Information Meeting for Interim FY 2009

November 25, 2008
KAGA ELECTRONICS CO., LTD. (TSE 1st section, 8154)
2-2-9 Hongo, Bunkyo-ku, Tokyo 113-8503
Tel: (03) 4455-3131 Fax: (03) 3815-6807
http://www.taxan.co.jp

Financial Highlights
First half of fiscal year ending in March 2009
April to September 2008
(Consolidated First Half)

2© 2008 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

■ Financial Highlights of Interim FY 2009
Comparative Consolidated Income Statement
Net sales
Cost of sales

平成18年3月期（million yen）

Interim FY2008

Interim FY2009

136,139100.00%141,192

100.00%5,053

平成19年3月期（予）119,31087.64%

124,297

88.03%

4,987

Change16,82812.36%

16,89511.97%

67

13,951

10.25%

13,670

9.68%

-281

2,876

2.11%

3,224

2.28%

348

Non-operating income

482

0.36%

404

0.33%

-78

Non-operating expenses

471

0.35%

185

0.13%

-286

2,887

2.12%

3,444

2.44%

557

Extraordinary losses-591-0.43%-1,021-0.72%-430

Income before income taxes
and minority interests

2,297

1.69%

2,423

1.72%

126

1,459

1.07%

1,680

1.19%

221

131

0.10%

-191

-0.14%-322-59-0.04%-18-0.01%

41

765

0.56%

952

0.67%

187

Gross profit
Selling, general andadministrative expenses
Operating income

Ordinary income

Income, residential andenterprise taxes
Income tax adjustment
Minority interest in income/lossof consolidated subsidiaries

Net income

3© 2008 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

Comparison of Consolidated Sales by Business Category (Interim FY 2008 and 2009)（million yen）

Information equipment

EMS
Semiconductors

Interim FY 2008

Interim FY 2009 Change

28,301

31,323

20.8%

22.2%

42,431

31.2%

44,02931.2%

29,84321.9%

30,00921.3%

General electronic
components

16,626

OthersTotal

18,936
136,139

12.2%

19,611

13.9% 16,218
100.0% 141,192

13.9%
11.5%
100.0%

3,022
1,598
166
2,985
-2,718
5,053（ million yen ）160,000
140,000
120,000

136,139
18,936
16,626

141,192
16,218
19,611

100,000
80,000

OthersGeneral electronic
components

Semiconductors
29,84330,009EMS

60,00042,431

44,02928,301

31,323

Interim FY2008

Interim FY2009

40,00020,000Informationequipment0

Major changes■Information equipment：Sales Up ¥3,022million（+10.7%）・・Higher sales of PCs and peripherals. Higher sales of
security systems.
■ＥＭＳ：Sales Up ¥ 1,598million（+3.8%）・・Higher sales of LCD units for amusement equipment, but lower sales
from overseas office equipment circuit board assembly as manufacturers reduced production.
■Semiconductors：Sales Up ¥ 166million（+0.6%）・・Higher sales of some semiconductors for digital TVs andsemiconductors for amusement equipment. But lower sales of semiconductors for cell phones.
■General electronic components： Sales Up ¥ 2,985million（+18.0%）・・Higher sales of HD for information devices■Others： Sales Down ¥ 2,718million（-14.4%）・・Lower sales of chemical film and other photography products

4© 2008 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

Selling, General and Administrative Expenses (Interim FY 2008 and FY 2009)
16,000Interim FY2008

Interim FY2009

Change13,951
14,000（million yen）

13,670

Other administrative
expenses

AmountPacking and freight
1,356
R&D
295
Others1,127
Total selling expenses
2,778
Depreciation expenses
162
Rent
1,054
Personnel expenses
6,372
Others3,585
Total administrative
11,173
expenses
Total SG&A expenses
13,951

Pct.
Amount
9.7%
1,195
2.1%
515
8.1%
856
19.9%
2,566
1.2%
205
7.6%
1,136
45.7%
6,444
25.7%
3,318

