October 31, 2013

Summary of Consolidated Financial Results
For the First Half Ended September 30, 2013 [Japan GAAP]
Name of Company:
Stock Code:
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Representative
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Name:
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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
Tomohisa Tsukamoto
Director, Finance & Administration Headquarters
Eiji Kawamura+81-(0)3-4455-3111
November 14, 2013
December 6, 2013
Yes
Yes (for institutional investors)(Yen in millions, rounded down)

1.

Financial results for the first half of the fiscal year ending March 2014 (April 1, 2013 – September 30, 2013)(1) Result of operations (Consolidated, year-to-date)(Percentage figures represent year on year changes)
Net sales

Operating income

Ordinary income

Million yen%

Million yen%

Million yen%

First half ended September 2013
122,077
17.6
2,194
First half ended September 2012
103,845 (10.7)(470)
Note: Comprehensive income: First half ended September2013: 2,100 million yen (-%),
First half ended September 2012: (2,053) million yen (-%)

2,437
(355)

-

1,352
(1,373)-

Million yen%

Net income per shareFirst half ended September 2013
First half ended September 2012

Net income

Net income per share fully diluted
Yen

Yen

47.88
(49.79)-(2) Financial Position (Consolidated)
Total assets

Net assets

Million yen

As of September 30, 2013
As of March 31, 2013
Notes: Shareholders’ equity
2.

Equity ratio

Million yen%

116,658
50,364
111,888
48,806
As of September 30, 2013: 50,327 million yen／As of March 31, 2013: 48,656 million yen

43.1
43.5

Dividends
End of 1Q
Yen-

End of 2Q
Yen
15.00
15.00

Dividend per share
End of 3Q
Yen-

Fiscal year ended March 2013
Fiscal year ending March 2014
Fiscal year ending March 2014 (est.)
Note: Change in the estimation of dividend from the latest announcement: None-

End of FY
Yen
15.00

Full year
Yen
30.00

15.00

30.00

3.

Forecast for the fiscal year ending March 2014 (Consolidated, April 1, 2013 to March 31, 2014)(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

247,000

14.1

3,600

185.7

4,300

122.6

2,200

394.6

77.85

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: None(b) Changes other than in (a): None(c) Changes in accounting estimates: None(d) Retrospective restatement: None
(4) Number of shares outstanding (common stock)(a) Shares outstanding (including treasury stock)
As of September 30, 2013:

28,702,118

As of March 31, 2013:

28,702,118

444,319

As of March 31, 2013:

443,831

Period ended September 30, 2012:

27,596,838(b) Treasury stock
As of September 30, 2013:(c) Average number of shares (quarterly consolidated cumulative period)
Period ended September 30, 2013:

28,258,039* Description of quarterly review procedure implementation status
It is under the quarterly review procedure process based upon the Financial Instruments and Exchange Act at the time of
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.

2.

3.

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

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

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

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

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

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

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 ongoing 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 recovered at a moderate pace despite lingering signs of uncertainty
about the global economy, such as slowing growth in China and weakness in the European economy. Economic measures by
the Japanese government and the Bank of Japan’s monetary easing led to higher corporate earnings and a rebound in
consumer spending as the yen weakened and stock prices rose.
In the electronics industry, there are strong sales of mobile devices like smartphones and tablets and of automotive
components. However, the operating environment was difficult because of a continuation in sluggish demand for digitalconsumer electronics and information equipment, chiefly personal computers and peripherals.
In this environment, the KAGA ELECTRONICS Group reinforced collaboration among group companies, worked onincreasing sales to major current customers, added new products and took other actions. At the same time, there werereviews of unprofitable businesses and cost-cutting measures.
First half consolidated net sales increased 17.6% from one year earlier to 122,077 million yen. Operating income was 2,194
million yen compared with a 470 million yen loss one year earlier and ordinary income was 2,437 million yen compared witha 355 million yen loss one year earlier. Net income improved from a loss of 1,373 million yen to a profit of 1,352 million
yen.
Business segment performance was as follows.
(a) Electronic components (Development, manufacture and sale of semiconductors, general electronic components andother products, electronics manufacturing service (EMS), and other activities)
There were higher sales in Japan for EMS involving amusement equipment and for semiconductors. Overseas EMS
sales increased, too. The result was a 21.6% increase in segment sales from one year earlier to 94,595 million yen and a
365.7% increase in operating income to 1,601 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)
Demand for PCs and other consumer products in the information equipment category have declined because of the
popularity of smartphones, tablets and other mobile devices. Group companies worked on increasing sales of current
products and adding new ones. There were higher sales of products for the home, personal computers and software forschools, environmental products and other products. As a result, segment sales increased 2.6% to 19,767 million yen
and operating income was 184 million yen compared with a 337 million yen loss one year earlier.
(c) Software (Production of computer graphics, planning and development of amusement products, and other activities)
Activities in this segment focused on the production of computer graphics for animation applications, image processing
for amusement equipment and game software development and sales. Sales were 1,548 million yen, 3.8% higher than
one year earlier and operating income was 231 million yen from 403 million yen loss one year earlier.
(d) Others (Electronic device repairs and support, sales of sporting goods, and other activities)
Sales of amusement machines to arcades in Japan increased and there were strong sales of golf products and otherproducts in this segment. As a result, sales increased 16.3% from one year earlier to 6,165 million yen. Operating
income was 175 million yen compared with a 27 million yen loss one year earlier.

