(Translation)

Securities Code:June 7, 2019

6839

NOTICE OF THE 67TH ORDINARY GENERAL MEETINGOF SHAREHOLDERS

Dear Shareholders:
We would like to express our appreciation for your continued support.
You are hereby notified that the 67th Ordinary General Meeting of Shareholders of Funai
Electric Co., Ltd. (the “Company”) will be held as described below, and you are cordiallyinvited to attend the meeting.
Note that if you are unable to attend, as a shareholder you may exercise your voting rights inwriting. Please review the attached Reference Document for the General Meeting of
Shareholders set forth below and exercise your voting rights as stipulated.

[Exercising voting rights in writing]Send the enclosed voting form indicating your approval or disapproval of the propositions to
us by return mail no later than 5:00 p.m. (JST) on June 25, 2019 (Tuesday).
[Exercising voting rights online, including Internet]
Access the designated website for exercising voting rights (https://evote.tr.mufg.jp/), use thecode for exercising voting rights and the one-time password shown in the enclosed voting
form and follow the instructions that appear on your screen. Submit your approval ordisapproval of the propositions to us by no later than 5:00 p.m. (JST) on June 25, 2019
(Tuesday).
Refer to page 4. Instructions on exercising your voting rights online, including via Internet

when casting your vote online.

Yours very truly,

Hideaki Funakoshi
Representative Director, President, andChief Executive Officer

Funai Electric Co., Ltd.
7-1, Nakagaito 7-chome,
Daito City, OsakaDescription
1.

Date and hour:
June 26 (Wednesday), 2019, 10:00 a.m.

2.

Place:
5F, Multipurpose Hall, Technology Bldg. of the Company
7-1, Nakagaito 7-chome, Daito City, Osaka

3.

Matters forming the objects of the meeting:
Matters to be reported:
1.

The business report, the consolidated financial statements and the audit reportson the consolidated financial statements by the independent auditors and the
Audit and Supervisory Committee for the 67th fiscal year (from April 1, 2018
to March 31, 2019)2.

The nonconsolidated financial statements for the 67th fiscal year (from April 1,2018 to March 31, 2019)

Matters to be resolved:
Proposition No. 1: Reduction of Capital Reserve
Proposition No. 2: Partial revision to the Articles of Incorporation
Proposition No. 3: Election of six (6) Directors (excluding Directors who are
Audit and Supervisory Committee Members)
Proposition No. 4: Election of three (3) Audit and Supervisory Committee member
Proposition No. 5: Election of one (1) substitute Audit and Supervisory Committee
member
Proposition No. 6: Payment of retirement benefits for retiring Directors
Proposition No. 7: Issuance of share acquisition rights as a stock option
4. Decisions for convening the General Meeting of Shareholders○In cases where a shareholder exercises their voting rights both in writing and electronically,
including via the Internet, the voting rights exercised electronically will be deemed as thevalid vote.
○In cases where a shareholder exercises their voting rights electronically, including via theInternet, more than once, only the last vote will be deemed as valid.
- END ・ In attending the meeting, please submit the enclosed voting form to a receptionist at theplace of the meeting.
・ Of the documents to be provided upon giving notice of this Ordinary General Meeting of
Shareholders, “Notes to the consolidated financial statements” and “Notes to thenonconsolidated financial statements”, which are posted on our website(http://www2.funai.co.jp/en/investors/) in accordance with and as provided for in theapplicable laws and ordinances and Article 14 of the Articles of Incorporation of theCompany, are not attached with this notice of the Ordinary General Meeting of

Shareholders. Therefore, the attached documents to this notice of the Ordinary General
Meeting of Shareholders are a part of the consolidated financial statements andnonconsolidated financial statements that have been audited by the independent auditors
to express their audit opinions.
・ In the event of the revision to any matters in the Reference Document for the General
Meeting of Shareholders, the business report, the consolidated financial statements andthe nonconsolidated financial statements, it will be posted on our website stated above.

Reference Document for the General Meeting of Shareholders
Propositions and reference information
Proposition No. 1:
Reduction of Capital Reserve
1. Reasons for reducing capital reserve
Pursuant to Article 448, Section 1 of the Companies Act, the Company shall reduce its capitalreserve and transfer the amount by which it is reduced to other capital surplus to ensure theflexibility and mobility of its financial strategy going forward.
2. Details of the reduction to the capital reserve(1) Amount of capital reserve reduction
The capital reserve will be reduced by ¥3,000,000,000 from a total of ¥20,023,476,638,
and the amount by which it is reduced will be transferred to other capital surplus. The
amount of capital reserve after reduction will be ¥17,023,476,638.
(2) Date the capital reserve reduction will take effectJuly 29, 2019

Proposition No. 2:
Partial revision to the Articles of Incorporation
1. Reason for proposal
The Company and its subsidiaries aim to implement the expansion of business operations anddeploy businesses going forward. In preparation for this, we plan to add new businessobjectives to Article 2 (Purpose) of the Articles of Incorporation.
Current Articles of Incorporation

After revision(Purpose)(Purpose)

Article 2: The purpose of the Company is to

Article 2: (No change)

conduct the following business operations.
1.-3. (Text omitted)(Newly added text)

1.-3. (No change)
4. Development, manufacturing, sales andimport/export of automobiles (including electricvehicles and two-wheeled vehicles) and automotiveparts

4.-7. (Text omitted)

5.-8. (No change)

8. Product and merchandise repair and maintenance

9. Product and merchandise repair, serving,

services in the preceding items (excluding items 2,

inspection and maintenance services in the

3 and 5)preceding items (excluding items 2, 3 and 6)

9. Products, merchandise, copyrights, software

10. Products, merchandise, copyrights, software

rental and leasing in the preceding items (excluding

rental and leasing in the preceding items (excluding

items 2, 3 and 8)

items 2, 3 and 9)

10.-34. (Text omitted)

11.-35. (No change)(Newly added text)
35. (Text omitted)

36. Power generation business37. (No change)Proposition No. 3: Election of six (6) Directors (excluding Directors who are Audit andSupervisory Committee Members)
The term of office of all five (5) directors (excluding directors who are Audit andSupervisory Committee members; the same applies hereinafter in this proposition) currently
in office will expire at the close of this Ordinary General Meeting of Shareholders.

Hence, it is hereby proposed that six (6) Directors, increasing one (1) outside Director, beelected in order to accelerate decision-making and increase management efficiencies.
The candidates for Director are as follows:Candidate
No.

Name
(Date of birth)

Brief history, post in the Company and business incharge (and important concurrent office)April 1984
January 1993
April 2006
February 2008

June 2010

July 2011

May 2012

1

Hideaki Funakoshi(September
30,
1965)

April 2013

November 2014
April 2016

June 2016
May 2017

Joined Mitsubishi ElectricEngineering Company, Limited
Joined the Company
General Manager of DVD Projectof the Company
Executive General Manager of
DVD Business Div. of theCompany
Director of the Company
Officer and General Manager of
DVD Business Div. of theCompany
Officer and Deputy General
Manager of AV Business
Headquarters of the Company
Officer, Deputy General Manager
of AV System Business
Headquarters and General Manager
of Digital Media Business Div. of
the Company
Officer, General Manager of AV
System Business Headquarters andGeneral Manager of Display
Business Div. of the Company
Officer and General Manager of
AV System Business Headquartersof the Company
Officer, General Manager of AV
System Business Headquarters andGeneral Manager of Display
Business Div. of the Company
Director of the Company
Representative Director of theCompany (To date)President & CEO of the Company(To date)

Number ofshares of theCompany heldby Candidate

800 shares

Candidate
No.

Name
(Date of birth)

Brief history, post in the Company and business incharge (and important concurrent office)April 1982
April 2003

April 2005

2

Takeshi Ito(September 10,
1960)

August 2008
October 2009
April 2012
October 2014

June 2016(Responsible)
April 1977

General Manager of Marketing
Promotion Dept., Overseas Sales
Div. of Victor Company of Japan,
LimitedFebruary 2003

Executive Vice President of JVC
Canada Inc.
General Manager of AVC
Accessory Dept. of Victor
Company of Japan, Limited

Motoyoshi Adachi(January 26, 1955)
April 2007
June 2008

September 2008

September 2009
June 2011

1,000 shares

General Manager, Sales
Headquarters
Joined Victor Company of Japan,
Limited (currently JVC Kenwood
Corporation)

September 1998

September 2006
3

Joined the Company
Assumed the position of General
Manager of the Company
President of FUNAICORPORATION, INC.
Executive General Manager of theCompany
President of P&F USA, Inc.
Officer of the Company(To date)President of Funai India Private
Limited
Officer and General Manager ofMaterials Headquarters of theCompany
Director of the Company (To date)

Number ofshares of theCompany heldby Candidate

Associate Director of Victor
Company of Japan, Limited
Director of Victor Company ofJapan, Limited
Director, Executive Officer of JVC
Kenwood Holdings Inc. (currently,
JVC Kenwood Corporation)
Director, Managing Officer of
JVC Kenwood Holdings Inc.
Advisor of JVC Kenwood
Holdings Inc.

- shareCandidate
No.

Name
(Date of birth)

Brief history, post in the Company and business incharge (and important concurrent office)May 2013

Joined the Company as Associate
Director in charge of sales
management

April 2014

Associate Director and General
Manager of HV Business Div., AV
System Business Headquarters of
the Company

October 2014

Officer, General Manager of HVBusiness Div., AV System
Business Headquarters of theCompany(To date)

January 2015

Officer, General Manager ofDisplay System Business Div., AV
System Business Headquarters of
the Company

April 2016

President of Funai Corporation,
Inc.
President of P&F USA, Inc.

April 2018

June 2018

Officer, General Manager ofBusiness Headquarters of theCompany
Director of the Company (To date)(Responsible)

General Manager of AV Division

Number ofshares of theCompany heldby Candidate

Candidate
No.

Name
(Date of birth)

Brief history, post in the Company and business incharge (and important concurrent office)April 1986
October 2003
April 2006

June 2007

July 20094

Makoto Ueshima(February 27,
1963)

July 2010

April 2014
August 2015
April 2017
July 2017

Candidate for
Outside Director

April 2018
May 2018
June 2018

Joined the Company
Officer of the Company (To date)Director of the Company (To date)(Responsible)

General Manager of
Administration Headquarters
Vice President and Director of
T.P.S. Laboratory Co., Ltd. (Todate)
Outside Director of the Company(To date)
Outside Director of THE SAILORPEN CO., LTD.
Outside Audit & Supervisory
Board Member of Oriental Chain
Mfg. Co., Ltd. (To date)Outside director of the Company(To date)

July 1995

September 1998
5

Mitsuo Yonemoto(March 18, 1939)

Joined Daiwa Bank, Limited (nowResona Bank, Limited)
General Manager of Senri Branchof Resona Bank
Department Manager of theSeventh Osaka Sales Department,
Osaka Sales Office, Resona Bank
Department Manager of the Sixth
Tokyo Sales Department, Tokyo
Sales Office, Resona Bank
Department Manager of theSecond Sales Department,
Toranomon Branch, Resona Bank
General Manager of Amagasaki
Kita Branch and Amagasaki Area
Manager, Resona Bank
General Manager of Osaka Nishi
Branch, Resona Bank
General Manager of Pension Sales
Department, Resona Bank
Loaned to the Company, Associate
Director
General Manager of
Administration Headquarters of
the Company (To date)

March 2009
June 2012

June 2018

Number ofshares of theCompany heldby Candidate- share100 shares

Candidate
No.

