Member, Financial Accounting Standards Foundation

Consolidated Financial Results for the Fiscal Year Ended March 31, 2017
May 15, 2017
Listed company name
Funai Electric Co., Ltd.
Stock exchange listing
Tokyo first section
Securities code
6839
Representative
President and CEO
Inquiries
Officer General Manager
Annual general shareholders meeting
Filing of securities report
Commencement of annual dividend payments
Financial results supplementation
Financial results meeting

URL http://www2.funai.co.jp
Hideaki Funakoshi
Makoto Ueshima
TEL: (072) 870-4395
June 28, 2017
June 28, 2017
June 29, 2017
Yes
Yes

1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2017 (April 1, 2016 – March 31, 2017)(1) Consolidated Operating Results(% shows year on year rates)
Net Income(loss)
Net Sales
Operating Income(loss) Ordinary Income(loss) attributable to ownersof parent
Million yen%
Million yen%
Million yen%
Million yen%
133,838(21.3)(6,775)(7,726)(6,745)－－－
Fiscal Year 2016
170,041(21.5)(10,539)(13,653)(33,839)－－－
Fiscal Year 2015
(Note) Comprehensive Income (6,098)million yen (－%) for the FY2016, 37,479million yen (－%) for the FY2015
Net Income
Net Income(loss)
Per Share
Per Shareon a Fully Diluted
Basis
Yen
Yen
(197.70)－(991.81)－

Fiscal Year 2016
Fiscal Year 2015
(Reference) Equity in earnings of affiliates

Return on
Shareholders’EquityOrdinary
Income(loss) toTotal Assets%(8.4)(32.6)(2) million yen for the FY2016

Operating
Income(loss) Ratio

%
(5.9)
(5.1)
(7.9)
(6.2)
(4) million yen for the FY2015%(2) Consolidated Financial Position

Fiscal Year 2016
Fiscal Year 2015
(Reference)

Total Assets

Net Assets

Million yen
108,685
154,191

Million yen
76,65684,439

Shareholders’ Equity

76,507 million yen for the FY2016(3) Consolidated Cash FlowsNet Cash Provided by(Used in) Operating
Activities
Million yen(13,329)
Fiscal Year 2016
(7,549)Fiscal Year 2015

Net Cash Provided by(Used in) Investing
Activities
Million yen
13,266
11,805

4

Shareholders’Equity Ratio

Net Assets
Per Share
%

70.4
54.0

Yen
2,242.38
2,442.28

83,328 million yen for the FY2015
Net Cash Provided by(Used in) Financing
Activities
Million yen(11,150)
69

Cash and Cash
Equivalents at the End
of Period
Million yen
38,971
47,116

2. Dividends

1Q End2Q End3Q EndYear-End

Annual

Total
Dividend
Payment

yen

yen

yen

yen

yen

Million yen

－
－

30.00
10.00

30.00
10.00

1,023
341

－

－

－

Dividend per Share

Fiscal Year 2015
Fiscal Year 2016－－

Fiscal Year 2017
(Forecast)

－

0.00
0.00
－

Pay-out Ratio Dividend on
Equity Ratio
Consolidated Consolidated
%
－
－

%
1.0
0.4

－

(Note) The dividend forecast for FY 2017 is undetermined; because the high impact stemmed from the recent
fluctuations in exchange rates give to the consolidated net assets. Additionally the company’s dividend policy of DOE is
unchanged. The dividend forecast for FY 2017 will be announced as soon as it is determined.
3 Consolidated Financial Forecast for the Fiscal Year Ended March 31, 2018 (April 1, 2017 - March 31, 2018)(% shows year on year rates)Net
Net Income(loss)
Operating
Ordinary
Income(loss)
Net Sales
attributable to
Income(loss)
Income(loss)
owners of parent
Per Share
Million yen%
Million yen% Million yen% Million yen%
Yen
81,400
23.1
600
700
400
11.72
－
－
－
The First Half
160,000
19.5
600
700
200
5.86
－
－
－
Full Year*Note(1) Changes in Consolidated Subsidiaries (Changes in Scope of Consolidation): No(2) Changes in accounting policies and estimates
1. Changes in accounting policies from revision of accounting standards: Yes
2. Changes in accounting policies from other reason: No
3. Changes in accounting estimates: No
4. Restatement: No(4) Number of Shares Outstanding (Ordinary Shares)
1. Number of shares outstanding (including treasury stock)
2. Number of shares of treasury stock
3. The Average number of outstanding shares

5

As of March 31, 2016
As of March 31, 2017
As of March 31, 2016
As of March 31, 2017
On March 31, 2016
On March 31, 201736,130,796
36,130,796
2,011,687
2,011,765
34,119,119
34,119,089

(Reference)Non-consolidated Financial Results for the Fiscal Year ended March 31, 2017 (April 1, 2016– March 31, 2017)(1) Non-consolidated Operating Results

Fiscal Year 2016
Fiscal Year 2015

Net Sales
Operating Income(loss)
Million yen%
Million yen%
103,982(23.1)(9,084)－135,147(12.2)(7,860)－Net Income(loss)
Per Share
Yen

Fiscal Year 2016
Fiscal Year 2015(62.69)(135.12)(% shows year on year rates)
Net Income(loss)
Ordinary Income(loss)
Million yen%
Million yen%(5,315)2,138－－
14,980(4,610)－－Net Income
Per Shareon a Fully Diluted BasisYen－－(2) Non-consolidated Financial Position
Total Assets
Fiscal Year 2016
Fiscal Year 2015
(Reference)

Million yen
91,994116,239

Shareholders’ Equity

Net Assets
Million yen
71,26970,197

71,119 million yen for the FY2016

Shareholders’ Equity
Ratio

Net Assets
Per Share
%

77.3
60.3

Yen
2,084.46
2,053.17

70,052 million yen for the FY2015

Note:
This document contains forward-looking statements and projections regarding business performance which are nothistorical facts. Please note that these statements are based on the current expectations, assumptions, estimates andprojections of the Funai Group in light of the information currently available to it. Actual performance may materiallydiffer from projections included in this document because of the impacts of uncertainty in various factors.