Pct.
8.7%
3.8%
6.3%
18.8%
1.5%
8.3%
47.1%
24.3%

-161
220
-271
-212
43
82
72
-267

80.1%

11,10381.2%-70100.0%

13,670100.0%-281

12,000

3,585

3,318

Rent

10,000

8,000
6,372

6,444

Depreciation
expenses
Oher selling
expenses

6,000

R&D

4,000

2,000

Personnel
expenses

1,054
162
1,127

1,136
205
856

295

515

1,359

1,195

Interim FY2008

Interim FY2009

Packing andfreight

0

Major changes■Selling expenses：Decline in packing and freight due to review of the logistics system at KAGA HIGHTECH.
Decline of 271 million yen in others mainly due to decreases of 235 million yen in sales promotion expenses (atKAGA DEVICES and other companies) and 63 million yen in advertising and marketing expenses (at KAGACOMPONENTS and other companies).
■Administrative expenses: Personnel expenses up 72 million yen. Workforce up 353 from end of March ’08. 141
in sales departments, 53 in administrative departments, etc. Others down 267 million yen mainly due to 130 million
yen decrease in office expenses (at KAGA ELECTRONICS and other companies).

5© 2008 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

■ Financial Highlights of Interim FY 2009
Consolidated Balance Sheets（ASSETS）
Current assets
Cash and cash equivalents
Notes and account receiv able-trade

Merchandize and finished goods

Goods in progress
Raw materials and other supplies

OthersFixed assets
Property, plant and equipment

Intangible assets
Investments and other assets（million yen）

FY2008 Interim
ChangeFY end FY2009（LIABILITIES）
130,423 136,637
6,214
Current liabilities
113,147 118,742
5,595
平成18年3月期
平成19年3月期（予）Notes and accounts payable-trade
14,021
14,000-21
Short-term bank loans
72,53072,335-195
Others15,99818,3502,352Long-term liabilities
506
902
396
Long-term bank loans
3,672
4,354
682
Others
6,420
8,801
2,381
（NET ASSETS）
Shareholders' equity
Paid-in capital
17,276
17,894
618
Capital surplus
5,415
6,064
649
Retained earnings
1,559
2,062
503
Treasury stock
10,301
9,768-533
Valuation and translation adjustment

Minority interests
Total assets

130,423

136,637

6,214

Total liabilities and net assets

FY2008 Interim
ChangeFY end FY2009
78,231
82,2584,027
74,461
78,178
3,717
56,10958,017
1,908
11,697
13,682
1,985
6,655
6,479
-176
3,769
4,079
310
625
400
-225
3,144
3,679
535
52,192
54,3792,187
12,133
13,912
27,413-843-475
51
130,423

12,133
13,912
27,619
-844
-525
2,083
136,637

0
0
206
-1
-50
2,032
6,214

6
© 2008 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

Consolidated Cash Flows (FY 2008 and Interim FY 2009)（million yen）

Operating activities

640

Interim
FY20093,806

Investing activities-718-2,568-1,850Financing activities718-1,111-1,829-1,186

-147

1,039

Increase (decrease) in cash and cash equivalents

-546

-20

526

Cash and cash equivalents, beginning of period

14,55814,011-547

Cash and cash equivalents, end of period

14,011

13,990-20

FY2008

Effect of exchange rate changes on cash and cash equivalents

Change3,166

Major changes■Operating activities ：Provided net cash of 3,806 million yen mainly because of a decrease inreceivables■Investing activities ： Used net cash of 2,568 million yen mainly because of payments for the purchase of property,
plant and equipment.
■Financing activities ：Used net cash of 1,111 million yen mainly because of dividend payments

7© 2008 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

■ Forecast for the Fiscal Year Ending March 2009
Consolidated Income Statement (FY2008 and FY2009 Plan)
FY2008 (actual)
Amount
平成18年3月期

FY2009 (plan)

Pct.
Amount
平成19年3月期（予）（million yen）

ChangePct.

ChangePct.change

291,331100.0%

290,000

100.0%-1,331-0.5%

256,09087.9%

255,000

87.9%-1,090-0.4%

35,24012.1%

35,000

12.1%

-240

-0.7%

27,4549.4%

29,000

10.0%

1,546

5.6%

7,786

2.7%

6,000

2.1%

-1,786-22.9%

-746

-0.3%

200

0.1%

946

-126.8%

Ordinary income

7,040

2.4%

6,200

2.1%

-840

-11.9%Net income

3,684

1.3%

2,400

0.8%

-1,284-34.9%Net sales
Cost of sales
Gross profit
SG&A expenses
Operating income
Non-operating income※The fiscal 2009 consolidated forecast was revised on November 10, 2008.

