July 31, 2012

Summary of Consolidated Financial Results
For the First Quarter Ended June 30, 2012 [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
Tomohisa Tsukamoto
Director, Administration Headquarters
Eiji Kawamura+81-(0)3-4455-3111
August 10, 2012
NoneNone(Yen in millions, rounded down)

1.

Financial results for the first quarter of the fiscal year ending March 2013 (April 1, 2012 – June 30, 2012)(1) Result of operations (Consolidated, year-to-date)(Percentage figures represent year on year changes)
Net sales

Operating income

Ordinary income

Net income

Million yen% Million yen% Million yen% Million yen%First quarter ended June 2012
49,686
(9.7)
(289)
(282)
(350)
(62.5)(79.2)First quarter ended June 2011
55,001(7.9)
247(73.0)
372114
Note: Comprehensive income: First quarter of FY3/2013: -865 million yen (-%), First quarter of FY3/2012: -406 million yen (-%)
Net income per share

Net income per share fully diluted
Yen-Yen(12.71)
4.16

First quarter ended June 2012
First quarter ended June 2011
(2) Financial Position (Consolidated)
Total assets
As of June 30, 2012

41.9

114,71447,936

40.5

As of March 31, 2012%

46,410 million yen

Dividends
End of 1Q
Yen-

End of 2Q
Yen
15.00

Dividend per share
End of 3Q
Yen-

Fiscal year ended March 2012
Fiscal year ending March 2013
Fiscal year ending March 2013 (est.)
15.00
Note: Change in the estimation of dividend from the latest announcement: None3.

Equity ratio

Million yen
46,607

As of March 31, 2012
Reference: Shareholders’ equity
As of June 30, 2012:
45,158 million yen
2.

Net assets

Million yen
107,727-

End of FY
Yen
15.00

Full year
Yen
30.00

15.00

30.00

Forecast for the fiscal year ending March 2013 (Consolidated, April 1, 2012 to March 31, 2013)(Percentage figures represent year on year changes)
Net income
Net sales
Operating income
Ordinary income
Net incomeper share
Million yen% Million yen% Million yen% Million yen%Yen
First Half
104,000(10.5)
(200)
(100)
(300)
(10.87)230,000
0.1
1,500(27.4)
1,800(29.9)
1,000
9.4
36.24
Full year
Note: Change in the forecast from the latest announcement: Yes

* Notes(1) Changes in significant subsidiaries (Changes in specific subsidiaries accompanied by changes in the scope ofconsolidation): 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 June 30, 2012:

28,702,118

As of March 31, 2012:

28,702,118

As of June 30, 2012:

1,105,227

As of March 31, 2012:

1,105,201

Period ended June 30, 2011:

27,597,462(b) Treasury stock(c) Average number of shares (quarterly consolidated cumulative period)
Period ended June 30, 2012:

27,596,898* Information concerning quarterly review procedure
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. The financial statements for the first quarter were under review at the time this Summary ofFinancial Results was released.
* Cautionary statement regarding forecasts of operating results and special notes

Forecasts regarding future performance in these materials are based on judgments made in accordance withinformation available at the time this report was prepared. Actual results may differ significantly from these forecasts
for a number of factors. For information about the forecasts, please see “(3) Forecast for fiscal year ending in March2013” on page 3.

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 for fiscal year ending in March 2013 .................................................................................................................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)Notes to ongoing concern assumptions ............................................................................................................................8(4)Segment information ........................................................................................................................................................8(5)Notes on significant change in shareholders’ equity: .......................................................................................................81

1.