2

(2)

Overview of financial condition(a) Assets, liabilities and net assets
Assets totaled 116,658 million yen at the end of the first half, 4,769 million yen more than at the end of the previous fiscal
year mainly because of increases in cash and deposits and inventories.
Liabilities increased 3,211 million yen to 66,293 million yen mainly because of an increase in notes and accounts payabletrade.
Net assets increased 1,557 million yen to 50,364 million yen mainly because of the first half net income.
(b) Cash flows
There was a net increase of 2,217 million yen in cash and cash equivalents from the end of the previous fiscal year to
14,096 million yen at the end of the first half.
(Operating activities)
Net cash provided by operating activities was 3,772 million yen compared with 3,293 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 3,695 million yen to 1,033 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 258 million yen to 708 million yen. Repayments of long-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, 2014 that was announced on October 22, 2013in a press release titled “Notice of Revisions in First Half and Fiscal Year Forecasts.”

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:
None

Changes in significant subsidiaries:
None

3

3.
(1)

Quarterly Consolidated Financial Statements
Quarterly consolidated balance sheet(Million yen)
Fiscal year ended March 2013
(As of March 31, 2013)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 2013
(As of September 30, 2013)12,25854,580111
14,075
637
4,065
482
3,823
(90)

14,53854,479110
15,400
1,068
3,914
677
4,324
(102)

89,945

94,410Noncurrent assets
Property, plant and equipment
Buildings and structures, net
Machinery, equipment and vehicles, net
Tools, furniture and fixtures, net
LandConstruction in progress

3,126
1,714
805
4,305
606

3,098
1,622
733
4,328
1,096

Total property, plant and equipment

10,55910,880

799
435
991

784
394
820

2,226

1,999

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

4,491
472
5,239
(1,046)

4,796
414
5,168
(1,011)

Total investments and other assets

9,157

9,367

Total current assets

Intangible assets
Goodwill
Software
Other
Total intangible assets

Total noncurrent assets
Total assets

4

21,94322,247

111,888

116,658(Million yen)
Fiscal year ended March 2013
(As of March 31, 2013)
LIABILITIESCurrent liabilities
Notes and accounts payable-trade
Short-term loans payable
Income taxes payable
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Provision for retirement benefits
Provision for directors' retirement benefits
Other
Total noncurrent liabilities

First half ended September 2013
(As of September 30, 2013)

37,423
9,567
1,055
5,309

39,223
10,141
941
6,785

53,35557,091

5,121
1,643
1,398
1,562

4,395
1,458
1,393
1,955

9,726

9,202

Total liabilities

63,082

66,293

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

12,133
13,912
24,384(535)

12,133
13,912
25,313(535)

Total shareholder’s equity

49,89550,823

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

(180)
(6)
(1,052)

38
0
(535)

Total accumulated other comprehensive income(1,238)

(496)

