October 31, 2014

Summary of Consolidated Financial Results
For the First Half Ended September 30, 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:

KAGA ELECTRONICS CO., LTD.
8154
Tokyo Stock Exchange, First Section
http://www.taxan.co.jp/
President & COO
Ryoichi Kado
Director, Finance & Administration Headquarters
Eiji Kawamura+81-(0)3-5657-0111
November 13, 2014
December 5, 2014
Yes
Yes (for institutional investors)(Yen in millions, rounded down)

1.

Financial results for the first half of the fiscal year ending March 2015 (April 1, 2014 – September 30, 2014)(1) Result of operations (Consolidated, year-to-date)(Percentage figures represent year on year changes)
Net sales
Million yen%

Operating income

Ordinary income

Million yen

Million yen%

Net income%

Million yen%

First half ended September 2014
120,318
(1.4)
3,067
39.8
3,636
49.2
2,157
59.4
First half ended September 2013
122,077
17.6
2,194
2,437
1,352
Note: Comprehensive income: First half of FY3/2015: 3,073 million yen (46.3%), First half of FY3/2014: 2,100 million yen (-%)
Net income per shareFirst half ended September 2014
First half ended September 2013

Net income per share fully diluted
Yen

Yen

76.34
47.88

-

(2) Financial Position (Consolidated)
Total assets
As of September 30, 2014
As of March 31, 2014
Notes: Shareholders’ equity
As of September 30, 2014: 55,475 million yen
2.

Net assets

Equity ratio

Million yen

Million yen%

122,132
126,028

55,50952,82545.4
41.9

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 2015 (Consolidated, April 1, 2014 to March 31, 2015)(Percentage figures represent year on year changes)
Net income
Net sales
Operating income
Ordinary income
Net income
per share
Million yen%

Million yen%

Million yen%

Million yen%

Yen

260,000

0.8

5,300

3.8

6,000

2.6

4,000

3.2

141.56

Full year

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

* Notes(1) Changes in significant subsidiaries (Changes in specific subsidiaries accompanied by changes in the scope of
consolidation): None
(2) Use of of accounting methods specifically for the preparation of the quarterly consolidated financial statements: None
(3) Changes in accounting principles and estimates, and retrospective restatement(a) Changes due to revision of accounting standards: Yes(b) Changes other than in (a): None(c) Changes in accounting estimates: None(d) Retrospective restatement: None
Note: Please refer (3) Changes in accounting principles and estimates, and retrospective restatement in 2. Other Information on page 3(4) Number of shares outstanding (common stock)(a) Shares outstanding (including treasury stock)
As of September 30, 2014:

28,702,118

As of March 31, 2014:

28,702,118

445,345

As of March 31, 2014:

445,002

Period ended September 30, 2013:

28,258,039(b) Treasury stock
As of September 30, 2014:(c) Average number of shares (quarterly consolidated cumulative period)
Period ended September 30, 2014:

28,256,963* Description of quarterly review procedure implementation status
The rule mandating a review of quarterly financial statements (under the Financial Instruments and Exchange Act) does not apply
to this Summary of Financial Results. It is under the quarterly review procedure process based upon the Financial Instruments
and Exchange Act at the time of disclosure of 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.

Index for Supplementary Information
1.

Results of Operations ............................................................................................................................................. 22.

(1) Overview on consolidated business performance ........................................................................................ 2(2) Overview of financial condition ................................................................................................................... 3(3) Forecast ........................................................................................................................................................ 3
Other Information................................................................................................................................................... 3
(1)
(2)

3.

Changes in significant subsidiaries: ............................................................................................................. 3
Use of of accounting methods specifically for the preparation of the quarterly consolidated financial
statements: .................................................................................................................................................... 3(3) Changes in accounting principles and estimates, and retrospective restatement: ......................................... 3
Quarterly Consolidated Financial Statements ........................................................................................................ 4(1) Quarterly consolidated balance sheet ........................................................................................................... 4(2) Quarterly consolidated statements of income and consolidated statements of comprehensive income ....... 6(3) Quarterly consolidated statements of cash flows ......................................................................................... 8(4) Notes to quarterly consolidated financial statement ..................................................................................... 9(Notes to going concern assumptions) .................................................................................................................. 9(Significant change in shareholders’ equity) ........................................................................................................ 9(Segment information).......................................................................................................................................... 9