Results of Operations(1)Overview on consolidated business performance
In the first quarter, the Japanese economy benefited both from capital expenditure and housing investment caused byrecovery and reconstruction demand from the Great East Japan Earthquake and from increased consumer expenditure inareas such as automobile sales due to the eco-car subsidy program and other measures with the result that it was marking out
a recovering trend. However, the combined impact of several factors including the emergence of the European sovereign
debt crisis, persistent yen strength, weakness in the stock market and a balance of trade deficit resulted in a further
continuation of uncertainty about the outlook for the future.
In the electronics industry, which the KAGA ELECTRONICS Group belongs to, the market environment for consumer
electronics products, centering on flat-panel televisions remains challenging but demand in the market for smartphones,
tablet computers and other mobile information devices continues firm.
In this environment, the KAGA ELECTRONICS Group has been strengthening the degree of cooperation and coordination
across the whole group, intensifying sales promotions to major existing customers, developing new products and expanding
its marketing of LED lighting and other environmentally friendly products as well as growing sales of EMS* in growthmarkets such as automobile-installations and overseas. For the quarter the Group recorded, in a market for digital electronics
products which is much harsher than had been anticipated, consolidated net sales of 49,686 million yen (down 9.7% from thesame period in the previous year), an operating loss of 289 million yen (from operating income of 247 million yen), an
ordinary loss of 282 million yen (from ordinary income of 372 million yen) and a net loss of 350 million yen (from net
income of 114 million yen).
*EMS: Electronics Manufacturing Service is a term used for the provision of product development and manufacturingservices on an outsourcing basis.
Business segment performance was as follows.
(a) Electronic components (Development, manufacture and sale of semiconductors, general electronic components andother products, EMS, and other activities)
The electronics components business has been successful in growing its in-vehicle electronics components,semiconductor and its EMS business in areas such as overseas air conditioner equipment applications etc. but, in Japan,
because orders for electronics components and semiconductors for amusement equipment applications and forJapanese digital electronics product manufacturers located overseas have decreased, the business saw sales fall 5.2% to37,366 million and recorded operating income 44.9% lower at 101 million yen.
(b) Information equipment (Sales of PCs, PC peripherals, photograph and imaging products, original-brand products, andother products)
The information equipment business engaged in aggressive sales promotion activities to increase sales of personal
computers, peripherals and other existing products but, due to the negative impact of changes to sales and distribution
channels on sales of memory-card products to consumer electricals chain stores and specialists, the result was a 26.8%
decrease in segment sales to 9,180 million yen and an operating loss for the segment of 193 million yen (from segment
income of 54 million yen in the same period in the previous year).
(c) Software (Production of computer graphics, planning and development of amusement products, and other activities)
In the software segment, group companies focused on the production of computer graphics for animation applications,image processing for amusement equipment and sales of game software and new products. However, a decrease insales of game software and additional time required for their development resulted in sales in the segment falling
11.3% to 636 million and an operating loss for the business of 169 million yen (from segment income of 35 million
yen in the same quarter last year).
(d) Others (Electronic device repairs and support, sales of sporting goods, and other activities)
The segment showed signs of recovery from the impact that the Great East Japan Earthquake had on sales in thegolfing product sales business. As a result, the business saw sales increase 8.5% to 2,503 million but, due to a lower
gross margin for the segment, recorded an operating loss of 21 million yen (from operating income of 13 million).

2

(2)

Overview of financial condition
Assets totaled 107,727 million yen at the end of the first quarter, 6,986 million yen less than at the end of the previous
fiscal year mainly because of a decrease in notes and accounts receivable-trade.
Liabilities decreased 5,656 million yen to 61,120 million yen mainly because of a decrease in notes and accounts payabletrade.
Net assets decreased 1,329 million yen to 46,607 million yen. This was attributable primarily to a net loss and dividends
from surplus.

(3)

Forecast for fiscal year ending in March 2013(a) Consolidated forecast for the first half ending September 2012 (April 1, 2012 – September 30, 2012)

Previous forecast (A)Million yen
108,000

Operatingincome
Million yen
300

Revised forecast (B)104,000(200)

Difference (B-A)(4,000)Pct. change (%)(3.7)
116,237Net Sales(Ref.) Previous fiscal year

Ordinary
incomeMillion yen
500

Million yen
300

Net income
per shareYen
10.87

(100)

(300)

(10.87)

(500)

(600)

(600)

-----

771

895

301

10.92

Net income(b) Consolidated forecast for fiscal year ending March 2013 (April 1, 2012 – March 31, 2013)