8© 2008 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

■ Consolidated Sales Forecast by Business Category (FY2008 and FY2009 plan)（million yen）

FY2008Net sales

Pct.

FY2009(est.)
Net sales

Pct.

Change250,000

63,19221.7%

68,000

23.4%

4,808

7.6%

EMS

90,281

31.0%

82,00028.3%-8,281-9.2%

Semiconductors

65,54422.5%

68,500

23.6%

2,956

4.5%

291,331

290,000

39,24636,00033,06535,500General electronic
components

65,54468,500

Semiconductors

90,28182,000300,000

Change Pct.change

Informationequipment（million yen）

350,000

200,000

Others150,000
EMS

General electronic
components

33,065

11.3%

35,500

12.2%

2,435

7.4%

100,000

Others39,24613.5%

36,00012.4%-3,246-8.3%

50,000

Total

291,331100.0% 290,000

100.0%-1,331-0.5%

63,19268,000FY2008FY2009(est.)

Informationequipment0

Summary■Information equipment：Sales up 4,808 million yen due to higher sales of PC peripherals at KAGA HIGHTECH and projectors at
KAGA COMPONENTS■ＥＭＳ：Sales down 8,281 million yen. Sales for LCD units for amusement equipment in Japan increased, but reduced overseas
production by Japanese office equipment companies lowered sales for main circuit boards for this equipment.
■Semiconductors：Sales up 2,956 million yen. Lower sales of ICs used by major overseas cell phone manufacturers and ICs used indigital TVs. But segment sales benefited from inclusion of new group member ADM and other factors.
■General electronic components：Sales up 2,435 million yen due to higher sales of electronic components for amusement devices inJapan and information devices■Others：Sales down 3,246 million yen due to lower sales of chemical film and other photography products at KAGA HIGHTECH

9© 2008 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

Selling, General and Administrative Expense Forecast (FY2008 and FY2009 plan)（million yen）

Changes in SG&A expenses
FY2008FY2009(est.)

ChangeAmount
2,655
700
2,386
5,741
339
2,184
12,402
6,788

Pct.
Amount
9.7%
2,686
2.5%
1,591
8.7%
1,950
20.9%
6,227
1.2%
411
8.0%
2,300
45.2% 13,618
24.7%
6,443

Pct.
9.3%
5.5%
6.7%
21.5%
1.4%
7.9%
47.0%
22.2%

Total administrative
expenses

21,713

79.1%

78.5%

1,059

Total SG&A expenses

27,454 100.0%

29,000 100.0%

1,546

Packing and freight
R&D
OthersTotal selling expenses
Depreciation expenses

Rent
Personnel expenses
Others

22,772（million yen）

35,000

31
891
-436
486
72
116
1,216
-345

30,00025,00029,000

Other administrative
expenses

6,443

Personnel expenses

27,454

6,788

Rent

20,00015,00012,402

13,618Depreciation expenses
Other selling expenses

10,000
5,000
0

2,184
339
2,386
700
2,655

2,300
411
1,950
1,591
2,686

FY2008FY2009(est.)

R&D
Packing and freight

Summary■Selling expenses： R&D expenses up 891 million yen(Up 470 million yen at KAGA ELECTRONICS Technology Division)■Administrative expenses： Personnel expenses higher as workforce increased by 406（Increases of 7 at WORKBIT, 1 at KAGA EDUCATIONAL MARKETING, 49 at SI ELECTRONICS, 97 at ADM, etc.）

10© 2008 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

Fiscal 2009 Topics

11© 2008 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

■Fiscal 2009 Topics – Stronger Foundation and Business Expansion
A stronger foundation for the KAGA ELECTRONICS Group’s trading company
function = Expansion into new business domains!
Category

M&A

M&A

LSI development

Name

WORKBIT CORPORATIONASIC development SI ELECTRONICS, LTD.