Name
(Date of birth)

Candidate for
Outside Director

Atsushi Shirakami(December 19,
1960)

6

Brief history, post in the Company and business incharge (and important concurrent office)Number ofshares of theCompany heldby Candidate(Vice President and Director of T.P.S. Laboratory Co.,Ltd.)
(Outside Audit & Supervisory Board Member ofOriental Chain Mfg. Co., Ltd.)
April 1983
Joined The Dai-Ichi
Kangyo Bank, Limited(currently Mizuho Bank,
Ltd.)
June 1998
Deputy Branch Manager,
London Office, Dai-Ichi
Kangyo Bank
April 2002
Assistant Sales Manager,
Japanese Corporate Sales,
Europe Branch, Mizuho
Corporate Bank, Ltd.,(currently Mizuho Bank,
Ltd.)
June 2003
General Manager,
Financial ProductDevelopment, Mizuho
Securities Co., Ltd.
March 2005
General Manager, Sales
Department, Medical
Division, Nikkiso Co.,Ltd.
August 2007
General Manager,
Corporate Planning,
Executive Officer,
Katokichi Co., Ltd.
(currently TableMark Co.,Ltd.)
January 2010
Vice President, MT Lab
January 2011
Strategic Dominance Co.,Ltd.
President (to date)- share(President, Strategic Dominance Co., Ltd.)(Director, Nippon Jigyo Senryaku Sogo Kenkyujo(Japan Business Strategy Research Institute))(Notes) 1. None of the candidates for Director have any special interests with the Company.
2. Candidate for Director, Mr. Mitsuo Yonemoto, is a candidate for Outside Director.
3. Reasons for the selection of the candidates for Director or Outside Director:
・The Management expects Mr. Hideaki Funakoshi to use the wide range of knowledge andcapabilities accumulated from his broad expertise and experience as a manager of the AV
business, one of the Company’s core businesses.
・The Management expects Mr. Takeshi Ito to use the wide range of knowledge andcapabilities accumulated from his diverse business experience within the Company andextensive overseas business experience in the management of the Company.
・The Management expects Mr. Motoyoshi Adachi to make full use of the abilities andinsight that he has developed from his abundant experience and achievements in the areaof business management for many years in his previous career and at this Company.
・The Management expects Mr. Makoto Ueshima to make full use of his abilities andabundant insight in the area of banking and finance in the management of the Company.
・The Management expects Mr. Mitsuo Yonemoto to offer advice based on his broad
experience as a management consultant and also enhance the transparency ofmanagement by participating in the Board of Directors as an independent officer.
・The Management expects Mr. Atsushi Shirakami to provide beneficial advice based on his
wide range of knowledge and capabilities accumulated as a management consultant andalso expects to use his diverse business experience and network within the Company.
4. Years of service of Outside Director of the Company:
Mr. Mitsuo Yonemoto will have served as an outside director for 20 years and ninemonths at the close of this Ordinary General Meeting of Shareholders.
5. Designation of independent officer:
The Company has designated Mr. Mitsuo Yonemoto as an independent officer inaccordance with the rules of Tokyo Stock Exchange, Inc. and registered him with suchexchange.
6. Conclusion of limited liability agreement:
The Company has entered into an agreement with Non-executive Directors Mr. Tetsuro
Funai and Mr. Mitsuo Yonemoto to limit their liability for any damage as provided for in
Article 423, paragraph 1 of the Companies Act of Japan within the aggregate amount asprovided for in the items of Article 425, paragraph 1 of the said Act, pursuant to Article
427, paragraph 1 of the said Act. If they are reelected, such agreement will be renewed.
The Company and Mr. Atsushi Shirakami will enter into a limited liability agreement
once he is elected.

Proposition No. 4:

Election of three (3) Audit and Supervisory Committee member

The term of office for three (3) Directors, who are also Audit and Supervisory Committee
members, will expire at the close of this Ordinary General Meeting of Shareholders. We
would like to nominate three (3) Directors, who are also Audit and Supervisory Committee
members, including two (2) Outside Directors.
Note that this proposition has been approved by the Audit and Supervisory Committee.
The candidate for directors who are also Audit and Supervisory Committee members are as
follows:
Candidate
No.

Name(Date of birth)

Brief history, post in the Company and business incharge (and important concurrent office)September 1969
November 1982
June 1988
July 1997

1

Fumiaki
Kidera(January 31, 1951)

July 2003
July 2006
June 2012
June 2017

Joined Sansui Electric Co., Ltd.
Director of Osaka Service
Center of Quality Assurance
Dept., of Sansui Company
General Manager of Service
Dept., of FUNAI SALES CO.,LTD.
President and Representative
Director of FUNAI SERVICE
CO., LTD.
Associate Officer of Products
Reliability Div. of theCompany
Officer of Products Reliability
Div. of the Company
Resigned from the Company
Director (full-time Audit andSupervisory Committee
member) (To date)

Number ofshares of theCompany heldby Candidate- shareCandidate
No.

Name
(Date of birth)

Brief history, post in the Company and business incharge (and important concurrent office)April 1973
March 1982
August 1992
May 1999
October 2006

2

Hiroyuki Yamada(November
26,
1950)
April 2007
June 2007
April 2008
June 2008
October 2012

3

Takahiro Tanaka(January 17, 1973)

Joined Chuo Accounting OfficeBecame a registered certified
public accountant (CPA)
Employee, Chuo Shinko Audit
Corporation
Senior Partner, Chuo Shinko
Audit Corporation
Became a registered tax
accountant
Opened Yamada & Partners
Accounting Co., Ltd. and
Yamada & Partners Tax
Accounting Co., Ltd.
Representative (to date)Outside Director, Takasho Co.,
Ltd. (to date)Outside auditor, Denkyosha
Co., Ltd. (to date)Outside auditor, Imura
Envelope Corporation (to date)Outside auditor, KFC Ltd.
Director, Kansai University(President, Yamada & Partners Accounting Co., Ltd.)(President, Yamada & Partners Tax Accounting Co.,Ltd.)
(Outside Dirctor, Takasho Co., Ltd.)(Outside auditor, Imura Envelope Corporation)
April 2000
Lawyer registration (Osaka Bar
Association)
Joined the Nakanoshima Chuo
Law Office
January 2007
Became a partner at the law
office above (to date)June 2010
Outside auditor, Shinko Wire
Company, Ltd.
June 2015
Outside Director, Shinko Wire
Company, Ltd. (to date)

Number ofshares of theCompany heldby Candidate- share- share(Partner, Nakanoshima Chuo Law Office)(Outside Director, Shinko Wire Company, Ltd.)(Professor, Graduate School of Intellectual Property,
Osaka Institute of Technology)

1. Mr. Takahiro Tanaka, a candidate for Director who will also serve as an Audit andSupervisory Committee member, is a partner at Nakanoshima Chuo Law Office. The
Company has a consulting contract with this law firm. Note that in the fiscal year ended
March 31, 2019, the total amount of transactions with this law firm was around 2 million yen
annually. Candidates for Director who will also serve as an Audit and Supervisory
Committee member have no special interests in the Company.

2. Mr. Hiroyuki Yamada and Mr. Takahiro Tanaka are candidates for the position of Outside
Director.
3. Reasons for the selection of the candidates for Directors, who will also serve as an Audit
and Supervisory Committee member, or Outside Directors:
Mr. Fumiaki Kidera has many years of experience related to corporate management.
Management expects Mr. Kidera to use his capabilities and knowledge in the audit system of
the Company.
Mr. Hiroyuki Yamada has broad experience as a CPA and tax accountant andpossesses specialized knowledge related to corporate accounting and taxes. Management
expects Mr. Yamada to use these capabilities for conducting audits in the Company. Asidefrom his role as an Outside Director and Outside Auditor, Mr. Yamada has no direct
involvement in the management of the Company. In light of the above reasons, Management
believes that Mr. Yamada is a good candidate for executing duties as an Outside Director
who is an Audit and Supervisory Committee member.
Mr. Takahiro Tanaka has broad experience as a lawyer and possesses specialized
knowledge related to corporate law. Management expects Mr. Tanaka to use thesecapabilities to fortify compliance and for conducting audits at the Company. Aside from hisrole as an Outside Director and Outside Auditor, Mr. Tanaka has no direct involvement in the
management of the Company. In light of the above reasons, Management believes that Mr.
Tanaka is a good candidate for executing duties as an Outside Director who is an Audit andSupervisory Committee member.
4. The Company has designated Mr. Hiroyuki Yamada and Mr. Takahiro Tanaka as
independent officers and plans to register them with the Tokyo Stock Exchange, Inc.
Note that as stated above the Company has business transactions with Mr. Tanaka’s law firm.
However, it has been determined that this does not influence his independence in his duties as
an officer.
5. Conclusion of limited liability agreement:
The Company has entered into an agreement with Mr. Fumiaki Kidera, who is a director andalso an Audit and Supervisory Committee member, to limit their liability for any damage asprovided for in Article 423, paragraph 1 of the Companies Act of Japan within the aggregate
amount as provided for in the items of Article 425, paragraph 1 of the said Act, pursuant to
Article 427, paragraph 1 of the said Act. If he is reelected, such agreement will be renewed.
The Company will also enter into a limited liability agreement with Mr. Hiroyuki Yamada
and Mr. Takahiro Tanaka, should they be newly elected.

Proposition No. 5:

Election of one (1) substitute Director, who will also serve as an
Audit and Supervisory Committee member

In accordance with the provisions stipulated in Article 329, paragraph 3 of the Companies
Act, we propose that one (1) substitute Director, who will also serve as an Audit andSupervisory Committee member is elected in advance as a contingency for when the
Company does not have the required number of Directors who are also Audit andSupervisory Committee members as prescribed by laws and ordinances.
Note that prior to taking office, the nomination can be terminated via consent by the Audit
and Supervisory Committee and a vote by the Board of Directors.
This Audit and Supervisory Committee has consented to this proposition.
The candidate for substitute Director, who will also serve as an Audit and Supervisory
Committee member is as follows:

Name(Date of birth)

Brief history, post in the Company and business incharge (and important concurrent office)
July 1995

September 1998
Mitsuo Yonemoto(March 18, 1939)

March 2009
June 2012

June 2018

Vice President andDirector of T.P.S.
Laboratory Co., Ltd. (todate)
Outside Director of theCompany (to date)Outside Director, THE
SAILOR PEN CO., LTD.
Outside Audit &Supervisory Board
Member, Oriental Chain
Mfg. Co., Ltd.
Outside Director, Oriental
Chain Mfg. Co., Ltd. (todate)

Number ofshares of theCompany heldby Candidate

100 shares(Vice President, TPS Laboratory Co., Ltd.)(Outside Director, Oriental Chain Mfg. Co., Ltd.)1.
The candidate for Director, who will also serve as an Audit and Supervisory
Committee member, does not have any special interests in the Company.
2.
Mr. Mitsuo Yonemoto is a candidate for substitute Outside Director.
3.
Reasons for the selection as a candidate for substitute Outside Director, who will also
serve as an Audit and Supervisory Committee member:
・Mr. Mitsuo Yonemoto has abundant experience as a management consultant and has many
years of experience related to corporate management. Management expects Mr. Yonemoto toutilize these capabilities and knowledge in the audit system of the Company.
4.
Years of service of Outside Director of the Company:
Mr. Mitsuo Yonemoto is currently an Outside Director of the Company and will have served
as an Outside Director for 20 years and nine months at the close of this Ordinary General
Meeting of Shareholders.
5. Conclusion of limited liability agreement:

The Company plans to enter into an agreement with Mr. Mitsuo Yonemoto, once elected, tolimit their liability for any damage as provided for in Article 423, paragraph 1 of theCompanies Act of Japan within the aggregate amount as provided for in the items of Article
425, paragraph 1 of the said Act, pursuant to Article 427, paragraph 1 of the said Act.