6

1. Business Performance and Financial Position(1) Overview of Business Performance
1. Business Performance for the Fiscal Year2016
The United States, the Company’s main market, saw a gradual expansion of the economy such as a recovery incompanies’ investment activities, despite a temporary decline in consumer spending. In Europe, the economy’s paceof recovery is accelerating as consumer spending continues to see a gradual upturn. Meanwhile in China, theeconomic slowdown has come to a pause in some areas, as investments in fixed assets and exports have bottomedout.
In Japan, exports and industrial production continue to see a gradual recovery, while consumer spending isrecovering on the back of the robust employment and income environment.
As a result of the above factors, net sales ended at ¥133,838 million, down 21.3% compared to the previous fiscal
year (year on year). Furthermore, the Group posted an operating loss of ¥6,775 million (an operating loss of ¥10,539
million in the previous fiscal year), due to the drop in sales as well as a continued surge in liquid crystal panel prices
until the fiscal year-end, inventory adjustment of old models of LCD-TVs in the first half, and a drop in gross margin
due to tougher price competition in Mexico.
Ordinary loss amounted to ¥7,726 million due to foreign exchange losses in accounts receivable from thedepreciation of the Mexican Peso against the U.S. dollar (an ordinary loss of ¥13,653 million in the previous fiscal
year). Net loss attributable to owners of parent ended at ¥6,745 million (a net loss attributable to owners of parentof ¥33,839 million in the previous fiscal year).
Results by regioni) Japan
Although BD-recorders and ink cartridges increased due to strong sales, LCD-TVs and DVD recorders decreased. As
a result, net sales were ¥31,200 million (down 8.6% year on year) and segment loss (operating loss) resulted in¥8,219 million (the previous fiscal year: segment loss of ¥7,663 million).
ii) Americas
Although BD-players and ink cartridges increased due to strong sales, LCD-TVs decreased due to failure of sales
expansion in new mass merchandisers in the U.S. market to progress as expected as well as tougher pricecompetition in the Mexican market. As a result, net sales ended at ¥101,751 million (down 23.0% year on year)
and segment loss (operating loss) amounted to ¥131 million (a segment loss of ¥2,964 million in the previous
fiscal year).
iii) Asia
Net sales were ¥274 million, down 88.7% year on year due to decrease on ink cartridges. Segment loss (operatingloss) ended at ¥630 million (a segment loss of ¥15 million in the previous fiscal year).
iv) Europe
Total sales decreased, due to the end of LCD-TV sales. As a result, net sales dropped to ¥612 million, down 51.4%
year on year, while segment loss (operating loss) ended at ¥45 million (a segment loss of ¥300 million in theprevious fiscal year).
Results by product segmenti) Audiovisual Equipment
BD-players increased due to strong sales. However, LCD-TVs decreased due to failure of sales expansion in new
mass merchandisers in the U.S. market to progress as expected as well as tougher price competition in the
Mexican market. As a result, net sales ended at ¥115,262 million, down 22.0% year on year.
ii) Information Equipment
Total sales increased due to increase of newly launched ink cartridges developed in-house. As a result, net sales
amounted to ¥5,075 million, up 1.5% year on year.
iii) Other Products
Net sales of other products resulted in ¥13,500 million, down 22.0% year on year, due to the end of sales of audio
accessories, whose contract terminated in the previous term.
(2) Consolidated Financial Forecast for the Fiscal Year 2017
The Company expects the operating climate to remain problematic, but we are committed to these following
strategies and improve sales and profit.

7

(a) Display Business (LCD-TV business)
・Increase sales in the U.S. market : Increase sales with existing customers and open up new customers byintroducing multiple models for large UHD.
・Enter the Japanese market: Increase share in the Japanese market through exclusive business with Yamada Denki
Co., Ltd.
(b) Digital Media Business (DVD, BD business)
・Increase sales of UHD-BD players in the U.S. market.
・Enter the Japanese market: Increase share in the Japanese market through exclusive business with Yamada Denki
Co., Ltd.
(c) Office Solution Business (information equipment-related business)
・Improve profit margin by increasing sales of high value-added printer products.
・Review the investment in microfluidic control technology.
(d) New Business・Increase sales by developing and launching new products related to health care, medical, and the automotive
market.
< Consolidated Operating Forecast >Net sales
Operating income
Ordinary income
Net income attributable to owners ofparent¥ 160,000 million
600 million
600 million
200 million( 19.5 % increase year-on-year)(Last fiscal year operating loss 6,775 million)(Last fiscal year ordinary loss 7,726 million)(Last fiscal year net income 6,745 million)