Previous forecast (A)Million yen
234,000

Operatingincome
Million yen
2,200

Revised forecast (B)230,000

1,500

Difference (B-A)(4,000)(700)

Pct. change (%)(1.7)(31.8)

229,856

2,067

2,569

Net Sales(Ref.) Previous fiscal year

OrdinaryincomeMillion yen
2,700Million yen
1,600

Net income
per share
Yen
57.98

1,800

1,000

36.24

(900)

(600)

-(33.3)(37.5)

-914

33.13

Net income(c) Reason for revisions
Although the Japanese economy is gradually recovering from the effects of the Great East Japan Earthquake, concerns
about loss of economic momentum as a result of stagnation in the European economies due to the prolongation of theEuropean sovereign debt crisis, slowdowns in the economies of the United States and developing nations, combinedwith the strength of the yen and the weakness of the stock market and other factors, mean the outlook continues toremain uncertain.
Given this environment, the KAGA ELECTRONICS Group has been strengthening the degree of cooperation andcoordination across the whole group and intensifying sales promotions to major existing customers but in anenvironment which has much more difficult than had been anticipated and as a result of decreases in orders for digitalelectronics products, electronics components for amusement equipment applications and semiconductors and of
diminished sales volumes for information equipment and other factors, both sales and income have been lower than ourexpectations and so we have revised our cumulative earnings forecasts for the second quarter of the current fiscal year
as shown above.
Moreover, because we believe that the operating environment will remain adverse, we have also revised our forecast
for the fiscal year ending in March 2013 as shown above.

2.

Other Information(1)

Changes in significant subsidiaries:
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:None3

3.

Quarterly Consolidated Financial Statements(1)

Quarterly consolidated balance sheet(Million yen)
Fiscal year ended March 2012
(As of March 31, 2012)

First quarter ended June 2012
(As of June 30, 2012)ASSETS
Current assets
Cash and cash equivalents

9,775

9,437

Notes and accounts receivable-trade55,97948,29674

74

17,104

17,335

334

788

4,115

4,462

861

820

Others

6,272

5,750

Allowance for doubtful accounts

(144)

(68)

Total current assets

94,37486,898

Buildings and structures, net

2,945

3,069

Machinery, equipment and vehicles, net

1,492

1,552

926

951

4,077

4,077

45

155

9,487

9,805

253

217

Marketable securities
Merchandize and finished goods
Work in process
Raw materials and other supplies
Deferred tax assets

Fixed assets
Property, plant and equipment

Tools, furniture and fixtures, net
LandConstruction in progress
Total property, plant and equipment
Intangible assets
Goodwill
Software

800

711

Others

1,191

1,243

Total intangible assets

2,245

2,172

4,032

4,149

Investments and other assets
Investment securities

341

513

Others

5,911

5,854

Allowance for doubtful accounts(1,678)(1,667)

Total investments and other assets

8,607

8,850

20,34020,829114,714

107,727

Deferred tax assets

Total fixed assets
Total assets

4

(Million yen)
Fiscal year ended March 2012
(As of March 31, 2012)

First quarter ended June 2012
(As of June 30, 2012)

LIABILITIESCurrent liabilities
Notes and accounts payable-trade

41,74835,989

Short-term bank loans

11,084

12,860

Income taxes payable

1,082

372

Allowance for directors’ and corporate auditors’ bonuses

5237

Others

5,505

5,229

Total current liabilities59,474

54,489Long-term bank loans

2,833

2,384

Allowance for retirement benefits for employees
Allowance for retirement benefits for directors andcorporate auditors
Others

1,579

1,596

1,399

1,328

1,491

1,321

Total long-term liabilities

7,303

6,631

66,777

61,120Paid-in capital

12,133

12,133

Capital surplus

13,912

13,912Long-term liabilities

Total liabilities
NET ASSETS
Shareholder’s equity

Retained earnings

25,03824,274

Treasury stock(1,333)(1,333)

Total shareholder’s equity

49,751

48,987

(653)

(745)

Accumulated other comprehensive income
Valuation differences on available-for-sales securities

(24)

4

Foreign currency translation adjustments(2,663)(3,087)

