3) Segment Information
Operating segment information
For the first half ended September 2007 (April 1, 2007 – September 30, 2007)
Operating segment information is not presented since the KAGA ELECTRONICS Group was engaged in a single
sector generally described as the manufacturing and sale of electronics merchandise and products.
Geographical segment information
For the first half ended September 2007 (April 1, 2007 – September 30, 2007)(Million yen)
Japan

North
America

Europe

East
Asia

Total

Eliminations
orConsolidated
Corporate

Net sales
107,149

660

560

27,769136,139−

136,139

8,172

312

57

3,476

12,019(12,019)−

Total

115,321973

618

31,245

148,158(12,019)

136,139

Operating expenses

113,570

1,044

778

29,894145,287(12,025)

133,262

1,751

(71)

(160)

1,351

2,870

6

2,876

(1) (of which to outside customers)(2) (of which inter-segment)

Operating income (loss)

Notes: 1. Countries and regions are classified according to geographical proximity.
2. Countries and regions outside Japan are broken down into the following geographical areas.
(1) North America: United States(2) Europe: United Kingdom, Czech Republic, Russia(3) East Asia: Hong Kong, Singapore, Taiwan, Korea, China, Malaysia, Thailand
Overseas sales
For the first half ended September 2007 (April 1, 2007 – September 30, 2007)(Million yen)
North America
I Overseas sales
II Consolidated sales
III Share of overseas sales in total sales

1,072
−
0.79%

Europe
1,349
−
0.99%

East Asia
33,810−24.83%

Total
36,232
136,139
26.61%

Notes: 1. Countries and regions are classified according to geographical proximity.
2. Countries and regions outside Japan are broken into the following geographical area:(1) North America: United States(2) Europe: United Kingdom, Czech Republic, Russia(3) East Asia: Hong Kong, Singapore, Taiwan, Korea, China, Malaysia, Thailand
3. Overseas sales refer to sales posted by the Company and its consolidated subsidiaries in countries andregions outside Japan- 17 -