For its earnings estimates, the Group has assumed an exchange rate of JPY 110 = US$1.00.
The operating forecast is a forward-looking statement about the future performance of the Company and is basedon management’s assumptions and beliefs in light of information currently available, and involves risks anduncertainties. Various factors such as changes in economic conditions overseas, especially in the U.S. market, andsevere price fluctuations may cause actual results to differ from this forecast.
(2) Overview of Financial Position
1. Balance Sheet
Total assets decreased by ¥45,505 million compared to the end of the last fiscal year. The primary components ofthe change were as follows: Decrease of ¥17,473 million in cash and deposits, ¥8,521 million in notes and accounts receivable – trade,¥3,568 million in merchandise and finished goods and ¥2,738 million in land.
Total liabilities increased by ¥37,722 million compared to the end of the last fiscal year. The primary components ofthe change were as follows: Increase of ¥2,998 million in note and accounts payable-trade Decrease of ¥5,118 million in short-term loans, ¥26,868 million in accounts payable-other and ¥6,009 million
in long-term loans.
Net assets decreased by ¥7,782 million compared to the end of the last fiscal year. The primary components of thechange were increase of ¥998 million in the foreign currency translation adjustment and decrease of ¥7,768 million
in retained earnings and of ¥965 million in Non-controlling interests.
2. Cash Flow
An analysis of consolidated cash flows shows that net cash used in operating activities amounted to ¥13,329 million.
Net cash provided by investing activities was ¥13,266 million, and net cash provided by financing activities was¥11,150 million. The balance of cash and cash equivalent as of March 31, 2017 was ¥38,971 million.
Cash flow ratios
FY 2012FY 2013

FY 2014

FY 2015

FY 2016

Shareholders’ equity ratio (%)

60.7

62.8

64.6

54.0

70.4

Shareholders’ equity ratio at market value (%)

20.3

19.3

25.0

21.8

29.7

Ratio of cash flow to interest-bearing debt(year)

-

-

0.6

-

-

Interest coverage ratio (%)

-

-

89.6

-

-

8

Shareholders’ equity ratio
Shareholders’ equity ratio at market value
Ratio of cash flow to interest-bearing debt
Interest coverage ratio: Equity capital / Total assets: Market capitalization / Total assets: Interest-bearing debt / Operating cash flow
: Operating cash flows / Interest payments*All ratios are calculated based on consolidated financial statements.
*Market value is calculated by at price of shares at the end of the consolidated fiscal year×Number of shares
outstanding (after deducting treasury stock)*Operating cash flows represent the cash flows from net cash provided by (used in) operating activities on theConsolidated Statements of Cash Flows. Interest-bearing debt represents debt stated on the Consolidated Balance
Sheets for which interest is paid. Interest paid represents corresponding amount stated on the Consolidated
Statements of Cash Flows.
*The ratio of cash flow to interest-bearing debt and the interest coverage ratio for the fiscal year 2012, 2013, 2015
and 2016 have been omitted because cash flow from operating activities was negative.
(3) Dividend Policy
The Company regards returning profits to shareholders as one of its most important key issues, and basicallyprovides stable dividends while strengthening its management base. The dividend policy is based on dividend on
equity ratio (DOE) of 1% under the consideration of business conditions. Basically the Company plans to implement
dividend payments once a year. When the Company pays an interim dividend, it makes a public announcement inadvance.
Based on above policy, the dividend plan for the fiscal year 2016 is expected to be JPY 10 per share because weposted net loss attributable to owners of the parent. The dividend plan for the fiscal year 2017 is currently
undecided.
(5) Important Information about Going Concern Assumption
Since the Group recorded a significant operating loss, ordinary loss, net loss attributable to owners of the parent,
and negative operating cash flow during the fiscal year 2016, events or circumstances that cast significant doubt on
the going concern assumption exist at the present time.
Since the Group’s balance of cash and deposits is sufficient to cover working capital, repayment of borrowings, andother requirements for some time, there is no significant concern about fundraising.
Since the Group is already implementing the following countermeasures in stages, the Group believes that a
resolution of the matter can be achieved.
(a) Display Business (LCD-TV business)
・Increase sales in the U.S. market: Increase sales with existing customers and open up new customers byintroducing multiple models for large UHD.
・Enter the Japanese market: Increase share in the Japanese market through exclusive business with Yamada
Denki Co., Ltd.
(b) Digital Media Business (DVD, BD business)
・Increase sales of UHD-BD players in the U.S. market.
・Enter the Japanese market: Increase share in the Japanese market through exclusive business with Yamada
Denki Co., Ltd.
(c) Office Solution Business (information equipment-related business)
・Improve profit margin by increasing sales of high value-added printer products.
・Review the investment in microfluidic control technology.
(d) New Business・Increase sales by developing and launching new products related to health care, medical, and the automotive
market.
Accordingly, Funai judges that there is no significant uncertainty related to the going concern assumption as ofMarch 31, 2018 and has omitted the Notes on Going Concern Assumption from the consolidated financial
statements.

2. Basic Rationale on Selection of Accounting Standards
The Group applies Japanese accounting standards. We have not set a definite timetable for the adoption ofinternational financial reporting standards (IFRS), but we will consider taking this step based on the situation ofanother companies in the same business.