Proposition No. 6:

Payment of retirement benefits for retiring Directors

Mr. Masahide Morimoto and Mr. Masakazu Funaishi will retire as directors who also
serve as Audit and Supervisory Committee members as their term of office will end at theclose of this Ordinary General Meeting of Shareholders. Both parties will be paid retirement
benefits, within a set amount based on Company standards for their service during theirrespective terms in office.
Note that the specific amount, time of payment, method of payment and otherconditions will be decided based the outcome of discussions by Directors who also serve as
Audit and Supervisory Committee members.
A brief history of the retiring Directors who also serve as Audit and Supervisory
Committee members is as follows:
Name
CareerMasahide Morimoto June 2015

Masakazu Funaishi

June 2017

Outside Director (Audit and Supervisory
Committee member)(to date)
Outside Director (Audit and Supervisory
Committee member)(to date)Proposition No. 7:

Issuance of share acquisition subscription rights as a stock option- END We request that the Ordinary General Meeting of Shareholders approve the above proposition
to allow the Board of Directors to determine the details of an issuance of newshare subscriptions rights as stock options for Directors of the Company and its
subsidiaries (excluding Directors that are also Audit and Supervisory Committee members
and Outside Directors), corporate officers and employees in accordance with Articles
236, 238, and 239 of the Companies Act.
This issuance of new share subscription rights is non-monetary compensation. We also askthat you approve the calculation method for allocating new share subscription rights todirectors, as stipulated in Article 361 of the Companies Act.
Note that in the event that Proposition No. 3:Election of six (6) Directors (excluding
Directors who are Audit and Supervisory Committee Members) is approved at the Ordinary
General Meeting of Shareholders, four (4) Directors shall receive said allocation (excluding
outside directors). Should the new share subscription rights be issued to Directors of theCompany, the maximum number of new share subscription rights to be allocated is 500 newshare subscription rights, taking into account the purpose of the stock option and the level ofcompensation for each Director (the maximum number of new share subscription rights to beallocated to persons other than Directors is the number stipulated in 2.(2) below, minus thenumber of new share subscription rights allocated to the Directors). The amount ofcompensation to be paid to the Directors in the form of new share subscription rights is thefair market value of the new share subscription rights, calculated using the Black Scholesmodel, multiplied by the total number of new share subscription rights to be allocated to the
Directors (the annual 550 million yen Director compensation approved at the 63rd Ordinary
General Meeting of Shareholders, held on June 25, 2015, is separate from this stock option).
We also request approval to delegate to the Board of Directors the authority to decide on
when to issue and distribute the new share subscription rights to each Director.
1. Reasons for offering certain individuals new share subscription rights based on special
conditions
The issuance of new share subscription rights as a stock option aims to increase the corporate
value of the Company by boosting motivation and morale to improve consolidated earnings
performance, as well as by securing skilled personnel.
2. Details of new share subscription rights and ceiling (maximum number of subscription
rights), etc. to be decided pursuant the delegation of authority to the Board of Directors at theOrdinary General Meeting of Shareholders(1) Types and number of shares associated with new share subscription rights
The maximum number of common shares to be issued is 180,000 shares.
Should the Company conduct stock splits (including gratis stock issues) or consolidations thattake effect after the close of the Ordinary General Meeting of Shareholders, the following
method will be used to adjust the number of shares associated witheach new share subscription right. However, such adjustments will only bemade for new share subscription rights issued as part of thisannouncement that have not been exercised as of the time of the adjustment. Furthermore,
fractional sums of less than 1 share will be rounded off.
Number of shares after adjustment = number of shares before adjustment X split (orconsolidation) ratio
Additionally, the number of shares associated with new share subscription rights may be
adjusted within reason should the Company merge through acquisition or consolidation,
absorb a split-off, incorporate a split-off, engage in stock swaps or equity transfers, or forother unavoidable reasons, that take effect after the of the Ordinary General Meeting of
Shareholders.
(1) Number of new share subscription rights
The maximum number of new share subscription rights is 1,800.
Note that the share lot for each new share subscription right is 100. However, as stipulated in(1) above, this will also be adjusted in the event of a number of shares associated with newshare subscription rights is adjusted.
(3) Payment in exchange for acquisition of the new share subscription rights
Payment is not required to acquire the new share subscription rights.
(4) Value and calculation method of assets to be paid in upon exercise of new sharesubscription rights
The value of assets to be paid in upon exercise of each new share subscription right shall be
the per-share value (hereinafter “exercise price”) determined by the following
method, multiplied by the number of shares associated with each new sharesubscription right defined previously in (2).
The exercise price shall be either the average closing price (hereinafter “closing price”) of theCompany’s common stock on the Tokyo Securities Exchange of each trading day (except
days when Company stock was not traded) in the month prior to the date of the new sharesubscription rights issuance (hereinafter “issue date”) multiplied by 1.05 (remainders of lessthan one yen will be rounded up) or the closing price on the issue date (or, if there is no
closing price on the issue date, the closing price from the most recent trading day), whichevervalue is higher.
Note that should the Company conduct stock splits or consolidations, the exercise price will
be adjusted according to the following formula, with remainders of less than one yen roundedup.
Exercise price after adjustment = exercise price before adjustment X 1 / (split (orconsolidation) ratio)
Should the Company issue new shares or retire treasury shares at a price below market value(excluding the exercise of new share subscription rights or preemptive subscription rights),
the exercise price will be adjusted according to the following formula, with remainders ofless than one yen rounded up.
Exercise price after adjustment = exercise price before adjustment X(number of currently issued shares) +((number of newly issued shares X amount paid per share) / market value before newissuance) / (number of currently issued shares + number of newly issued shares)
The “number of currently issued shares” in the formula above is arrived at by subtracting thenumber of common Company treasury shares from the total number of outstanding commonshares. Additionally, should the Company dispose of common treasury shares, “number ofnewly issued shares” and “amount paid per share” shall be replaced by “number of treasury
shares to be disposed of” and “retirement price per share,” respectively.
Furthermore, the exercise price may be adjusted within reason should the Company merge
through acquisition or consolidation, absorb a split-off, incorporate a split-off, engage instock swaps or equity transfers, or for other unavoidable reasons.
(5) Exercise period for new share subscription rights
In accordance with the decision by the Board of Directors, new share subscription rights may
be exercised (allocated) from the date two years after the date of resolution by the Board of
Directors related to the new share subscription rights to the date 10 years after the date of said
resolution.
(9) Conditions for exercising new share subscription rights① The number of new share subscription rights that may be exercised in a single year during
the exercise period for new subscription rights shall be based upon standards determined by
the Board of Directors.
Additionally, should the owner of the new share subscription rights fail to exercise all, or a
portion of, eligible new share subscription rights during any year in the exercise period, his or
her remaining new share subscription rights from that year may be carried over into
subsequent fiscal years until the end of the exercise period.
② New share subscription rights may not be exercised in any year during the exercise period
described above without the authorization of the Company.
③ Should a director, auditor, corporate officer or employee of the Company or an affiliatecease to be a director, auditor, corporate officer or employee of the Company or an affiliatedcompany, he or she may no longer exercise his or her new share subscription rights.
④ The new share subscription rights cannot be transferred, pledged, or otherwise furnished
as collateral to a third party.
(7) Notes concerning increases in capital and capital reserves should shares be issued due tothe exercise of new share subscription rights① The value of the capital increase due to the issuance of shares when new sharesubscription rights are exercised shall be 1/2 of the increase in capital value as calculated
according to Article 17 Paragraph 1 of the Company accounting regulations, with remaindersof less than one yen resulting from the calculations rounded up.
② The value of the capital reserve increase due to the issuance of shares when new sharesubscription rights are exercised shall be calculated by subtracting the increased capital value
defined in ① from the increase in capital defined in ①.
(8) Limitations on acquisition of new share subscription rights through transfer
Acquiring new share subscription rights through a transfer requires the approval of the Boardof Directors.
(9) Reasons for acquisition of new share subscription rights by the Company① The Company may acquire unexercised new share subscription rights without payment ona date to be decided separately by the Company’s Board of Directors should a measure toapprove a merger agreement under which the Company will cease to exist, or a measure toapprove an exchange of shares or equity transfer through which the Company will become awholly owned subsidiary, be approved at a General Shareholders Meeting (upon approval by

the Company Board of Directors if approval at the General Shareholders Meeting is not
required).
② The Company may acquire unexercised new share subscription rights without payment ona date to be decided separately by the Board of Directors should the exercise rights become
lost in accordance with conditions stipulated above in (7).
③ Should a holder of new share subscription rights abandon all, or a portion, of his or her
new share subscription rights, the Company may acquire those rights without payment on adate to be decided separately by the Board of Directors.
(10) Handling of new share subscription rights should the Company be restructured
Should the Company merge (limited to cases in which the Company would cease to exist due
to merger), absorb a split-off, incorporate a split-off, engage in share swaps or equity
transfers (hereinafter collectively “restructuring”), the Company may issue new sharesubscription rights for the company created under “i” to “ho” of Article 236, Paragraph 1,
Item 8 of the Companies Act (hereinafter “restructured company”) to holders of unexercised
new share subscription rights as of the effective date of restructuring based upon theconditions below. In this case, the unexercised new share subscription rights would cease toexist and the restructured company would newly issue its own new share subscription rights.
However, issuances of new share subscription rights from the restructured company inaccordance with the conditions below are limited to instances in which they are defined inmerger agreements, split-off absorption agreements, split-off incorporation plans, share swap
agreements and equity swap plans.
① Number of restructured company new share subscription rights to be issued
The number of restructured company new share subscription rights issued shall be the sameas the number of unexercised Company new share subscriptions rights held.
② Types of restructured company shares associated with new share subscription rights
Shares shall be common shares of the restructured company.
③ Number of restructured company shares associated with new share subscription rights
To be decided based upon (1) above after giving consideration to the conditions of therestructuring.
④ Value of assets to be paid in upon exercise of new share subscription rights
The value of assets to be paid in upon exercise of each allocated new share subscription rightshall, after giving consideration to the conditions of the restructuring, be determined bymultiplying the price to be paid after restructuring, calculated by adjusting the exercise priceas defined earlier in (4), by the number of restructured company shares associated with the
new share subscription right as defined above in ③
⑤ Exercise period for new share subscription rights
The exercise period shall extend from either the starting date of the exercise period for new
share subscriptions defined in (5) above or the effective restructuring date, whichever is later,
to the expiration of the exercise period for new share subscriptions defined in (5) above.
⑥ Conditions for exercising new share subscription rights
To be determined according to (6) above.
⑦ Notes concerning increases in capital and capital reserves should shares be issued due tothe exercise of new share subscription rights
To be determined according to (7) above.