Total valuation and translation adjustments(3,341)(3,828)Deferred gains or losses on hedges

00

Non-Controlling Interest

1,526

1,448

Total net assets

47,936

46,607

114,714

107,727

Subscription rights to shares

Total liabilities and net assets

5

(2)

Quarterly consolidated statements of income and consolidated statements of comprehensive income
For the first quarter (April 1, 2012 – June 30, 2012)(Million yen)First quarter ended June 2011
(April 1, 2011 – June 30, 2011)

First quarter ended June 2012
(April 1, 2012 – June 30, 2012)

Net sales

55,001

49,686

Cost of sales

47,95443,545Gross profit

7,046

6,141

Selling, general and administrative expenses

6,799

6,431

247

(289)

Interest income

18

11

Dividend income

38

36

Commission income48

46

Operating income (loss)
Non-operating income

Others94

90

Total non-operating income

200

185

Non-operating expenses
Interest expense

3432

Foreign exchange losses

16118

Others24

26

Total non-operating expenses

75

177

372

(282)

Gain on sales of noncurrent assets

32Others

0-

Total extraordinary income

32

Ordinary income (loss)
Extraordinary income

Extraordinary losses
Loss on retirement of fixed assets

31

Loss on revaluation of investment securities

3282

Loss on impairment of fixed assets

3-

Loss on valuation of golf club membership

161

Others80

Total extraordinary losses

6485

Income (loss) before income taxes andNon-Controlling Interest

311(365)

Income taxes-current

223

195

Income taxes-deferred(33)(178)

Total taxes

19017Income (loss) before Non-Controlling Interest

121(383)

6(32)

114

(350)

Non-Controlling Interest in income (loss)

6(32)Income (loss) before minority interests

121(383)

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

6

(Million yen)First quarter ended June 2011
(April 1, 2011 – June 30, 2011)

First quarter ended June 2012
(April 1, 2012 – June 30, 2012)

Other comprehensive income
(354)

(88)

(0)

28

Foreign currency translation adjustment

(172)

(422)

Total other comprehensive income

(528)

(482)

(406)

(865)

(413)

(838)

6(27)

Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of
the parent
Comprehensive income attributable to Non
Controlling Interest

7

(3)

Notes to ongoing concern assumptions
None(4)

Segment information
For the first quarter ended June 2011 (Apr. 1, 2011 – June 30, 2011)
1. Information about sales and income (loss) by reportable segments
Reporting segments
Adjustment(Note 1)

(Million yen)Amount on theconsolidated
statements ofincome(Note 2)

Electroniccomponents

Informationequipment

Software39,42912,546717

2,308

55,001-55,001

336

159

704

348

1,548

(1,548)-39,765

12,705

1,421

2,656

56,550(1,548)55,001OthersTotal

Net salesof which tooutside customersof which intersegment
TotalSegment
184
54
35
13287(40)247
income (loss)
Notes:
1. The adjustment reducing segment income by 40 million yen includes amounts for intersegment cancellation of -20
million yen and for goodwill amortization of -19 million.
2. Segment income is adjusted for quarterly consolidated income and for operating income in the statement ofcomprehensive income.
For the first quarter ended June 2012 (Apr. 1, 2012 – June 30, 2012)
1. Information about sales and income (loss) by reportable segments

Reporting segments
Adjustment(Note 1)

(Million yen)Amount on theconsolidated
statements ofincome(Note 2)

Electroniccomponents

Informationequipment

Software

OthersTotal

37,366

9,180

636

2,503

49,686-

49,686

246

209

209

839

1,505

(1,505)-37,612

9,390

846

3,342

51,192(1,505)49,686

Net salesof which tooutside customersof which intersegment
Total

Segment101
(193)
(169)
(21)
(282)
(7)
(289)
income (loss)
Notes:
1. The adjustment reducing segment income by 7 million yen includes amounts for intersegment cancellation of 9
million yen and for goodwill amortization of -16 million.
2. Segment income is adjusted for quarterly consolidated income and for operating income in the statement ofcomprehensive income.

(5)

Notes on significant change in shareholders’ equity:
None8