Major products
Development of interface LSIs
(for PCs and peripherals, digitalconsumer electronics, measuring
instruments and other products)

・ASICs for display devices
・ Graphic boards

Objectives as group member
Reinforce technology development
skills involving LSI development
Reinforce technological skills

Upgrade product development
skills in the amusement
equipment fieldUpgrade productdevelopment

New Information devices
・ PCs (Apple Computer)
KAGA EDUCATIONAL MARKETING CO., LTD. ・ Picture editing software
company trading company
・ Installation of LAN systems

M&A

Semiconductor
trading company

ADM INC. (shares traded on JASDAQ)

Enlarge sales channels in theinformation devices business(to include universities, professional
schools, etc.)

Enlarge sales channels

Acquired right to serve as sales
Sales of products made byagent for Analog Devices
Analog Devices, Inc. of the U.S.
・Addition of new products
・ Analog ICs (converters, amps,
・Relationships with new customers
and others devices)・ Digital signal processors and otherA larger product lineup
devices12© 2008 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

■Fiscal 2009 Topics – New Group Companies (1)Added a company that develops interface conversion LSIs = Reinforce
technological skills
Purchased all shares of WORKBIT CORPORATION in April 2008
A company with outstanding technologies that specializes in developing conversion
LSIs for interfaces of all types＝ These LSIs are sold to PC peripheral manufacturers in Japan and othercustomers.
WORKBIT will provide technical support for the many development projects at the KAGA ELECTRONICS Group.
Name： WORKBIT CORPORATION
Established：September 1995
Activities：Planning, development, manufacture and sale of LSIs andother semiconductors for PCs and peripherals, digital consumer
electronics, measuring instruments
Capital：20 million yen
Head office：1-1-2 Chuo,Yamato City, Kanagawa
Sales：178 million yen （year ended February 2008）
Major customer：Large PC manufacturers , PC peripheral manufacturers
in Japan, other companies

13© 2008 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

■Fiscal 2009 Topics – New Group Companies (1)Storage is used in many types of devices
Interface
Karaoke systems
Video cameras

DVD recorders/HDD

I/F
Storage

PCs

Chip mounters

Copiers

HDD・SSD
CF etc■ Conversion boards: Converts old storage into new storage
ー Used for conversions between different types of storage systems
Before conversion

After conversion
Old

New

SCSI and PATA
hard disk

SATA
hard disk

14© 2008 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

■Fiscal 2009 Topics – New Group Companies (1)■ Monitors: Used for development and maintenance = Check operationsUSB
ATA Monitor

Storage (HDD, etc.)■ Inspection equipment: Used for development = Check operations and analyze
defects
Storage (HDD, etc.)

ATA Commander Lite

PC to operate equipment

Occurrence of
defectATA(IDE)New
15© 2008 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

■Fiscal 2009 Topics – New Group Companies (2)Added a company that develops display devices for amusement equipment
Purchased 88.09% of shares of SI ELECTRONICS LTD. in July 2008
A company with outstanding development skills for designing graphic
ASICs and graphic boards＝ Much experience in supplying devices to major amusement equipment
manufacturers and in other activities
Will yield synergies with group companies for OEM supply of display devices foramusement equipment and in other business fields
Name：SI ELECTRONICS LTD.
Established：April 1992
Activities：Development, design, manufacture and sale of devices
for displays in amusement equipment
Capital：244.4 million yen
Head office：YS Kaigan Bldg., 2-2-6 Kaigan, Minato-ku, Tokyo
Sales：1,969 million yen （year ended March 2008）
Major customers：Large amusement equipment manufacturers in Japan, other companies

16© 2008 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

■Fiscal 2009 Topics – New Group Companies (2)Businesses Involving Graphics■ Provision of hardware, software libraries and other items as a system● Development of 3D graphics engines and sale as ASICs● Design and commercialization of substrates for amusement
equipment, AM and other applications● Provision of OS, drivers, software libraries, middleware and othersystem software and software development kits (SDK)● Authoring tools to enable producing applications more efficiently● Workforce made up primarily of engineers that helped develop
Sega TV game consoles17© 2008 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

■Fiscal 2009 Topics – New Group Companies (2)Businesses Other Than Graphics■ Consumer products■ Quality assurance● TV game peripherals, electronic toys
● Able to select the best factory in China
for each product● Automated inspection equipment≫ Used for amusement equipment andother products● Much expertise in high-volume
production with outstanding quality

Amusement equipment parts■ Reliability tests≫ A full assortment of testing machines≫ Used by the KAGA ELECTRONICS
Group