⑧ Limitations on acquiring new share subscription rights through assignment
Acquiring new share subscription rights through assignment shall require the approval of therestructured company.
⑨ Reasons for acquisition of new share subscription rights
To be determined according to (9) above.
(11) Handling of fractional shares resulting from the exercise of new share subscription
rightsFractional sums of less than 1 share arising when shares are issued to a holder of new sharesubscription rights as a result of the exercising of his or her rights shall be rounded off.
(12) Other
Other matters regarding new share subscription rights shall be determined by the Board of
Directors.

(Attached documents)
BUSINESS REPORT(April 1, 2018 to March 31, 2019)1.

Current state of the Funai Group (the “Group”)(1)

Development and results of business activities:

In the United States, the Group’s mainstay market, the economy is trending firmly,
reflecting an increase in private consumption and capital investment, and improvement in theemployment and income environment. Despite this overall tone, the pace of economic growthslowed at one point due in part to the government shutdown and drop in stock prices. Goingforward, sufficient consideration should be given to risks stemming from uncertainties related
to U.S. government policy, including trade issues, such as U.S.-China trade friction, and apotential change in the Federal Reserve Board’s monetary tightening policy.
In Europe, although private consumption is trending firmly on the back ofimprovements to employment and incomes, turmoil triggered by Brexit negotiations, slowing
economies outside of Europe, and political risks are weighing heavily on the region. In lightof this, the outlook for the EU economy remains murky.
Meanwhile, in Japan, the economy is modestly recovering, owing to an improvement
in employee and incomes, as well as a rebound in private consumption. On top of this, special
demand is anticipated owing to the Tokyo Olympic and Paralympic Games, which will beheld in July 2020. However, there is a concern that private consumption and investment arebrittle due to growing risk of an economic downturn reflecting uncertainties related tooverseas economic trends and government policies, including trade issue trends and impact,
and the economic outlook for countries in Asia, including China.
Amid this backdrop, the Group worked steadily to achieve its vision—to become acompany that creates products that are the choice of people around the world. The vision was
promoted in the FY2018 management policy as a measure to shed losses. As its basic strategy,
the Group tackled (1) market share expansion in North America, (2) Funai brand penetrationin Japan, and (3) new business development.
Consequently, the Group booked net sales of ¥105,549 million (a decrease of 18.9%
year on year). The overall decline reflects negative trends in North America, the Group’s
mainstay sales market. Sales in North America faltered due to ongoing inventory adjustments
along distribution channels, especially in the first quarter of the period under review, andsales of surplus inventory took precedence, mainly at large mass merchandisers. In addition,
sales in Japan were impacted in part by the withdrawal of an OEM partner from consumer
electronics. However, sales did increase at large mass merchandisers in the United States andin Canada owing to the development of new business partners. This paves the way for future
expansion in market share. In Japan, sales to Yamada Denki Co., Ltd., with which the Group
has an exclusive distribution agreement, were in line with plans.
In the profit front, the Group posted operating income of ¥682 million (versus an
operating loss of ¥10,885 million a year earlier). Operating income improved sharply year on
year reflecting a decline in component costs, including those for LCD panels, the Group’s
review of its business model and unprofitable product sales, and a certain scale of benefit
from a reduction in manufacturing and selling, general and administrative expenses. Ordinary
income totaled ¥1,392 million (in contrast with a ¥11,909 ordinary loss a year earlier). This isattributable to aforementioned factors as well as an increase in foreign exchange translation
gains and interest income. Meanwhile, profit attributable to owners of the parent stood at¥2,613 million (in comparison with a ¥24,709 million loss attributable to owners of the parent
a year earlier). This mainly reflects the posting of income taxes-deferred (profit) associatedwith the merger of sales companies in North America.
Net sales by product sector were as follows:
Audiovisual Equipment
In the audiovisual equipment segment, The decline in sales of LCD TVs due to the
influence of the distribution inventory adjustment phase in the North American market, inparticular the decline in DVD / BD related products due to the decline in demand for DVD
players and the rise of low price products by Chinese companies Sales decreased due to theimpact of the withdrawal of black goods from Japan. As a result, net sales amounted to¥97,059 million, down 20.8% year on year.
Information Equipment
In the information equipment segment, Sales decreased by approximately ¥ 17 billion
compared with plan due to the reduction of sales of inkjet printers, which are unprofitableproducts for North America, and the sale of new products, large-capacity inkjet printers andmulti-printers for China, to the next period have become. On the other hand, net sales
amounted to ¥ 3,306 million due to the continued sales of inkjet printer cartridges, increased
sales of label printers and nail art printers, and increased sales of commercial ink cartridges.
Other
In other equipment segment, sales of automotive backlights, sales of LCD modules, and salesof medical and healthcare related products such as dental CT and nursing bed modules
increased. As a result, net sales amounted to ¥5,183 million, a growth of 22.7% year on year.
<Consolidated net sales by product group>Group
Audiovisual equipment
Information equipment
Other
Total
(2)

Net sales(millions of yen)
97,0593,306
5,183
105,549

Component rate
(%)
92.0
3.1
4.9
100.0

Investment in property, plant and equipment:

Investment in property, plant and equipment during the fiscal year under review
totaled ¥1,424 million, which comprised of ¥1,195 million by its manufacturing companiesand ¥229 million by its sales companies. Such investments were mainly for the improvementof the manufacturing facilities.

(3)Finance:
Nothing to be reported.

(4)

Status of major organizational restructuring, etc.

On April 1, 2018 consolidated subsidiary Funai Corporation, Inc. and P&F USA, Inc.
were merged with the goal of improvement earnings strength and fortifying operational
strength in North America.
Note that the surviving company, P&F USA, Inc., changes its corporate name on the samedate to Funai Corporation, Inc.

(5)Issues to be addressed:

In the market environment in which Funai operates its consumer electronics business,competition is expected to further intensify due to ongoing uncertainties in the North
America market, the mainstay market. In addition, the market for DVD and BD related
products is shrinking faster than forecast due to the spread of online video streaming services.
Amid this business environment, the Company aims to tackle the following issues.
(i)Sales expansion and recovery of earnings strength

Sales expansion and the recovery of earnings strength are positioned as two key
priorities.
In Audiovisual Equipment, the Company aims to expand its market share byincreasing sales in Mexico, where it has completed a revision of its business model, and by
fortifying measures for the Christmas season in the market in North America. In Japan, salesof FUNAI brand products, which were launched in 2017, are trending steadily. Given
anticipation for replacement demand for audio-visual equipment, mainly ahead of the 2020
Tokyo Olympic and Paralympic Games, the Company aims to achieve further brandpenetration, and focus management resources into the development of products for theJapanese market.
In the Office Solutions business, the Company is planning to achieve sales and profit
growth by expanding sales of OEM and in-house brand CISS (large-capacity cartridge ink-jet
printers), label printers, and nail art printers to China.
In new businesses, Funai plans to cultivate new fields and deploy new products, including
automotive products and specialty printers that apply technologies that were fostered overmany years. In addition, the Company aims to secure an earnings base in markets that it has
full-filled market entry. Also, the Company aims to actively introduce to market new
products including direct automotive backlights, for which technological development wascompleted, and products in the commercial signage business, and the medical andhealthcare-related fields. The Company also plans to launch sales of jointly-developed
derivative products that utilize microfluidics (micro fluid control technology), and existingdeveloped items for the world’s largest general consumer products manufacturer.
In the operating income front, Funai aims to pursue economies of scale on one hand while
pouring energies into sales promotions of high-margin products. On top of this, the Company
aims to curb valuation losses on product, component and raw material inventories bydeploying a purchasing strategy that corresponds to actual sales at retailers to thoroughly
implement PSI management. Funai aims to become a company that creates products that arechosen by people around the world. The Company plans to focus on reducing the productreturn rate as well as minimize losses in tandem with the disposal of returned products.
Through these measures, the Company aims to build a system that will consistently secure
profits.
(ii)

Reinforcement of the manufacturing systems

The Group has production sites in China, Thailand, the Philippines and Mexico. By
concentrating production activities in the most optimal regions, the Group makes concerted
efforts to enhance the local content ratio, improve production efficiency and reduce costs
throughout all processes up to the delivery of end products.

(iii)

Training and appointment of human resources

The Group recognizes that it is important to bolster the Group’s capabilities by improving
each employee’s capabilities and more effectively leveraging its skills to win out against the
global competition in the new era and implementing the Group’s medium- to long-termbusiness strategy. Therefore, the Group is actively training and assigning employees,
regardless of their age and career, by strengthening and expanding its internal and external
training systems, such as language training.
(iv)

Significant events concerning the assumptions of the going concern

Given the Group recorded a significant operating loss, ordinary loss, loss attributable toowners of the parent and negative operating cash flow in the previous consolidated fiscal year,
at this stage there are events and circumstances that cast significant doubt on the Company’s
viability as a going concern.
There are no significant concerns about fundraising as the current balance of cash anddeposits will sufficiently satisfy working capital needs for the time being.
In addition, the Group formulated a medium-term management policy, for which FY2018
is the first year of implementation. In line with the basic policy, the Group posted operating
cash flow of ¥3,507 million. Moreover, the Company aims to gradually implement measuresin line with the following policies for each of its businesses going forward. In light of this,the Group believes that a resolution of the matter can be achieved.
(A) Display business (LCD-TV business)
・Further expand market share at new mass retailers and enhance totalcompetitiveness such as quality and cost
・Reduce returns and discards by strengthening efforts to the North American
Christmas sales battle and improving internal and external service businessprocesses
・The Japanese market sells TVs with built-in advanced BS tuners, and gains
market share in the Mexican market by restructuring business models(B) Digital media business (DVD and BD business)・Develop a niche strategy with BD players that other companies withdrew in the
North American market and capture market share
・Strengthen cooperation with OEMs in the Japanese market and strengthen lineupof FUNAI brand products(C) Office solution business (information equipment-related business)
・Improve profitability by expanding sales of OEM and own brand of nail art printer・Expand sales of label printers and high-capacity inkjet printers
・Expand sales by bringing to market derivative products that make use of
microfluidics (microflow control technology)(D) New businesses
・Expanded sales channels for automotive backlights (existing edge type and new
direct type)・Sales expansion of medical and healthcare related module products in addition todental CT and securing of revenue base・Strengthen alliance strategy through EV business and start mass production andsales of new products for commercial display

As a result of the foregoing, it has been determined that significant uncertainty concerning
the assumptions of the going concern is not deemed to exist as of the end of the fiscal year
under review.