93. Consolidated Financial Statements(1) Consolidated Balance Sheets(Million Yen)
Fiscal year 2015
(As of March 31, 2016)

Fiscal year 2016
(As of March 31, 2017)

ASSETS;
Current Assets
Cash and deposits

57,60940,136

Notes and accounts receivable-trade

24,092

15,571

Merchandise and finished goods

22,76815,459Work in process

1,196

1,149

Raw materials and supplies

13,212

9,644

664

489

Other

4,071

3,900

Allowance for doubtful accounts

(400)

(847)

123,21485,503

Buildings and structures

18,138

14,832

Accumulated depreciation(9,794)(8,691)

Buildings and structures, net

8,343

6,140

Machinery,equipment and vehicles

10,746

8,748

Accumulated depreciation(8,964)(7,354)

Machinery,equipment and vehicles, net

1,781

1,394

Tools, furniture and fixtures

23,086

19,455

Accumulated depreciation(21,919)(18,173)

Tools, furniture and fixtures, net

1,166

1,281

Lands

6,331

3,592

Lease assets

697

597

Accumulated depreciation

(203)

(230)

Lease assets, net

493

367

Other

87

187

18,203

12,963Patent right

3,297

2,576

Other

1,562

765

4,860

3,342

Investment securities

2,418

1,425

Deferred tax assets

206

454

Net defined benefit asset

1,555

1,543

Other

4,003

3,703

Allowance for doubtful accounts

(271)

(252)

Total investments and other assets

7,912

6,875

30,97623,181

154,191

108,685

Deferred tax assets

Total current assets
Noncurrent assets
Property, plant and equipment

Total property, plant and equipment
Intangible assets

Total intangible fixed assets
Investment and other assets

Total noncurrent assets
TOTAL ASSETS

10

(Million Yen)
Fiscal year 2015
(As of March 31, 2016)

Fiscal year 2016
(As of March 31, 2017)

LIABILITIES;Current Liabilities
Notes and accounts payable-trade

15,60418,603

Short-term loans payable

5,118

-

Accounts payable-other34,1497,280

lease obligations

251

242

Income taxes payable

783

813

Provision for bonuses

236

9

Provision for product warranties

689

481

Foward exchange contracts

18

-

Other

2,971

2,144

Total current liabilities

59,82329,575

6,009-

lease obligations

737

514

Deferred tax liabilities

811

595

Deferred tax liabilities for land revaluation

205-

Provision for directors' retirement benefits

1,106

1,047

Net defined benefit liability

395

15

Other

662

281

Noncurrent liabilities
Long-term loans payable

Total noncurrent liabilities

9,927

2,453

69,751

32,028

Capital stock

31,30731,307

Capital surplus

33,30133,603Retained earnings

54,78947,020Treasury stock(24,341)(24,341)

Total shareholders' equity

95,05887,59016011Foreign currency translation adjustment(12,204)(11,206)

Remeasurements of defined benefit plans

314

111

(11,729)(11,082)

Subscription right to shares

145

149

Non-controlling interests

965-

84,43976,656

154,191

108,685

TOTAL LIABILITIESNET ASSETS;
Shareholders' equity

Accumulated other comprehensive income
Valuation difference on avaiable-for-sale securities

Total accumulated other comprehensive income

Total net assets
TOTAL LIABILITIES AND NET ASSETS

11

(2) Consolidated Statements of Income and Consolidated Statement of Comprehensive Income(Consolidated Statements of Income)(Million Yen)
Fiscal year 2015

Fiscal year 2016

( from April 1, 2015
to March 31, 2016 )
170,041( from April 1, 2016
to March 31, 2017 )
133,838

Cost of sales

144,671

114,795

Gross profit

25,37019,043

Selling, general and administrative expenses

35,91025,818Operating income (loss)(10,539)(6,775)259

230

Net sales

Non-operating income
Interest income
Dividends income

28

23

Rent income on non-current assets

208

119

Gain on investments in partnership
Other

218

-

79

146

Total non-operating income

793

519

296

152

Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses

4

2

3,244

1,122

362

193

3,908

1,470

(13,653)(7,726)

Gain on sales of noncurrent assets

18

1,436

Gain on sales of shares of subsidiaries
Settlement received

41

-

902

-

Refund of customs duty

485-

Ordinary income (loss)
Extraordinary income

Other

114

141

1,562

1,578

Loss on disposal of noncurrent assets

475

57

Impairment loss

667

339

-

704

Compensation for damage
Other

18,502-

303

57

Total extraordinary loss

19,9481,158(32,040)(7,307)514

67

Income tax adjustments

1,322

(632)

Total income taxes

1,836

(565)

Net income (loss)(33,876)(6,742)

Total extraordinary income
Extraordinary loss

Loss on disposal of affiliated company

Income (loss) before income taxes and minority interests
Income taxes

Net income (loss) attributable to non-controlling interests
Net income (loss) attributable to owners of parent

12

(37)

3

(33,839)(6,745)

(Consolidated Statement of Comprehensive Income)(Million Yen)
Fiscal year 2015

Net income (Loss)

Fiscal year 2016

( from April 1, 2015
to March 31, 2016 )(33,876)( from April 1, 2016
to March 31, 2017 )(6,742)

(264)

(148)

Other comprehensive income
Valuation difference on avaiable-for-sale securities
Foreign currency translation adjestment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of associates accounted
for using equity method
Total other comprehensive income
Comprehensive income(3,270)

954

(48)

(207)

(19)

44

(3,603)643(37,479)(6,098)(37,442)(6,098)(37)0(Comprehensive income attributable to)Comprehensive income attributable to owners of the parent
Comprehensive income attributable to non-controlling interests13(3) Consolidated Statements of Changes in Shareholders' Equity
Fiscal year 2015 (April 1, 2015 - March 31, 2016)(Million Yen)
Shareholders' equity
Capital stock

Capitalsurplus31,307

Beginning balance

Retainedearnings

Treasury
stock

Total
shareholders'equity89,903(24,341)

130,142

33,272

Changes of items during the period
Dividends from surplus(1,194)(1,194)

Income (loss) attributable to owners of parent(33,839)(33,839)(0)

Purchase of treasury stock(79)