1

1.
(1)

Results of Operations
Overview on consolidated business performance
In the first half of the fiscal year, the Japanese economy staged a gentle recovery despite a temporary decline in consumer
spending in reaction to the hike in the consumption tax rates as positive factors including economic measures by the Japanese
government and the Bank of Japan’s monetary easing.
In the electronics industry, demand for consumer electronics remained weak, but demand in the markets for tablets and for
devices installed in automobiles continued to expand, in addition to strong growth in sales of electronics in the environmental,
energy, and heath-care sectors.
In this environment, the KAGA ELECTRONICS Group reinforced collaboration among group companies, worked onincreasing sales to major current customers, developed additional new products and expanded its network of overseas
facilities, as well as engaging in cost-cutting measures such as moving its headquarters to lower its rental expenses.
Consequently, consolidated net sales in the first half decreased 1.4% from one year earlier to 120,318 million yen, operating
income increased 39.8% to 3,067 million yen, ordinary income increased 49.2% to 3,636 million yen, and net income
increased 59.4% to 2,157 million yen.
Business segment performance was as follows.
(a) Electronic components (Development, manufacture and sale of semiconductors, general electronic components andother products, EMS*, and other activities)
In Electronic Components, there were declines in demand for electronic components, semiconductors, EMS and otheritems used in amusement equipment in Japan. Overseas, however, profit increased as demand for EMS for electronic
devices and other products was strong. The result was a 1.1% decrease in segment sales to 93,519 million yen and a
65.4% increase in segment (operating) income to 2,648 million yen.
* Electronics manufacturing service is a term used for the provision of product development and manufacturing services on an
outsourcing basis.

(b) Information equipment (Sales of PCs, PC peripherals, photograph and imaging products, original-brand products, andother products)
In Information Equipment, sales of PCs and other consumer products in the information equipment category increased
due to replacement demand for Windows XP computers. Moreover, sales of housing-related products andenvironmental-related items were strong, although there was some impact on profits from sluggish demand for digitalelectrical household goods. As a result, segment sales increased 0.3% to 19,828 million yen and there was an operating
profit for the segment of 162 million yen (down 12.0% from the same quarter one year earlier).
(c) Software (Production of computer graphics, planning and development of amusement products, and other activities)
In Software, activities in this segment focused mostly on the production of computer graphics for animation
applications and on the development and sales of game software. Orders for the development of electronic games
declined however. Segment sales decreased 32.3% to 1,047 million yen and there was an operating profit for thesegment of 122 million yen (down 47.0% from the same quarter one year earlier).
(d) Others (Electronic device repairs and support, sales of sporting goods, and other activities)
In Others, the manufacture and sale of amusement machines to arcades in Japan peaked out and sales declined.
Moreover, increased costs and other factors resulting from replacement of items carried in the golf products sales
business resulted in earnings falling in this segment. Consequently, segment sales decreased 3.9% to 5,922 million yen
and there was an operating profit for the segment of 51 million yen (down 70.5% from the same quarter one year
earlier).

2(2)Overview of financial condition(a) Assets, liabilities and net assets
Total assets as of September 30, 2014 were 122,132 million yen, down 3,896 million yen from March 31, 2014. This was
mainly due to a decline in sales receivables.
Total liabilities were 66,623 million yen, down 6,579 million yen from March 31, 2014. This was mainly due to a declinein (inventory) purchasing/stocking is payables.
As a result, net assets totaled 55,509 million, up 2,683 million yen from March 31, 2014. This was mainly due to net
income being recorded for the quarter.
(b) Cash flows
There was a net increase of 1,003 million yen in cash and cash equivalents from the end of the previous fiscal year to
14,365 million yen at the end of the first half.
(Operating activities)
Net cash provided by operating activities was 4,940 million yen compared with 3,772 million yen one year earlier. The
main source of cash was income before income taxes and minority interests.
(Investing activities)
Net cash used in investing activities decreased from 1,033 million yen to 730 million yen. The primary use of cash was
payments for the purchase of property, plant and equipment.
(Financing activities)
Net cash used in financing activities increased from 708 million yen to 3,409 million yen. Repayments of short-term loans
payable were the primary use of cash.

(3)

Forecast
There are no revisions to the forecast for the fiscal year ending on March 31, 2015 that was announced on May 9, 2014 in“Summary of Consolidated Financial Results For the Year Ended March 2014 [Japan GAAP].”