(6)Property and income/loss:
64rd(April 1, 2015 toMarch 31, 2016)

65th(April 1, 2016 to
March 31, 2017)

66th(April 1, 2017 toMarch 31, 2018)

67th(April 1, 2018 toMarch 31, 2019)

Net sales(millions of yen)

170,041

133,838

130,130

105,549

Ordinary income(loss)(millions of yen)

(13,653)(7,726)(11,909)

1,392

Net income (loss)
attributable to ownersof the parent(millions of yen)

(33,839)(6,745)(24,709)

2,613

Net income (loss)
per share (yen)(991.81)(197.70)(724.21)76.59

Total assets(millions of yen)

154,186

108,655

80,26583,293Equity(millions of yen)

84,43976,65650,71754,057

Equity per share(yen)

2,442.28

2,242.38

1,485.96

1,583.46

Fiscal year
Item

(Note)

1. Net income (loss) per share is calculated based on the average of the total number ofshares issued and outstanding during the fiscal year. Equity per share is calculated basedon the total number of shares issued and outstanding as of the end of the fiscal year. Each
such number of shares does not include the shares of treasury stock.
2. The Company began implementing the Partial Amendments to Accounting Standard forTax Effect Accounting (ASBJ No. 28, February 16, 2018) at the start of the fiscal year
ended March 31, 2019. The above revised standards have been retroactively applied tofinancial indicators and other data for Terms 64, 65 and 66.

(7)

Major subsidiaries:

Trade name

Capital stock

Ratio of equity
participation of
the Company(%)

Main business

Sale of the Company’s
FUNAI CORPORTION,
US$123.5 million
100.00products
INC.
FUNAI(THAILAND)
Manufacture of the Company’s
THB1,568 million
100.00CO., LTD.
products
Funai Electric Philippines
Manufacture of the Company’s
PHP1,176 million
100.00Inc.
products(Note) FUNAI CORPORATION, INC. Merged with P & F USA, INC. On April 1, 2018, and thesurviving company P & F USA, INC. On the same date, changed its trade name to FUNAICORPORATION, INC.

(8)

Major businesses of the Group:
Division

Principal products

Audiovisual equipment

LCD-TVs, OLED, DVD players, DVD recorders, BD players
and BD recorders

Information equipment

Large capacity ink jet printer, Label printers, Nail art printers
and ink cartridges

Otherautomotive backlight unit, CT for dental clinics, bed modules forthe nursing care field, Other equipment(9)

Major business sites of the Group:
Category

Funai Electric Co., Ltd.
Sales subsidiaries

Production subsidiaries

Name

Location

Head Office

Daito City, Osaka

Tokyo Branch

Chiyoda-ku, Tokyo

FUNAI CORPORATION, INC.

U.S.A.

P&F MEXICANA. S.A. DE C.V.

MexicoFunai Electric (HK) Ltd.

Hong Kong

FUNAI (THAILAND) CO., LTD.

ThailandFunai Electric Cebu, Inc .

Philippines

Funai Electric Philippines Inc.

Philippines

Funai Manufacturing S.A.DE C.V.

MexicoChugoku Funai Electric Co., Ltd.

Fukuyama City,
Hiroshima(10)(Note)

Employees of the Group:
Number of employees(persons)

Change from the end of the previous fiscal year(+ or -) (persons)

2,383

-25

1. The above number of employees represents those actively at work.
2. The number of employees decreased from the previous fiscal year mainly due to natural
reduction.

(11)

Major lenders:

Nothing to be reported.
(12)

Other important matters concerning the current state of the Group:Nothing to be reported.

2.

Matters concerning the shares of the Company(1)

Total number of shares authorized:

80,000,000 shares(2)

Total number of shares issued:

36,130,796 shares(Including 2,011,830 shares of treasury stock)(3)

Number of shareholders:

8,616 persons(4)

Principal shareholders (top 10):
Name

Tetsuo Funai
Funai Information Science Promotion Foundation
SSBTC Client Omnibus Account
BNY CGM CLIENT ACCOUNT JPRD AC ISG(FE-AC)
State Street Bank and Trust Company 505223
GOLDMAN SACHS INTERNATIONAL
Northen Trust Co. (AVFC) Sub A/C USL Non-Treaty
Japan Trustee Services Bank, Ltd. (trust account 9)
EFUTSU Co., Ltd.
T&N Co., Ltd.
Funai Kosan Co., Ltd.

Number of shares held
(thousands of share)
13,438
1740
998
985
934
854
837
477
470
470
470

Shareholding
ratio (%)
39.39
5.10
2.93
2.89
2.74
2.50
2.46
1.40
1.38
1.38
1.38

(Notes) 1. The Company, which holds 2,011 thousand shares of treasury stock, is not included in theabove-listed principal shareholders.
2. Each shareholding ratio is obtained by deducting shares of treasury stock of the Company
and calculating down to the third decimal place and thereafter rounding upward or
downward to the nearest second decimal place, as the case may be.

(5)

Other important matters concerning shares:
Nothing to be reported.

3.

Matters concerning stock acquisition rights:(1)

Stock acquisition rights issued and outstanding at the end of the fiscal year under review:(i)

Number of stock acquisition rights:(Note)(ii)

2,721 rights

The number of stock acquisition rights is shown by reducing from the numberof stock acquisition rights granted, the number of stock acquisition rights
exercised, and the number of stock acquisition rights that the persons entitledthereto ceased to have due to retirement or other terms of exercise of the rights.

Class and number of shares to be 272,100 shares of common stock
issued or transferred upon exercise (100 shares per stock acquisition right)of the stock acquisition rights:(iii) Stock acquisition rights held by Directors by category:

(2)

Issue

Category

Numberof rights

HolderExercise priceper share

Exercise period

The first stockacquisition rights
for the year ended
March 31, 2015

Director(other than Audit and Supervisory
Committee Member)(other than Outside Director)

40

1¥1,296

September 1, 2016
to August 31,
2023

The first stockacquisition rights
for the year ended
March 31, 2017

Director(other than Audit and Supervisory
Committee Member)(other than Outside Director)

144

3¥1,019September 1, 2018
to August 31,
2023

The first stockacquisition rights
for the year ended
March 31, 2018

Director(other than Audit and Supervisory
Committee Member)(other than Outside Director)

180

2

¥947

September 1, 2019
to August 31,
2024

Stock acquisition rights allotted during the fiscal year under review:
Nothing to be reported.

(3)

Other important matters concerning stock acquisition rights, etc.:
Nothing to be reported.

4.

Matters concerning Officers of the Company:(1)

Directors (as of March 31, 2019)
Title

Name

Representative Director and President& CEO
Director and Officer

Hideaki
Funakoshi
Takeshi Ito

Director and Officer

Motoyoshi
Adachi
MakotoUeshima
MitsuoYonemoto

Director and Officer
Outside Director

Director (Audit and Supervisory
Committee Member, full time)

Fumiaki
KideraOutside Director (Audit andSupervisory Committee Member)

Masahide
Morimoto

Outside Director (Audit andSupervisory Committee Member)

Masakazu
Funaishi(Notes)Business in charge and importantconcurrent office

General Manager of Materials
Headquarters
General Manager of Business
Headquarters
General Manager of
Administration Headquarters
Executive Vice President andDirector, TPS Co., Ltd.
Outside Corporate Auditor,
Oriental Chain Mfg. Co., Ltd.
Chairman of the Audit andSupervisory Committee

1. The Company has appointed Fumiaki Kidera as a full-time member of the
Audit and Supervisory Committee with the aim of enhancing the effectiveness ofaudits through reinforcement of the Committee’s information gathering capability
and collaboration with internal audit units, etc. and by further strengthening its
audit and supervisory functions.
2. The Company has designated Outside Director Mitsuo Yonemoto as an
Independent Officer in accordance with the rules of the Tokyo Stock Exchange,
Inc. and registered him with the exchange.
3. The Company has established a Nomination Committee and a Compensation
Committee (both of which are voluntary committees). The composition of each of
the committees is as follows:・Nomination Committee: Hideaki Funakoshi (Chairman), Takeshi Ito, Motoyoshi
Adachi and Makoto Ueshima
・ Compensation Committee: Hideaki Funakoshi (Chairman), Takeshi Ito,
Motoyoshi Adachi, Makoto Ueshima, Mitsuo Yonemoto(2)

Directors who retired during the fiscal year under review:

Name

Hiroyuki
MakiuraRetirement
date

June 27,
2018

ReasonExpiration of termof officeTitle, business in charge and importantconcurrent office upon retirement

Director, Officer, General Manager ofSales Headquarters(For reference)
The Company has adopted a “System of Officers” and the Officers as of April 1,
2019 who did not concurrently hold the offices of Directors were as follows:
OfficerHisaharu Oura
(3)

Outline of liability limitation agreements:
In accordance with Article 427, paragraph 1 of the Companies Act of Japan, theCompany has entered into an agreement with Non-executive Directors Mitsuo
Yonemoto, Fumiaki Kidera, Masahide Morimoto and Masakazu Funaishi to limit their
liability for any damage as provided for in Article 423, paragraph 1 of said act within
the aggregate of the amounts listed in the items of Article 425, paragraph 1 of said act.

(4)Total amount of remuneration, etc. for Directors(i)Total amount of remuneration, etc. for the fiscal year under review:

Category

Number ofrecipients(persons)

Director (other than Director being
Audit and Supervisory Committee
Member)(Outside Director)
Director (Audit and Supervisory
Committee Member)(Outside Director)
Total(Outside Director)

Amount of payments(million yen)

6
(1)

70
(4)

3
(2)

18
(9)

9
(3)

88
(14)

(Notes) 1. The above-listed amounts include payments to one director (excluding directors
who were members of the Audit and Supervisory Committee) who retired during
the fiscal year under review.
2. The above-listed amount of payments includes the following amount ofallowance for Officers’ retirement benefits recorded as expenses for the fiscal
year under review:• ¥4,937 thousand for five Directors (other than Directors being Audit andSupervisory Committee Members) (including ¥362 thousand for one outside
Director)• ¥1,425 thousand for three Directors (Audit and Supervisory Committee
Members) (including ¥725 thousand for two outside Directors)
3. The above-listed amount of payments includes the following amount of
remuneration in stock options recorded as expenses for the fiscal year underreview:• ¥2,492 thousand for three Directors (other than Audit and Supervisory
Committee Members)(ii) Director retirement benefits paid in the fiscal year ended March 31, 2019
The following are the retirement benefits paid in accordance with the approval granted at the
66th Ordinary General Meeting of Shareholders held on June 27, 2018:
Retirement benefits were paid out to one (1) director (excluding those who are also Audit andSupervisory Committee members): 389 million yen(The above amount is included in the provision for director retirement benefits, which is thetotal amount of compensation, etc. for directors (excluding those who are also
Audit and Supervisory Committee members) disclosed in business reports forpast years.)(5)

Other important matters concerning Officers:
Nothing to be reported.

(6)Matters concerning Outside Officers:(i)Concurrent holding of important offices of Executive Officers of othercorporations and their relationships with the Company:•

Director Mitsuo Yonemoto is Vice President and Director of T.P.S. LaboratoryCo., Ltd. The Company has no special relationship with T.P.S. LaboratoryCo., Ltd.

(ii)

Concurrent holding of important offices of Outside Officers of othercorporations and their relationships with the Company:•

Director Mitsuo Yonemoto is an Outside Audit & Supervisory Board Memberof Oriental Chain Mfg. Co., Ltd. The Company has no special relationshipwith Oriental Chain Mfg. Co., Ltd.