Change of scope of consolidation
Change in treasury shares of parent arising fromtransactions with non-controlling shareholders

29

(0)
(79)
29

Net changes of items other than shareholders'equity－31,307

Total changes of items during the periodEnding balance29
33,301(35,113)54,789(0)(24,341)(35,084)
95,058

Accumulated other comprehensive income

Beginning balance

Unrealized
holding
gains/losses
on securities

Foreigncurrencytranslation
adjustment

Remeasurements ofdefinedbenefit
plans

Total
accumulated othercomprehensive income

Subscriptio
n rights tosharesNon-controlling
interests

Total net
assets421(8,913)365(8,127)

142

1,061

123,218

Changes of items during theperiodDividends from surplus(1,194)

Income (loss) attributableto owners of parent(33,839)

Purchase of treasury stock(0)

Change of scope of
consolidation
Change in treasury sharesof parent arising fromtransactions
with
non-controllingshare
holders
Net changes of items otherthan shareholders' equity
Total changes of items during
the periodEnding balance

(79)

29

(260)

(3,290)(51)(3,602)

2(95)(3,695)(260)(3,290)(51)(3,602)

2(95)(38,779)160(12,204)314(11,729)145

965

84,43914

Fiscal year 2016 (April 1, 2015 - March 31, 2016)(Million Yen)
Shareholders' equity
Capital stock

Capitalsurplus31,307

Beginning balance
Changes of items during the period

Retainedearnings

Treasury
stock

Total
shareholders'equity54,789(24,341)

95,05833,301Dividends from surplus(1,023)(1,023)

Income (loss) attributable to owners of parent(6,745)(6,745)
(0)

(0)
301

(0)
(24,341)(7,467)87,590Purchase of treasury stock

301

OthersNet changes of items other than shareholders'equityTotal changes of items during the period－
31,307

Ending balance

301
33,603(7,768)47,020

Accumulated other comprehensive income

Beginning balance

Unrealized
holding
gains/losses
on securities

Foreigncurrencytranslation
adjustment

Remeasurements ofdefinedbenefit
plans

Total
accumulated othercomprehensive income

Subscription
rights tosharesNon-controlling
interests

Total net
assets160(12,204)314(11,729)145

965

84,439Changes of items during theperiodDividends from surplus(1,023)

Income (loss) attributableto owners of parent(6,745)(0)
301

Purchase of treasury stock
OthersNet changes of items otherthan shareholders' equity
Total changes of items during
the periodEnding balance

(149)

998

(202)

647

3

(965)

(314)

(149)

998

(202)

647

3

(965)

(7,782)

11(11,206)

111(11,082)

149-

76,65615

(4) Consolidated quartely statements of cash flows(Million Yen)
Fiscal year 2015

Fiscal year 2016

( from April 1, 2015
to March 31, 2016)( from April 1, 2016
to March 31, 2017)

Cash flows from operating activities
Income (Loss) before income taxes and minority interests(32,040)(7,307)

Depreciation

4,498

4,098

Impairment loss

667

339

Increase (decrease) in allowance for doubtful accounts

41

451

Increase (decrease) in net defined benefit liability

(125)

(117)

Interest and dividend income

(287)

(253)

Interest expenses

296

152

4

2

Loss on retirement of property, plant and equipment

357

57

Loss (gain) on sales of property, plant and equipment

9(1,382)

Loss (gain) on sales of investment securities

(68)

(127)

Loss (gain) on sales of shares of subsidiaries and associates

(41)

704

Share of (profit) loss of entities accounted for using equity method

Loss (gain) on valuation of investment securities

2-

Loss on valuation of shares of subsidiaries and associates

6-

Decrease (increase) in notes and accounts receivable - trade

12,1994,601

Decrease (increase) in inventories

1,925

8,379

Increase (decrease) in notes and accounts payable - trade(15,381)3,470

Increase (decrease) in notes and accounts payable - other

20,520(25,539)

Other, net

290

(944)

Subtotal(7,124)(13,414)

Interest and dividend income received

295

256

Interest expenses paid

(294)

(151)

Income taxes paid

(454)

(69)

Income taxes refund

28

49(7,549)(13,329)

Payments into time deposits(21,227)(6,205)

Proceeds from withdrawal of time deposits

34,215

10,392

Purchase of property, plant and equipment(2,113)(3,042)

Proceeds from sales of property, plant and equipment

886

3,977

Purchase of intangible assets

(270)

(117)

Purchase of investment securities

(62)

(10)

Proceeds from sales of investment securities
Proceeds from sales of investments in subsidiaries resulting inchange in scope of consolidation.
Payments of loans receivable

242

178

Net cash provided by (used in) operating activities
Cash flows from investing activities

-

7,899

(2)

(4)

Collection of loans receivable

40

25

Other, net

98

174

11,805

13,266

Net cash provided by (used in) investment activities

16

(Million Yen)
Fiscal year 2015

Fiscal year 2016

( from April 1, 2015
to March 31, 2016)( from April 1, 2016
to March 31, 2017)

Cash flows from financing activities
Net increase (decrease) in short-term loans payable

1,124

Payment of long-term loans payable(6,510)-(3,192)(0)0(1,194)(1,023)

139

(424)

69

(11,150)

Effect of exchange rate change on cash and cash equivalents

(251)

3,069

Net increase (decrease) in cash and cash equivalents

4,074(8,145)

Cash and cash equivalents at beginning of period

42,991

47,116

Purchase of treasury shares
Cash dividends paid
Other, net
Net cash provided by (used in) financing activities