2.
(1)Other Information(2)

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

(3)

Changes in accounting principles and estimates, and retrospective restatement:
Changes in accounting policy(Application of accounting standard for retirement benefits)
Beginning at the start of the first quarter of the fiscal year ending on March 31, 2015, the Company is using AccountingStandard for Retirement Benefits (ASBJ Statement No. 26, May 17, 2012) and Guidance on Accounting Standard for
Retirement Benefits (ASBJ Guidance No. 25, May 17, 2012) as prescribed in paragraph 35 of this accounting standard 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 first half is included in retained earnings.
As a result, at the beginning of the first half, retirement benefit liabilities decreased 292 million yen and retained earnings
increased 188 million yen. However, effects on first half operating income, ordinary income and income before income
taxes and minority interests were negligible.

Changes in significant subsidiaries:
None

3

3.
(1)

Quarterly Consolidated Financial Statements
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

First half ended September 2014
(As of September 30, 2014)

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

14,96756,449114
16,699
910
4,651
853
4,599
(47)

102,930

99,199Noncurrent 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

5,573
1,853
885
4,039
2

Total property, plant and equipment

12,625

12,354

715
486
332

654
472
137

1,533

1,264

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

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

5,848
466
3,952
(952)

Total investments and other assets

8,938

9,314

Total current assets

Intangible assets
Goodwill
Software
Other
Total intangible assets

Total noncurrent assets
Total assets

4

23,09822,933126,028

122,132(Million yen)
Fiscal year ended March 2014
(As of March 31, 2014)
LIABILITIESCurrent liabilities
Notes and accounts payable-trade
Short-term loans payable
Income taxes payable
OtherFirst half ended September 2014
(As of September 30, 2014)

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

39,19010,4061,095
6,877

63,41057,569Provision for directors' retirement benefits
Other

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

3,967
1,457
1,656
1,973

Total noncurrent liabilities

9,792

9,054

Total liabilities

73,202

66,623

NET ASSETS
Shareholder’s equity
Capital stock
Capital surplus
Retained earnings
Treasury stock

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

12,133
13,912
29,194(536)

52,92354,703

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

161
0
5
(304)

375
40
626
(271)

Total accumulated other comprehensive income

(137)

771

39

33

Total current liabilities
Noncurrent liabilities
Long-term loans payable
Provision for retirement benefits

Total shareholder’s equity

Minority interests
Total net assets
Total liabilities and net assets

552,82555,509126,028

122,132

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

Net sales
Cost of sales

122,077
106,348

120,318
104,521

Gross profit

15,72815,796

Selling, general and administrative expenses

13,534

12,729Operating income (loss)

2,194

3,067

Non-operating income
Interest income
Dividends income
Commission fee
Foreign exchange gains
Other

26
56
103
15
193

78
65
170
161
197

Total non-operating income

396

674

Non-operating expenses
Interest expenses
Loss on investments in partnership
Other

64
54
34

58
3
43

Total non-operating expenses

153

105

2,437

3,636

1
5
-

7
3
1

6

12

15
34
26
-

4
166
8
4
64

12

1

90

249

Ordinary income (loss)
Extraordinary income
Gain on sales of noncurrent assets
Gain on sales of investment securities
Other
Total extraordinary income
Extraordinary loss
Loss on retirement of noncurrent assets
Loss on valuation of investment securities
Impairment loss
Office transfer expenses
Settlement package
Other
Total extraordinary loss
Income (loss) before income taxes and minority
interests

2,354

3,400

Income, inhabitants and enterprise taxes
Income tax adjustment

757
236

998
237

Total income taxes
Income (loss) before minority interests

994
1,360

1,236
2,164

Minority interests in income (loss)
Net income (loss)

7

7

1,352

2,157

6

(Million yen)First half ended September 2013
First half ended September 2014
(April 1, 2013 – September 30, 2013) (April 1, 2014 – September 30, 2014)
Minority interests in income (loss)
Income (loss) before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to owners of
the parent
Comprehensive income attributable to minority
interests

7

7

7

1,360

2,164

219
6
514
-

214
40
620
33

740

909

2,100

3,073

2,094

3,066

5

7

(3)

Quarterly consolidated statements of cash flows(Million yen)First half ended September 2013
First half ended September 2014
(April 1, 2013 – September 30, 2013) (April 1, 2014 – September 30, 2014)