149

37

Minority interests
Total net assets
Total liabilities and net assets

548,80650,364

111,888

116,658

(2)Quarterly consolidated statements of income and consolidated statements of comprehensive income
For the first half (April 1, 2013 – September 30, 2013)(Million yen)First half ended September 2012
First half ended September 2013
(April 1, 2012 – September 30, 2012) (April 1, 2013 – September 30, 2013)

Net sales
Cost of sales

103,845
91,515122,077
106,348

Gross profit

12,32915,728Selling, general and administrative expenses

12,80013,534

Operating income (loss)

(470)

2,194

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

20
42
117
252

26
56
103
15
193

432

396

66
188
25
38

64
54
34

Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Loss on investments in partnership
Other
Total non-operating expenses
Ordinary income (loss)
Extraordinary income
Gain on sales of noncurrent assets
Gain on sales of investment securities
Gain on sales of subsidiaries and affiliates' stocks
Total extraordinary income
Extraordinary loss
Loss on retirement of noncurrent assets
Loss on valuation of investment securities
Impairment loss
Loss on valuation of golf club membership
Office transfer expenses
Other

318

153

(355)

2,437

4
6

1
5
-

10

6

2
184
122
25
0

15
34
26
12

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

334

90

(680)

2,354

Income, inhabitants and enterprise taxes
Income tax adjustment

530
238

757
236

Total income taxes
Income (loss) before minority interests

769(1,449)

994
1,360

(75)

7

(1,373)

1,352

(75)

7

(1,449)1,360

Minority interests in income (loss)
Net income (loss)
Minority interests in income (loss)
Income (loss) before minority interests

6First half ended September 2012
First half ended September 2013
(April 1, 2012 – September 30, 2012) (April 1, 2013 – September 30, 2013)
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment

(134)
26
(495)

Total other comprehensive income
Comprehensive income
Comprehensive income attributable to owners of
the parent
Comprehensive income attributable to minority
interests

7

219
6
514

(603)

740

(2,053)

2,100(1,984)

2,094

(68)

5

(3)

Quarterly consolidated statements of cash flows(Million yen)First half ended September 2012
First half ended September 2013
(April 1, 2012 - September 30, 2012) (April 1, 2013 - September 30, 2013)
Operating activities
Income (loss) before income taxes
Depreciation and amortization
Impairment loss
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
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 for merger
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

(680)
1,260
122
2
(384)
(62)
66
184
11,444
(570)
829
618
(8,312)

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

(280)
(465)
143
3,914
63
(66)
(1,312)
693
3,293

27
1,323
(87)
4,658
82
(65)
(905)
2
3,772

(1,415)
(205)
(525)
30
(43)
(350)
(1,208)
(26)
21
(105)
133
(3,695)

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

1,152
(906)
(413)
(90)
(258)
(129)
(789)
9,695
8,905

1,204
(1,425)
(423)
(64)
(708)
186
2,217
11,87814,096(4)Notes to quarterly consolidated financial statement(Notes to ongoing concern assumptions)
None(Significant change in shareholders’ equity)
None(Segment information)
I. For the first half ended September 2012 (April 1, 2012 – September 30, 2012)
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:(Million yen)Amount on thequarterly
consolidated
statements of income
and consolidated
statements ofcomprehensive
income(Note 2)

Electronic
components

Informationequipment

Software

Others

Total

Adjustments(Note 1)77,783

19,270

1,491

5,299

103,845－

103,845

671

349

766

1,164

2,952

(2,952)－78,455

19,619

2,258

6,464

106,798(2,952)

103,845

343

(337)

(403)

(27)

(424)

(46)

(470)

1. Adjustment in segment income of -46 million yen includes -12 million yen for elimination of intersegment trade and -33 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)
In the information equipment segment, an impairment loss was posted for business assets in association with adecline in earnings. This impairment loss was 122 million yen in the first half of the fiscal year.
(Significant changes in goodwill)In the electronic components segment, goodwill was posted due to the merger of AD DEVICE CORPORATION and
AS Device Co., Ltd. The increase in goodwill in the first half of the current fiscal year resulting from this merger was
718 million yen.

9II. 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:(Million yen)Amount on thequarterly
consolidated
statements of income
and consolidated
statements ofcomprehensive
income(Note 2)

Electronic
components

Informationequipment

Software

Others

Total

Adjustments(Note 1)

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

10