Increase in cash and cash equivalents from newly consolidated subsidiary

Cash and cash equivalents at end of period

51
47,11617

38,971

(5) Notes on Consolidated Financial Statements(Notes on Going Concern Assumption)
Not Applicable(Basis of presenting consolidated financial statements)
The matter regarding consolidation scope
The number of consolidated subsidiaries: 20
Principal consolidated subsidiaries are FUNAI CORPORATION, INC., Funai Electric (H.K.), Ltd., and FUNAI(THAILAND) CO., LTD.
The Group included subsidiaries Funai Trading Corp. and Funai Manufacturing, S.A.DE C.V., which were
established in the consolidated fiscal year under review, in the scope of consolidation.
The Group has excluded HIGH DEFINITION COMMERCIAL SOLUTIONS and 嘉福金属有限公司 from the scope of
consolidation in the fiscal year 2016, as a result of their liquidation.
Former consolidated subsidiary DX Antenna Co., Ltd. has been excluded from the scope of consolidation due tothe transfer of all shares held by the Company. Following this, the Group also excluded its wholly owned
subsidiaries, DX ANTENNA PHILIPPINES, INC. and DX ANTENNA MARKETING, INC., from the scope of consolidation.
These three companies are consolidated in the statements of income only since the last day of the fiscal year
under review is the deemed transfer date.
(Change in Accounting Policy)(Application of “Practical Solution on a change in depreciation method due to Tax Reform 2016”)
Following revisions to the Corporation Tax Act, the Group has applied the “Practical Solution on a change indepreciation method due to Tax Reform 2016” (PITF No.32, June 17, 2016) in the consolidated fiscal year
under review, and changed the depreciation method for facilities attached to buildings and structuresacquired on and after April 1, 2016 from the declining balance method to the straight-line method. The impact
on consolidated financial statements is minor.
(Additional Information)(About Anti-Tax Haven Law)
The Group received a reassessment notice from the Osaka Regional Taxation Bureau on June 29, 2011. The
Bureau determined that our Hong Kong subsidiary does not meet the requirements for exemption under theanti-tax haven rules. In addition, they imposed a tax on us adding up with the Hong Kong subsidiary’s income forthe three fiscal years ended March 31, 2008 through 2010, which deems as our income.
We objected to this reassessment of income taxes, and filed a request for examination to the Osaka National Tax
Tribunal on August 25, 2011. However, we received written verdicts that reject our petition on July18, 2012. The
Group filed a suit for cancellation of reassessment to the Tokyo District Court on January 17, 2013.
The additional tax amount is totally ¥825 million including corporate, enterprise and residence taxes (¥935 million
including incidental taxes). We recorded this additional tax as “prior year’s taxes” in the fiscal year ended March
31, 2012. Also, the financial impact, when applying this tax rules has been recorded in the fiscal year ended
March 31, 2011 when tax investigation was completed.
(Application of “Implementation Guidance on Recoverability of Deferred Tax Assets”)
The “Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ Guidance No. 26, March 28, 2016)has been applied from the consolidated fiscal year under review.
(Assignment of shares of a consolidated subsidiary)
At the meeting of its Board of Directors held on November 7, 2016, the Company resolved to enter into a basic
agreement with Elecom Co., Ltd. (“Elecom”) to transfer shares in the Company’s consolidated subsidiary DX
Antenna Co., Ltd. (“DX Antenna”), 96% of outstanding shares of which are owned by the Company. A basic
agreement was concluded as of the same date. A final agreement concerning the share transfer was reached as aresult of subsequent discussions, and the Company resolved to transfer the shares at the meeting of its Board of
Directors held on February 21, 2017, concluded a share transfer agreement as of the same date, and transferred
the shares on March 30, 2017.
1. Reason for share assignment
We made DX Antenna our subsidiary in November 2001, and have since developed its domestic business as amanufacturing and sales company of antennas and TV reception equipment in Japan.

18

The company has had declining sales of LCD-TVs for reasons such as the intensifying price competition withcompetitors in the North American market—the company’s main market. Given this situation, we were looking
for an appropriate buyer for the company so that we could focus the management resources of the Funai
Electric Group in core areas, and ELECOM offered to purchase all of the DX Antenna shares we held.
The markets for the products manufactured and sold by ELECOM and DX Antenna are geographically close. In
addition, there is no overlap in sales channels. It is therefore expected that ELECOM’s acquisition of DX
Antenna will create synergies in terms of sales. In particular, ELECOM’s sales capabilities, mainly through massmerchant home appliance stores, are likely to significantly boost DX Antenna’s sales. We therefore decided toassign DX Antenna shares to ELECOM based on the view that this transaction would benefit both companies.
2. Name of the buyer
ELECOM Co., Ltd.
3. Timing of assignment
November 7, 2016
Signed a Letter of Intent
February 21, 2017
Sign a share assignment agreement
March 30, 2017
Share assignment date
4. Subsidiary’s name, business and transactions with Funai
Name:
DX Antenna Co., Ltd.
Business:
Sales of electric machinery and equipment
Transactions with Funai:
DX Antenna purchases electric machinery and equipment from us.
5. Number and price of shares to be assigned and shareholding ratio after assignment
The number of shares:
11,244,320 shares
Price of shares:¥10,367 million
Shareholding ratio after assignment:
0%
6. Impact on profit/loss
We posted ¥704 million as loss on disposal of affiliated company in extraordinary loss for the fiscal year 2016
due to this assignment.
(Consolidated statement of income)
1. Settlement received
Fiscal year 2015 (April 1, 2015 - March 31, 2016)
The Group filed a lawsuit for a compensatory damage against Olympus Corporation due to Olympus’s
misstatements in its securities registration statement, etc. The Group recorded 902 million as settlement
received after deducting necessary expenses from the settlement money in connection with this settlement.
2. Refund of customs duty
Fiscal year 2015 (April 1, 2015 - March 31, 2016)
This amount consists of refunded customs duties, legal costs, and associated interest received after
consolidated subsidiary FUNAI EUROPE GmbH won a lawsuit claiming a refund of assessed additional customs
duties brought against the German tax authorities in the District Court of Hamburg.
3. Impairment loss
Fiscal Year 2015 (April 1, 2015 - March 31, 2016)
The Group recorded losses on impairment in the following asset groups for fiscal year 2015.
In principle, the Group groups business assets on the basis of legal units that strive to maintain an ongoingunderstanding of income and expenses. The idle assets are grouped by individual asset.
Use