(iii)

Kinship among Executive Officers of the Company and its specified related
enterprises:
Nothing to be reported.

(iv)•

Major activities during the fiscal year under review:
Attendance and speeches at the meetings of the Board of Directors and the
Audit and Supervisory Committee:
Name

Director

Mitsuo Yonemoto

Attendance and Speeches
He attended 8 of the 8 meetings (attendance rate: 100%)of the Board of Directors held during the fiscal year
under review and expressed opinions principally fromthe standpoint of a management consultant, and from an
objective standpoint as an Independent Officer.

Director (Audit and Supervisory He attended 8 of the 8 meetings (attendance rate: 100%)
Committee Member)of the Board of Directors and 16 of 16 meetings(attendance rate: 100%) of the Audit and Supervisory
Committee held during the fiscal year under review.

Masahide Morimoto

He expressed opinions at the meetings of the Board of
Directors and the Audit and Supervisory Committee
principally from the standpoint of a veteran top
executive, and from the technical standpoint of financeand securities.

Director (Audit and Supervisory He attended 8 of the 8 meetings (attendance rate: 100%)
Committee Member)of the Board of Directors and 16 of 16 meetings(attendance rate: 100%) of the Audit and Supervisory
Committee held during the fiscal year under review. He
Masakazu Funaishi
expressed opinions at the meetings of the Board of
Directors and the Audit and Supervisory Committee
principally from the standpoint of a veteran top
executive.

(Note)In addition to the number of meetings of the Board of Directors
above, written resolutions, which shall be deemed to have been
adopted pursuant to the provisions of Article 370 of the Companies Act
and Article 23 of the Articles of Incorporation of the Company, wereadopted on three occasions.

5.

Matters concerning independent auditors:(1)

Names of the independent auditors:
Deloitte Touche Tohmatsu LLC(2)Amount of remuneration, etc., of the independent auditors for the fiscal year underreview:(i)(ii)(Notes)(3)

Remuneration, etc., of the independent auditors for the
fiscal year under review:¥84 million

Total amount of cash and other proprietary benefits
payable to the independent auditors:¥84 million

The amount of remuneration, etc., for audits under the Companies Act of Japanand the amount of remuneration, etc., for audits under the Financial Instruments
and Exchange Act of Japan are not separated in the audit agreement between the
Company and the independent auditors and cannot actually be separated.
Hence, the amount in item (i) above includes both amounts.

Content of non-auditing services:
Nothing to be reported.

(4)

Reasons for the Audit and Supervisory Committee to consent to the remuneration, etc.,of the independent auditors:
The Audit and Supervisory Committee, based on the “Practical Guidance on
Cooperation with Independent Auditors” issued by the Japan Audit & Supervisory
Board Members Association, verified the changes in audit hours and audit
remuneration by audit item and the status of audit plans and audit results for theprevious fiscal year and investigated whether the estimates of audit hours andremuneration for the fiscal year under review were appropriate. As a result, theAudit and Supervisory Committee consented to the remuneration, etc. of the
independent auditors pursuant to Article 399, paragraph 1 of the Companies Act.

(5)

Policy on the determination of dismissal or non-reappointment of the independent
auditors:
In the event that the independent auditors are found to fall under any event of
dismissal under the items of Article 340, paragraph 1 of the Companies Act and areconsidered appropriate to be dismissed, the Audit and Supervisory Committee shall,
upon unanimous consent of the Audit and Supervisory Committee Members, dismiss
the independent auditors. In addition, in the event that any problem is found to arise
with the performance by the independent auditors of their proper audits, the Audit andSupervisory Committee shall determine the content of a proposition for the dismissal
or non-reappointment of the independent auditors to be submitted to a General
Meeting of Shareholders.

(6)Outline of liability limitation agreements:
Nothing to be reported.

6.

Systems and policies of the Company(1)

Systems to secure the propriety of business activities:(i)

Systems to ensure that the Directors and employees perform their duties incompliance with laws, ordinances and the Articles of Incorporation
In the “Funai Group Charter of Conduct”, the “Regulations of Officers’
Compliance” and “Regulations of Compliance”, the Company shall specify
the acts to be taken by the Directors, Officers and employees to comply withlaws and ordinances and ensure that the Directors, Officers and employees
perform their duties in compliance with laws, ordinances and the Articles ofIncorporation. The Company has also formulated the “Whistleblower
Protection Regulations” to prohibit unfavorable treatment of whistleblowers.

(ii)

Systems for the storage and management of information concerning theperformance of the Directors’ duties
With regard to the storage and management of information concerning theperformance of the Directors’ duties, the minutes of meetings of the Board of
Directors and other important meetings that the Directors shall attend, circulardecision documents and other necessary documents and information to ensurethat the Directors perform their duties appropriately are stored and managed incompliance with laws, ordinances and the “Document Management
Regulations”.

(iii)

Regulations and other system for management of risk of loss
The Company has instituted “Risk Management Regulations” for managementof risk of loss and appointed Officers responsible for risk management toproperly grasp and evaluate risks to the Company and manage risks related totheir respective operations in charge.

(iv)

Systems to ensure that the Directors perform their duties effectively
To ensure that the management performs decision-making swiftly andeffectively, the Company has introduced a “System of Officers”, and place
Officers under the control of the Executive Directors to ensure that theoperations determined by the Executive Directors are performed swiftly. In
addition, to enhance the transparency of the Board of Directors and strengthen
its supervisory functions, the Company has appointed outside Directors andinstituted an Audit and Supervisory Committee.

(v)

Systems to secure the propriety of business activities of the corporate groupcomposed of the Company and its subsidiaries(a)

Systems of reports to the Company on the matters concerning theperformance by Directors, etc. of its subsidiaries of their duties

To grasp the management of the subsidiaries appropriately, the Company has
instituted the “Affiliated Companies Management Regulations” to set themateriality thresholds and the matters to be reported for the subsidiaries.
Accordingly, the Company requires the subsidiaries to submit operating
results and financial reports on a monthly basis.
(b)

Regulations and other system to manage the subsidiaries’ risks of loss

To control and manage the operations and administration of its subsidiaries,
the Company has instituted the “Affiliated Companies Management
Regulations” and with regard to the matters that may affect the finance andadministration of the subsidiaries through the relationships of funding,technology, personnel, transactions, etc., set required matters to consult with
the Company, and establish a system of consultation between the Company
and its subsidiaries.
(c)

Systems to ensure that the Directors, etc. of the subsidiaries performtheir duties effectively

To ensure that the subsidiaries manage business effectively, the Company has
instituted corporate regulations and established a system in accordance withthe “Affiliated Companies Management Regulations” that allow thesubsidiaries to manage business in respect of their managerial autonomy andindependence.
(d)Systems to ensure that the Directors, employees, etc. perform theirduties in compliance with laws, ordinances and the Articles ofIncorporation

The Company has instituted the “Funai Group Charter of Conduct” as a codeof conduct for all Officers and employees of the Funai Group, as well as the“Funai Group Procurement Policies” and “Regulations of Compliance” basedon the Charter of Conduct, and clarified the acts to be taken by the Directors,
employees, etc. of the subsidiaries to comply with law, thereby ensuring thatthe performance of their duties complies with laws, ordinances and the
Articles of Incorporation.
(vi)

Matters concerning the employees assisting the Audit and Supervisory
Committee to perform its duties
To allow the Audit and Supervisory Committee to properly perform its duties,
the Company shall institute a Secretariat to the Audit and Supervisory
Committee and assign employees to assist the Audit and Supervisory
Committee.

(vii)

Matters concerning the independence of the employees to assist the duties of
the Audit and Supervisory Committee, from the other Directors (other than
Directors being Audit and Supervisory Committee Members)

When the employees to assist the duties of the Audit and Supervisory
Committee are transferred to the Secretariat to the Audit and Supervisory
Committee, the Company shall assign employees who shall not be subjected todirect instructions and orders from other Directors (other than Directors being
Audit and Supervisory Committee Members) to secure their independence
from other Directors. The Company shall respect the opinions of the Audit
and Supervisory Committee with regard to their transfer and personnel
evaluations.
(viii)

Matters concerning the securing of the propriety of directions by the Audit andSupervisory Committee to employees assisting the Audit and Supervisory
Committee
The Audit and Supervisory Committee shall directly give instructions andorders to, and receive reports from, the employees to assist the Audit andSupervisory Committee to secure the propriety of directions.

(ix)

Matters concerning reports to the Audit and Supervisory Committee(a)System of reporting by the Directors (other than Directors being Audit
and Supervisory Committee Members), Officers and employees of theCompany to the Audit and Supervisory Committee

If the Directors (other than Directors being Audit and Supervisory Committee
Members), Officers and employees of the Company find any fact that has
inflicted or may inflict material damage on the Company, they shallimmediately report the fact to the Audit and Supervisory Committee.
(b)System of reporting by the Directors, Audit & Supervisory Board
Members, Officers and employees of the subsidiaries to the Audit andSupervisory Committee of the Company

In the event that the Directors, Officers and employees of the subsidiaries arerequested to give reports on business by the Director being Audit andSupervisory Committee Member appointed by the Audit and Supervisory
Committee of the Company, they shall immediately do so unless there is any
justifiable reason to the contrary. If the Directors, Audit & Supervisory
Board Members, Officers and employees of the subsidiaries find any violationof law or any fact that has inflicted or may inflict material damage on the
Company, they shall report the fact to the Audit and Supervisory Committeeof the Company.
(x)

Systems to ensure that any party who has given a report to the Audit andSupervisory Committee will not suffer unfavorable treatment because ofgiving such report
By instituting the “Regulations of Compliance” and the “Whistleblower
Protection Regulations”, the Company prohibits unfavorable treatment ofwhistleblowers. The Company shall also ensure that any party who hasgiven a report to the Audit and Supervisory Committee will not suffer
unfavorable treatment because of giving such report.
(xi)

Matters concerning policies on the treatment of expenses to be incurred in theperformance by Audit and Supervisory Committee Members of their duties
In the event that Audit and Supervisory Committee Members request
payments for expenses in performing their duties, the Company shall makesuch payments unless such expenses are not necessary for the performance of
their duties.

(xii)

Other systems to ensure that the Audit and Supervisory Committee performs
its audits effectively
To ensure that the Audit and Supervisory Committee performs its audits
effectively, the Audit and Supervisory Committee shall closely cooperate with
the independent auditors, and regularly meet the Representative Directors,
Directors of the subsidiaries, etc. to confirm the management policy andexchange opinions on the risks and issues surrounding the Company.