18
© 2008 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

■Fiscal 2009 Topics – New Group Companies (3)Information devices business specializing in the education market = Start ofmeasures to add sales channels
Established KAGA EDUCATIONAL MARKETING CO., LTD. in July 2008
Received sales license from Apple Japan to sell products to students
and academic institutions ＝ Goals are to enlarge sales channels andcapture a larger share of the education market
Sales of the KAGA ELECTRONICS Group’s extensive lineup of products to customers in the education sector
Name：KAGA EDUCATIONAL MARKETING CO., LTD.
Established：July 2008
Activities：Installation of computer systems, sales and support for equipment
and software for the education market, instructors and students
Capital：20 million yen
Head office：2-2-9 Hongo, Bunkyo-ku, Tokyo
Sales target：2 billion yen in three years
Major customers：Professional design schools, universities, others

19© 2008 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

■Fiscal 2009 Topics – New Group Companies (3)Number of Students at Professional Schools in Japan

Design/mass media/sports/arts

Business/languages

Education/
welfareIndustry/
agriculture

FashionAll professional schools
627,224 students
Design and fashion
127,038 students

Hairdresser/
beauty care
Nutrition/cooking
Healthcare※ Source: Preliminary results of basic school survey(Ministry of Education, Culture, Sports, Science and Technology)

20© 2008 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

■Fiscal 2009 Topics – New Group Companies (4)Goal is to add more products and sales channels by bringing a semiconductor
trading company into the KAGA ELECTRONICS Group
Purchased 51% of shares of ADM in August 2008
Acquired the right to sell the products ofAnalog Devices of the U.S.
Goals are to establish relationships with new customers andsupply products for new applications
Name： ADM INC.
Established： February 1975
Activities： Semiconductor trading company that purchases and sells electronic devices
Established to sell the products of Analog Devices
Capital： 560.33 million yen
Head office： 2-6-12 Minami-Honmachi, Chuo-ku, Osaka
Sales：21,765 million yen （year ended October 2007 ）Major customers： Manufacturers of digital consumer electronics, amusement
equipment
and other products in Japan21© 2008 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

■Fiscal 2009 Topics – New Group Companies (4)Share of Sales by Manufacturer (Fiscal 2007)

1%

Major Applications

20%

2%
77%

Digital cameras Cell phones
FlatFlat-panel TVs

Blood pressure meters

Analog Devices

OmniVision

Others

Associated with Company F
IC testers

Gas chromatographs

CT scanners

22© 2008 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

■Fiscal 2009 Topics – New Group Companies (4)■ Core strength of ADM = Sales agent for products of Analog Devices
・ Experience and know-how gained from working with Analog Devices for more than
three decades
・ Sound relationships with many prominent manufacturers＝ Major manufacturers of consumer digital electronics, digital still cameras, industrial
equipment and other products■ Objectives＊Use KAGA ELECTRONICS Group companies to sell the products of Analog Devices＝ Allows selling products to new customers and providing ideas for new applications!
＊Use ADM to sell the broad selection of products handled by the KAGA ELECTRONICS Group＝ Enlarge the product lineup to provide new ideas to current high-end customers!
＊Use the capabilities of KAGA ELECTRONICS Group companies to increase sales and earnings!
＝ Makes possible cooperation in Japan and overseas among the EMS,
general electronic components and semiconductor businesses!
© 2008 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

23

■ Fiscal 2009 Topics – Other Topics■Newly developed inverter (KAGA COMPONENTS)
・Technologies for high-frequency drive inverter and newly
developed DC drive inverter＝ Lower price, less noise, higher efficiency, compact, andspace-saving dimensions■Introduced the new KG-PL105S data projector
・Uses LED lamp = Compact, light weight and energy efficient■Business activities in Russia (KAGA IMPEX)■EcoCute hot water system business・Developed hot water heater remote control by starting with the ASIC
and now supply this remote control to a major hot water heater manufacturer
24© 2008 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

KAGA ELECTRONICS CO., LTD.
Century Tower, 2-2-9 Hongo, Bunkyo-ku, Tokyo 113-8503

Contact: Public Relations Department
TEL:03-4455-3131
FAX:03-3815-6807
E-mail：webmaster@taxan.co.jp

http://www.taxan.co.jp
25© 2008 KAGA ELECTRONICS CO.,LTD All Rights Reserved.