Location

Type

Business Assets

Funai Electric Co., Ltd.
(Osaka Daito city)

Long-term prepaid expenses

Business Assets

Funai Electric (H.K.)LTD(Hong Kong)

Machinery, equipment and vehicles
Tools, furniture and fixtures

Business Assets

Zhongshan Funai Electron Co.
(China Guangdong)Tools, furniture and fixtures

19

In the fiscal year 2015, as a result of the decision to withdraw from the laser printer business to concentrate
information equipment enterprise resources on the inkjet printer business, Funai wrote down the book valueof manufacturing facilities, development assets, and other assets not expected to be used in the future to therecoverable amount and recorded the reduction (¥431 million) in extraordinary loss. The total consists of ¥87
million for Funai Electric Co.,Ltd.(Long-term prepaid expenses), ¥10 million for Funai Electric(H.K.)LTD (¥6
million of Machinery, equipment and vehicles and ¥4 million of Tools, furniture and fixtures) and ¥333 million
for Zhongshan Funai Electron Co.(Tools, furniture and fixtures).
The recoverable amount of the assets has been determined based on net selling price and calculated with the
net selling price as zero.
Use

Location

Type

Retirement Assets

Funai Electric Cebu, Inc.
(Philippine Cebu)

Machinery, equipment and vehicles

Since acquiring the shares of a manufacturing subsidiary of Lexmark International, Inc. (now Funai ElectricCebu, Inc.), the Group has engaged in contract production of inkjet cartridges through the acquired company.
Although we previously grouped assets scheduled for retirement in connection with the end of production ofsome models as business assets, since the assets are now scheduled for retirement, we wrote down the bookvalue to the recoverable amount and recorded the reduction (¥125 million) in extraordinary loss.
The recoverable amount of the assets has been calculated using net selling price based on disposal value.
Use

LocationType

P&F USA,Inc.
Software(U.S. Delaware)
Regarding the assets whose profitability has declined remarkably, we wrote down the book value to therecoverable amount and recorded the reduction (¥110 million) in extraordinary loss.
The recoverable amount of the assets has been calculated using net selling price based on disposal value.
Business Assets

Fiscal Year 2016 (April 1, 2016 - March 31, 2017)
Use
Location
Retirement
AssetsType

Funai Electric Cebu, Inc.
(Philippine Cebu)

Machinery, equipment and vehicles

Since acquiring the shares of a manufacturing subsidiary of Lexmark International, Inc. (now Funai ElectricCebu, Inc.), the Group has engaged in contract production of inkjet cartridges through the acquired company.
Although we previously grouped assets scheduled for retirement in connection with the end of production ofsome models as business assets, since the assets are now scheduled for retirement, we wrote down the bookvalue to the recoverable amount and recorded the reduction (¥339 million) in extraordinary loss.
The recoverable amount of the assets has been determined based on net selling price and calculated with the
net selling price as zero.
*4. Compensation for damage
Funai resolved to acquire all shares in a company taking over PHILIPS’ Lifestyle Entertainment Business from
Koninklijke PHILIPS N.V. (“PHILIPS”). However, PHILIPS filed against Funai a petition for arbitration to recoverdamages caused by breach of agreement of Funai as of October 25, 2013.
With regard to this matter, Funai recognizes there has been no breach of agreement on its behalf. Therefore,
Funai filed a counterclaim for damages caused by breach of the agreement and unlawful actions by PHILIPS to theInternational Chamber of Commerce on December 6, 2013.
On April 26, 2016 the arbitral tribunal has ordered Funai to pay compensatory damages to Philips in the sum of
EUR 134.8M, arbitration costs in the sum of USD 1.35M,and Philips’s legal fees in the sum of EUR 2.5M plus
interest (2%) for them and the arbitral tribunal has dismissed the counterclaim by Funai. Funai posted ¥18,502
million as compensatory damages etc. in extraordinary loss in this fiscal year.