(xiii) System to ensure the reliability of financial reporting
The Company shall establish a “Basic Policy for Internal Control overFinancial Reporting” to ensure the reliability of financial reporting and theeffective and appropriate disclosure of “Internal Control Reports”. In
accordance with the Basic Policy, the Company shall establish an “Internal
Control Committee”, which shall be chaired by the Representative Director,
President, and CEO, and shall be responsible for continuous improvement,
administration and evaluation of internal control over financial reporting andpromptly implement a correction when any defect is found.
(xiv)

System for the exclusion of antisocial forces
The Company shall have a fundamental policy of having no relation with any
antisocial force and refusing any unjust claim.
In the event that a client is found to be an entity, enterprise, individual, etc.
having any relation with such antisocial force, the Company shall promptly
terminate a business relationship with it.
The Company shall designate its Personnel and General Affairs Department asa principal division in charge of dealing with antisocial forces and control theinformation centrally. To make its Officers and employees comply with its
fundamental policy, the Company shall also define it clearly in its related rules
and regulations and establish an education system therefor. In addition, theCompany shall prepare countermeasures to prevent damages from antisocial
forces, if necessary.
In the event that any unjust claim is requested by an antisocial force, theCompany shall work closely with external specialized agencies, including thepolice and its legal counsel, and establish a cooperative system for emergency
situations.
(2)

Summary of the operation status of the systems to secure the propriety of businessactivities:(i)

Compliance
By instituting the “Funai Group Charter of Conduct” as a code of conduct, as
well as the “Regulations of Compliance” and keeping all Officers andemployees informed about compliance, the Company has clarified thefundamental policy on compliance with law and ensured their performance of
duties conducted in compliance with laws, ordinances and the Articles ofIncorporation. The Company has also established a whistleblower system toprevent violations of law and swiftly detect problems.
During the fiscal year under review, the Company conducted two study
sessions for directors and division managers, and one study session for
employees, as part of educational activities to raise the compliance awarenessof the Company’s officers and employees.

(ii)

Risk management
To minimize losses and disadvantages in business activities, the Company has
made continuous risk management by instituting the “Risk Management
Regulations”, developing the system for risk management and monitoring
periodically.

(iii)

Directors’ performance of duties
The Board of Directors, which consists of 8 Directors (three of whom are
Directors being Audit and Supervisory Committee Members), including threeoutside Directors, makes decisions on the matters required by laws orordinances and important matters concerning management, and supervises theexecution of business. During the fiscal year under review, the Board of
Directors held 8 meetings. In addition, the Investment and Loan Committee
held one session, the Nomination Committee held one session and theCompensation Committee held two sessions.

(iv)

The Audit and Supervisory Committee Members’ performance of duties
The Audit and Supervisory Committee Members attend meetings of the Boardof Directors, as well as monthly financial reporting meetings. During the
fiscal year under review, 16 meetings of the Audit and Supervisory Committee
were held.

(3)

Policies for the determination of Directors’ remuneration, etc.:

Remuneration for Directors (other than Directors being Audit and Supervisory
Committee Members) and Directors being Audit and Supervisory Committee
Members shall be determined within the range of their respective maximum total
amounts of remuneration determined by resolution of the General Meeting of
Shareholders.
The amount of monthly remuneration for Directors (other than Directors being Audit
and Supervisory Committee Members) shall be determined by the Compensation
Committee upon authorization by the Board of Directors based on the Company’s
rules. The amount of monthly remuneration of Directors being Audit andSupervisory Committee Members shall be determined upon consultation among the
Directors being Audit and Supervisory Committee Members.
Bonuses for Directors (other than Directors being Audit and Supervisory Committee
Members) shall be determined by the Compensation Committee upon authorizationby the Board of Directors based on the Company’s rules. Bonuses for Directors
serving as Audit and Supervisory Committee Members shall be determined upon
consultation among the Directors being Audit and Supervisory Committee Members.
Regarding the retirement benefits for Directors, upon the approval of granting such
benefits to Directors (other than Directors serving as Audit and Supervisory
Committee Members) and Directors being Audit and Supervisory Committee
Members by resolution of the General Meeting of Shareholders and based on the
Company’s rules, the benefits for Directors (other than Directors serving as Audit andSupervisory Committee Members) shall be determined by the Compensation
Committee upon authorization by the Board of Directors, and the benefits for
Directors serving as Audit and Supervisory Committee Members shall be determinedby consultation among the Directors being Audit and Supervisory Committee
Members.
(4)

Policy for the determination of distribution of retained earnings, etc., by the Board of
Directors:
The Company recognizes the return of earnings to its shareholders as one of the mostimportant missions of management and strives to maintain a steady dividend as well
as reinforcement of its management base.
Specifically, the Company implements an active dividend policy, based on the plan topay dividends with a dividend on equity ratio of 1.0% on a consolidated basis,considering business conditions and other factors.
For the fiscal year under review, we regret to announce that the Company decided not
to pay year-end dividends. The Company will strive to resume dividend payments at
an early point by improving business performance and the Company’s financial
position.

=========================================================================(Note) In this business report, all figures and the number of shares are shown by
discarding any fractions of the indicated units, and rates are shown by rounding
fractions of a half or more of the indicated unit upward and the rest downwardunless otherwise indicated. Net income per share, net loss per share and equity
per share are shown by rounding off to two decimal places.

CONSOLIDATED BALANCE SHEET(As of March 31, 2019)(millions of yen)
ASSETS:
Current assets:

69,958Cash and deposits .............................................................................
Notes and accounts receivable-trade .................................................
Merchandise and finished goods .......................................................
Work in process .................................................................................
Raw materials and supplies ...............................................................
Other ..................................................................................................
Allowance for doubtful accounts .......................................................

35,417
7,724
13,517681
11,0592,276(718)
13,335

Fixed assets:
Property, plant and equipment:
Buildings and structures .....................................................................
Machinery, equipment, and motor vehicles .......................................
Tools, furniture, and fixtures .............................................................
Land ...................................................................................................
Lease assets ........................................................................................
Other ..................................................................................................

8,159
4,393
72
506
2,955
173
57

Intangible assets:
Other ..................................................................................................

68

Investments and other assets:
Investment securities ..........................................................................
Deferred tax assets .............................................................................
Assets for retirement benefits ............................................................
Other ..................................................................................................
Allowance for doubtful accounts .......................................................

5,107
1,273
1,201
1,881
819
(68)

TOTAL ASSETS

68

83,293

(millions of yen)
LIABILITIES:Current liabilities:

28,121
Notes and accounts payable-trade ........................................................
15,618
Accounts payable-other ........................................................................
8,287
Current portion of long-term lease obligations.....................................
217
Income taxes payable............................................................................
126
Reserve for product warranty ............................................................... 2,866 1,056
Other .....................................................................................................
2,815

Long-term liabilities:
Long-term lease obligations .................................................................
Deferred tax liabilities ..........................................................................
Liabilities for Directors’ and Audit & Supervisory Board Members’
retirement benefits ................................................................................
Liabilities for retirement benefits .........................................................
Other .....................................................................................................
TOTAL LIABILITIESEQUITY:
Shareholders’ equity:

1,114
102
617
27
33
333
29,236
65,153

Common stock ..........................................................................................

31,307

Capital surplus .........................................................................................

33,603Retained earnings .....................................................................................

24,583

Treasury stock ..........................................................................................

(24,341)

Accumulated other comprehensive income (loss):(11,127)

Unrealized gain on available-for-sale securities ....................................

1

Foreign currency translation adjustments.............................................

(11,609)

Defined retirement benefit plans ............................................................

480

Stock acquisition rights:

31

TOTAL EQUITY

54,057TOTAL LIABILITIES AND EQUITY

83,293

CONSOLIDATED STATEMENT OF OPERATIONS(from April 1, 2018 to March 31, 2019)(millions of yen)
Net sales
Cost of sales
Gross profit
Selling, general, and administrative expenses
Operating Income
Non-operating income:Interest and dividend income

105,549
91,84913,70013,018682
402

Foreign exchange income
Other
Non-operating expenses:

539
201

Interest expense
Compensation expenses
Compensation for damage
Other
Ordinary income
Extraordinary income:Gain on sales of noncurrent assets
Gain on liquidation of subsidiaries and affiliates
Other
Extraordinary loss:
Loss on disposal of fixed assets
Impairment loss

10
320
51
51

433
1,392

48
163
4

215

48
177

226

Income before income taxes
Income taxes – current
Income taxes – deferred
Net income
Net income attributable to owners of the parent

1,142

1,381
(310)
(921)

(1,231)
2,613
2,613

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY(from April 1, 2018 to March 31, 2019)(millions of yen)
Shareholders’ equity

Balance as of April 1, 2018
Changes of items during theperiodNet income attributable toowners of the parent
Purchase of treasury stock
Net changes of items otherthan shareholders' equity
Total changes of items during the
fiscal year
Balance as of March 31, 2019

Common stock

Capital surplus

31,30733,603Retainedearnings

Treasury stock

21,970(24,341)

2,613

-

-

31,30733,603

Total
shareholders’equity62,539

2,613

2,613
24,583

(0)

(0)

(0)
(24,341)

2,613
65,153

Accumulated other comprehensive income (loss)

Balance as of April 1, 2018
Changes of items during theperiodNet income attributable toowners of the parent
Purchase of treasury stock
Net changes of items otherthan shareholders' equity
Total changes of items during the
fiscal year
Balance as of March 31, 2019

(Note)

Unrealized
gain onavailablefor-salesecurities

Foreigncurrencytranslation
adjustments

Definedretirement
benefit plans

13(12,305)

451

Total
accumulated
othercomprehensive income(loss)(11,840)

StockacquisitionrightsTotal equity

17

50,717

2,613
(0)
(12)

696

29

713

13

726

(12)
1

696
(11,609)

29
480

713
(11,127)

13
31

3,340
54,057In the consolidated balance sheet and the consolidated statements of operations andchanges in equity, all figures are shown by discarding any fractions of the relevant
units.

NONCONSOLIDATED BALANCE SHEET(As of March 31, 2019)(millions of yen)
ASSETS:
Current assets:
36,702
Cash and deposits .............................................................................
23,498
Accounts receivable-trade ...................................................................................
15,053Merchandise and finished goods .........................................................................457
Raw materials and supplies .................................................................................
1,884
Prepaid expenses .................................................................................................219
Other ....................................................................................................................496
Allowance for doubtful accounts ........................................................................
(4,907)
Fixed assets:
33,988Property, plant and equipment:
4,381
Buildings .............................................................................................................
1,835
Structures .............................................................................................................22
Machinery and equipment ................................................................................... 0
Motor vehicles ..................................................................................................... 0
Tools, furniture, and fixtures ...............................................................................47
Land .....................................................................................................................
2,302
Lease assets .........................................................................................................173
Intangible assets:
55
Software ..............................................................................................................32
Lease assets ......................................................................................................... 9
Other ....................................................................................................................12
Investments and other assets:
29,551
Investment securities ...........................................................................................279
Investment in subsidiaries and associated companies .........................................
22,230Long-term loans receivable .................................................................................
18,201Long-term prepaid expenses ...............................................................................32
Prepaid pension cost ............................................................................................
1,247
Other ....................................................................................................................161
Allowance for doubtful accounts ........................................................................
(12,600)
TOTAL ASSETS
70,691(millions of yen)
LIABILITIES:Current liabilities:
Accounts payable-trade ........................................................................
Current portion of long-term lease obligations.....................................
Accounts payable-other ........................................................................
Accrued expenses .................................................................................
Income taxes payable............................................................................
Deposits received ..................................................................................
Reserve for product warranty ...............................................................
Other .....................................................................................................
Long-term liabilities:
Long-term loans payable ......................................................................
Lease obligations ..................................................................................
Deferred tax liabilities ..........................................................................
Liabilities for Directors’ retirement benefits ........................................
Other .....................................................................................................
TOTAL LIABILITIES