Operating activities
Income (loss) before income taxes
Depreciation and amortization
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Interest and dividends income
Interest expenses
Loss (gain) on valuation of investment securities
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories
Decrease (increase) in accounts receivable-other
Decrease (increase) in advance payments
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in accounts payable-other and accrued
expenses
Decrease (increase) in consumption taxes refund
receivable
Decrease (increase) in other current assets
Increase (decrease) in other current liabilities
Other, net
Sub-totalInterest and dividends income received
Interest expenses paid
Income taxes paid
Other, net
Net cash provided by (used in) operating activities
Investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of investments in subsidiaries
Payments of short-term loans receivable
Payments for guarantee deposits
Proceeds from collection of guarantee deposits
Other payments
Other proceeds
Net cash provided by (used in) investing activities
Financing activities
Net increase (decrease) in short-term loans payable
Repayment of long-term loans payable
Cash dividends paid
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period

8

2,354
1,006
57
(26)
(83)
64
34
806
(1,284)
46
(791)
1,209

3,400
968
61
(130)
(144)
58
166
4,693
(546)
(40)
(192)
(3,147)

27

47

31
(1)
1,323
(117)
4,658
82
(65)
(905)
2
3,772

369
1,276
(657)
114
6,297
142
(58)
(1,439)
(1)
4,940

(940)
(50)
(351)
497
(184)
(2)
(51)
68
(177)
158
(1,033)

(646)
(119)
(527)
243
(11)
(13)
(8)
12
(195)
533
(730)

1,204
(1,425)
(423)
(64)
(708)
186
2,217
11,87814,096(2,061)
(714)
(563)
(70)
(3,409)202
1,003
13,361
14,365(4)Notes to quarterly consolidated financial statement(Notes to going concern assumptions)
None(Significant change in shareholders’ equity)
None(Segment information)
I. For the first half ended September 2013 (April 1, 2013 – September 30, 2013)
1. Information about sales and income (loss) by reporting segments
Reporting segments

Net sales(of which tooutside customers)(of which intersegment)
Total
Segment income(loss)
Notes:

Adjustments(Note 1)

(Million yen)Amount on thequarterly
consolidated
statements of income
and consolidated
statements ofcomprehensive
income(Note 2)

Electronic
components

Informationequipment

Software

OthersTotal

94,595

19,767

1,548

6,165

122,077-

122,077

793

310

2,600

1,038

4,742

(4,742)-

95,38820,077

4,149

7,204

126,819(4,742)122,077

1,601

184

231

175

2,193

0

2,194

1. Adjustment in segment income of 0 million yen includes 17 million yen for elimination of intersegment trade and -16 million yen for amortization of goodwill.
2. Segment income (loss) is adjusted for operating income (loss) on the quarterly consolidated statements
of income and consolidated statements of comprehensive income.

2. Reportable segment information concerning impairment losses or goodwill amortization(Significant impairment losses for noncurrent assets)
There were no significant impairment loss or goodwill amortization.
(Significant changes in goodwill)
Omitted because insufficiently significant

9II. For the first half ended September 2014 (April 1, 2014 – September 30, 2014)
1. Information about sales and income (loss) by reporting segments
Reporting segments

Net sales(of which tooutside customers)(of which intersegment)
Total
Segment income(loss)
Notes:

Adjustments(Note 1)

(Million yen)Amount on thequarterly
consolidated
statements of income
and consolidated
statements ofcomprehensive
income(Note 2)

Electronic
components

Informationequipment

Software

OthersTotal

93,51919,828

1,047

5,922

120,318-

120,318

584

325

2,022

879

3,811

(3,811)-

94,103

20,154

3,070

6,802

124,130(3,811)

120,318

2,648

162

122

51

2,985

81

3,067

1. Adjustment in segment income of 81 million yen includes 81 million yen for elimination of intersegment trade.
2. Segment income (loss) is adjusted for operating income (loss) on the quarterly consolidated statements
of income and consolidated statements of comprehensive income.

2. Reportable segment information concerning impairment losses or goodwill amortization(Significant impairment losses for noncurrent assets)
Omitted because insufficiently significant.
(Significant changes in goodwill)
There were no significant change in goodwill.
(Significant changes in gain on bargain purchase)
Omitted because insufficiently significant

10