20

(Consolidated statement of comprehensive income)* 1. Reclassification adjustment and tax effect amount involved in other comprehensive income
Fiscal year 2015
( from April 1, 2015
to March 31, 2016 )(Million Yen)

Fiscal year 2016
( from April 1, 2016
to March 31, 2017 )Valuation difference on available-for-sale securities:
Accrued amount on the current term
Reclassification adjustment amountPre-adjustment of tax effectTax effect amount

Valuation difference on available-for-sale securities
Foreign currency translation adjustment:
Accrued amount on the current term
Reclassification adjustment amountPre-adjustment of tax effectTax effect amount

Valuation difference on available-for-sale securities
Remeasurements of defined benefit plans:
Accrued amount on the current term
Reclassification adjustment amountPre-adjustment of tax effectTax effect amountForeign currency translation adjustment
Share of other comprehensive income of entities
accounted for using equity method:
Accrued amount on the current term
Reclassification adjustment amount

Share of other comprehensive income of entities
accounted for using equity method:
Total other comprehensive income

323
(66)
(389)
125
(264)

93
(255)
(162)
13
(148)

(3,202)(92)(3,295)24(3,270)

971
(16)
954
954

(153)
69
(83)
35
(48)

(49)
(122)
(171)
(35)
(207)

0
(19)

(6)
50

(19)

44

(3,603)643(Segment Information)[Segment Information]
1. Summary of Reporting Segments
The reporting segments of the Group are components for which discrete financial information is available andwhose operating results are regularly reviewed by the board of directors to make decision about resource allocationand to assess their performance.
Businesses of the Group are to manufacture and sell electrical equipment and devices. In Japan, such functions are
the responsibility of DX Antenna Co., Ltd. In the areas of the United States, Asia and Europe such functions aremanaged by Funai Corporation, Inc. (Americas), P&F USA, Inc. (Americas), Funai Electric (H.K.) Ltd. (Asia), FUNAIELECTRIC EUROPE Sp.z o.o (Europe), and other local corporations. They are independent each other and plancomprehensive strategies on the products to carry in the region on their own.
Consequently, the Group is comprised of location-specific segments that are based on its manufacturing and sales
structure and has “Japan”, “Americas”, “Asia” and “Europe” as its four reporting segments.
2. Measurement of the amount of net sales, income/loss, assets and liabilities and other in each reporting segment
The accounting policies of the reporting segment are the same as “Basis of presenting consolidated financial
statements”. Net sales of intersegment are based on sales price to outside customers.

21

3. Net sales, income/loss, assets, liabilities and other by reporting segments
Fiscal year 2015 (April 1, 2015 - March 31, 2016)

Net Sales(1) Sales to outside customers(2) Inter-segment sales
Total
Segment Income (Loss)
Segment Assets
Other
Depreciation and amortization
Investment amount to equity
method affiliate
Increase in tangible fixed
assets and intangible assets

Europe

Total

Japan

AmericasAsia

34,139112,001

132,216
1,159

2,426
96,794

1,259－

170,041
209,955－(209,955)

170,041－

146,140(7,663)
114,583

133,376(2,964)45,14799,220(15)
52,612

1,259
(300)
2,119

379,997(10,944)
214,462(209,955)
404(60,271)

170,041(10,539)
154,191

1,633

180

2,660

23

4,498

－

4,498

－

－

166

－

166

－

166

752

510

1,863

－

3,127

(0)

3,127

Fiscal year 2016 (April 1, 2016 - March 31, 2017)

Net Sales(1) Sales to outside customers(2) Inter-segment sales
Total
Segment Income (Loss)
Segment Assets
Other
Depreciation and amortization
Amortization of goodwill
Investment amount to equity
method affiliate
Increase in tangible fixed
assets and intangible assets(Note)(Million Yen)
Adjustments Consolidated(Note 1)
(Note 2)Europe

Total(Million Yen)
Adjustments Consolidated(Note 1)
(Note 2)

Japan

AmericasAsia

31,20083,776

101,751
1,194

274
87,607612-

133,838
172,577(172,577)

133,838-

114,977(8,219)88,400102,945(131)
34,976

87,881(630)
42,110

612
45
1,868

306,416(8,935)
167,355(172,577)
2,160(58,669)

133,838(6,775)
108,685

1,589

171

2,337

0

4,098

-

4,098

654

332

2,250

-

3,237

(0)

3,237

1. Adjustments were as follows.
Segment Income(loss)(Million Yen)
Fiscal year 2016
Eliminations
696
2,705
Corporate expenses *
(761)
(767)
Inventories
469
222
Total
404
2,160
* Corporate expenses are general & administration expenses that do not correspond to the reporting
Segments
Fiscal year 2015

Segment Assets(Million Yen)
Fiscal year 2016
Total assets *27,67722,762Adjustments of inventories(1,520)(1,298)Eliminations(86,428)(80,133)
Total(60,271)(58,669)*Total assets are mainly excess cash/deposits and long term securities for investment that do not correspondto the reporting segments.
Fiscal year 2015

2. Segment income and loss are adjusted with the operating income reported in the consolidated statements
of income and loss.

22

(Information per share)
Fiscal year 2015
（April l,2015 – March 31,2016）
Book Value per share
2,442.28
Net loss per share
991.81

Fiscal year 2016
（April l,2016 – March 31,2017）
Book Value per share
2,242.38
Net loss per share
197.70(Note)
1. Net loss per share after dilution is not shown because there are no issuable shares with a dilutive effect.
2. The basis for the calculation of net income or net loss per share is as follows.
Fiscal year 2015
（April 1, 2015 – March 31,2016）

Fiscal year 2016
（April 1, 2016 – March 31,2017）

Net income (loss) per share
Net income (loss) attributable to owners of(33,839)(6,745)－－

Net income (loss) attributable to owners ofparent available to common shares (million yen)

(33,839)(6,745)The average number of outstanding shares for theperiod（Thousands of shares）

34,11934,119parentAmount not attributable to owners of the parent(million yen)

Overview of potentially dilutive common shares not Two types of stock acquisition rights Three types of stock acquisition
included in computation of net income per share (number of stock acquisition rights: rights (number of stock acquisition
after dilution because of their anti-dilutive effect2,837) have been excluded.
rights: 4,290) have been excluded.

(Events after the reporting period)
Not applicable23