16,589
7,434
114
5,028
2,001
5
380
822
801
1,767
887
86
432
27
333
18,357

EQUITY
Shareholders’ equity
52,301
Common stock
31,307
Capital surplus:
33,272
Capital reserve ......................................................................................
20,023
Other capital surplus .............................................................................
13,248Retained earnings:
12,063
Other retained earnings .........................................................................
12,063
Reserve for advanced depreciation of fixed assets ................................ 113
General reserve ......................................................................................10,971
Retained earnings brought forward ....................................................... 978
Treasury stock(24,341)
Valuation and translation adjustments:
1
Unrealized gain on available-for-sale securities
1
Stock acquisition rights
31
TOTAL EQUITY
52,334TOTAL LIABILITIES AND EQUITY
70,691NONCONSOLIDATED STATEMENT OF OPERATIONS(from April 1, 2018 to March 31, 2019)(millions of yen)
Net sales
Cost of sales
Gross profit
Selling, general, and administrative expenses
Operating income
Non-operating income:Interest and dividend income
Foreign exchange income
Other
Non-operating expenses:
Interest expense
Provision to the allowance for doubtful accounts
for affiliates
Compensation for damage
Other
Ordinary income
Extraordinary income:Gain on sales of fixed assets
Gain on reversal of subscription rights to shares
Extraordinary loss:
Loss on valuation of shares of subsidiaries andassociates
Impairment loss
Income before income taxes
Income taxes – current
Income taxes – deferred
Net income

97,91087,996
9,914
9,461
452
487
651
94

1,232

29
270
51
93

0
4
245
37
14
(22)

443
1,241

4

282
962
(8)
970

NONCONSOLIDATED STATEMENT OF CHANGES IN EQUITY(from April 1, 2018 to March 31, 2019)(millions of yen)
Shareholders’ equity
Retained earnings

Capital surplus
Commonstock

Balance as of April 1, 2018
Changes of items during the
fiscal year
Transfer to other capitalsurplus from legal capitalsurplus
Reversal of legal retained
earnings
Deficit disposition
Reversal of reserve foradvanced depreciation of
fixed assets
Net income
Acquisition of treasurystock
Net changes of items otherthan shareholders’ equity

Capitalreserve

31,307

32,833

Other
capitalsurplus438

Other retained earnings
Reserve for
Retained
advanced
Generalearnings
depreciation
reservebrought
of fixed
forwardassetsTotal capitalsurplusLegalreserve

33,272

209

120

23,400(12,637)

Total
shareholders’equityTreasury
stock

Total
retainedearnings

11,092(24,341)

51,331-(12,810)

12,810-(209)(12,428)

(7)

209

-

-

12,428

-

-

7

-

-

970

970

970
(0)

(0)

Total changes of items during
the fiscal year-

(12,810)

12,810

-

(209)

(7)

(12,428)

13,615

970

(0)

970

Balance as of March 31, 2019

31,30720,023

13,24833,272-

113

10,971

97812,063(24,341)

52,301(millions of yen)

Balance as of April 1, 2018
Changes of items during the
fiscal year
Transfer to other capitalsurplus from legal capitalsurplus
Reversal of legal retained
earnings
Deficit disposition
Reversal of reserve foradvanced depreciation of fixed
assets
Net income

Valuation and translation adjustments
Unrealized gain
Total valuationonand translation
available-for-saleadjustments
securities
13
13

Stock acquisitionrights17

Total equity

51,362-970

Acquisition of treasury stock(0)

Net changes of items otherthan shareholders’ equity

(12)

(12)

13

Total changes of items during the
fiscal year

(12)

(12)

13

972

1

1

31

52,334

Balance as of March 31, 2019

(Note)

1

In the nonconsolidated balance sheet and the nonconsolidated statements of operations and changes in equity, all figures areshown by discarding any fractions of the relevant units.

Copy of Independent Auditor’s Report on Consolidated Financial Statements(TRANSLATION)
INDEPENDENT AUDITOR'S REPORTMay 22, 2019
To the Board of Directors
Funai Electric Co., Ltd.:
Deloitte Touche Tohmatsu LLC
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:
Akira Nakata
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:
Akihiro Okada
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:Yuichiro Katsura

Pursuant to the fourth paragraph of Article 444 of the Companies Act, we have audited theconsolidated financial statements, namely, the consolidated balance sheet as of March 31,
2019 of Funai Electric Co., Ltd. (the “Company”) and its consolidated subsidiaries, and therelated consolidated statements of operations and changes in equity for the fiscal year from
April 1, 2018 to March 31, 2019, and the related notes.
Management's Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with accounting principles generally accepted in Japan,
and for such internal control as management determines is necessary to enable thepreparation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
Auditor's Responsibility

Our responsibility is to express an opinion on these consolidated financial statements basedon our audit. We conducted our audit in accordance with auditing standards generally
accepted in Japan. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the consolidated financial statements are free frommaterial misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the consolidated financial statements. The procedures selected depend on theauditor's judgment, including the assessment of the risks of material misstatement of theconsolidated financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity's preparation and fairpresentation of the consolidated financial statements in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity's internal control. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our audit opinion.
Audit Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in allmaterial respects, the financial position of Funai Electric Co., Ltd. and its consolidated
subsidiaries as of March 31, 2017, and the results of their operations for the year then endedin accordance with accounting principles generally accepted in Japan.
Interest
Our firm and the engagement partners do not have any interest in the Company for which
disclosure is required under the provisions of the Certified Public Accountants Act.
The above represents a translation, for convenience only, of the original report issued in theJapanese language.
-END-

Copy of Independent Auditor’s Report on Nonconsolidated Financial Statements(TRANSLATION)
INDEPENDENT AUDITOR'S REPORTMay 22, 2019
To the Board of Directors
Funai Electric Co., Ltd.:
Deloitte Touche Tohmatsu LLC
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:
Akira Nakata
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:
Akihiro Okada
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:Yuichiro Katsura

Pursuant to the first item, second paragraph of Article 436 of the Companies Act, we haveaudited the financial statements, namely, the balance sheet as of March 31, 2019 of Funai
Electric Co., Ltd. (the “Company”), and the related statements of operations and changes inequity for the 67th fiscal year from April 1, 2018 to March 31, 2019, and the related notes
and the accompanying supplemental schedules.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements and the accompanying supplemental schedules in accordance with accounting
principles generally accepted in Japan, and for such internal control as management
determines is necessary to enable the preparation of financial statements and theaccompanying supplemental schedules that are free from material misstatement, whether due

to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements and theaccompanying supplemental schedules based on our audit. We conducted our audit inaccordance with auditing standards generally accepted in Japan. Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial
statements and the accompanying supplemental schedules are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements and the accompanying supplemental schedules. The
procedures selected depend on the auditor's judgment, including the assessment of the risks
of material misstatement of the financial statements and the accompanying supplemental
schedules, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of thefinancial statements and the accompanying supplemental schedules in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity's internal control. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the financial
statements and the accompanying supplemental schedules.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our audit opinion.
Audit Opinion
In our opinion, the financial statements and the accompanying supplemental schedules
referred to above present fairly, in all material respects, the financial position of Funai
Electric Co., Ltd. as of March 31, 2017, and the results of its operations for the year thenended in accordance with accounting principles generally accepted in Japan.
Interest
Our firm and the engagement partners do not have any interest in the Company for which
disclosure is required under the provisions of the Certified Public Accountants Act.

The above represents a translation, for convenience only, of the original report issued in theJapanese language and "the accompanying supplemental schedules" referred to in this report
are not included in the attached financial documents.
-END-

Copy of Audit Report of the Audit and Supervisory Committee

AUDIT REPORT
We, the Audit and Supervisory Committee of Funai Electric Co., Ltd. (the “Company”),
have performed our audits on the execution by Directors of their duties during the 67th fiscal
year from April 1, 2018, through March 31, 2019. We hereby report the audit method andresults as follows.
1.

Methods of audits and the particulars thereof:

With regard to the details of the resolutions of the Board of Directors on the mattersprovided in Article 399-13, paragraph 1, item 1 (b) and (c) of the Companies Act of Japanand the systems established pursuant to such resolutions (internal control systems), we
periodically received reports from the Directors and employees, etc., demanded their
explanations as necessary, and expressed our opinions, on the state of formulation andoperation thereof and conducted our audits in the following methods.
(i) Working in collaboration with the internal audit division, we attended important
meetings, received the execution of duties from the Directors and employees, etc.,
demanded their explanations as necessary, inspected important decision-making
documents, etc., and investigated the state of business operations and property at thehead office and principal business offices of the Company, pursuant to the audit policy,
task allocation, etc. determined by us. With regard to its subsidiaries, we maintained
constant communication and exchanged information with the directors, Audit &Supervisory Board Members, etc. and required the subsidiaries to report on theirbusiness operations as necessary.
(ii) In addition to monitoring and verifying whether the independent auditors had
maintained an independent position and conducted adequate audits, we received
reports on the state of execution of duties from the independent auditors and demanded
their explanations, as necessary. Moreover, we received from the independent
auditors a notice that a “system to secure adequate execution of duties” (as listed in theitems of Article 131 of the Ordinance on Accounting of Companies) has been
established in accordance with the “Quality Control Standards Concerning Audits” (theAccounting Standards Board of Japan, October 28, 2005) and demanded their
explanations, as necessary.
In accordance with such methods, we investigated the business report and its
accompanying supplemental schedules, the nonconsolidated financial statements (thenonconsolidated balance sheet, the nonconsolidated statements of operations and changes inequity, and the related notes) and their accompanying supplemental schedules, as well as theconsolidated financial statements (the consolidated balance sheet, the consolidated statementsof operations and changes in equity, and the related notes), for the fiscal year under review.

2.

Results of audit:(1)

Results of audit of the business report, etc.:(i)

We confirm that the business report and its accompanying supplemental schedules
present fairly the state of the Company in accordance with laws and ordinances andthe Articles of Incorporation.

(ii) We confirm that in connection with the execution of duties of the Directors, no
misconduct or material fact of violation of laws or ordinances or the Articles ofIncorporation was found.
(iii) We confirm that the details of the resolutions of the Board of Directors on internal
control systems are proper. We did not find anything that should be mentioned withrespect to the information in the business report and the execution of duties of the
Directors concerning such internal control systems.
(2)

Results of audit of the nonconsolidated financial statements and their accompanying
supplemental schedules:
We confirm that the audit method and results performed by the independent auditors,
Deloitte Touche Tohmatsu LLC, are proper.

(3)

Results of audit of the consolidated financial statements:
We confirm that the audit method and results performed by the independent auditors,
Deloitte Touche Tohmatsu LLC, are proper.

May 23, 2019
Funai Electric Co., Ltd.
The Audit and Supervisory Committee
Fumiaki Kidera(seal)
Outside Audit and Supervisory Committee Member
Masahide Morimoto(seal)
Outside Audit and Supervisory Committee Member
Masakazu Funaishii(seal)
Outside Audit and Supervisory Committee Member- END -