November 12, 2018 Listed company name Funai Electric Co., Ltd. Tokyo First Section Stock exchange listing 6839 Securities code President and CEO Representative Inquiries Director and Officer Scheduled date of Quarterly Report Scheduled date of Commencement of Annual Dividend Payment 一Quarterly Financial Results Supplementation Yes Quarterly Financial Results Seminar Yes URL http://www2.funai.co.jp/en/index.html Hideaki Funakoshi TEL: (072) 870-4395 Makoto Ueshima November 13, 2018 1. Consolidated Financial Results for the Second Quarter Ended September 30, 2018 (April 1, 2018 – September 30, 2018)
The company stipulate according to company contract that we can make an interim dividend based on September 30 as the record date. The dividend for FY 2018 has been undecided. The company’s dividend policy of DOE is unchanged. Because of the high impact stemmed from the recent fluctuations in exchange rates give to the consolidated net assets, the dividend is to be disclosed at t he time disclosure has become possible to public. 3. Consolidated Financial Forecast for the Fiscal 2018 (April 1, 2018 - March 31, 2019)
*Note (1) Changes in Consolidated Subsidiaries (Changes in Scope of Consolidation): Yes Out (Company name: FUNAI CORPORATION,INC.) In (Company name:   一) (2) Adoption of special accounting methods of Quarterly consolidated financial statements: Yes (3) Changes in accounting policies and estimates 1. Changes in accounting policies from revision of accounting standards: Yes 2. Changes in accounting policies from other reason: No 3. Changes in accounting estimates: No 4. Restatement: No (4) Number of Shares Outstanding (Ordinary Shares) 1. Number of shares outstanding (including treasury stock) 2. Number of shares of treasury stock 3. The Average number of outstanding shares
* The Recording of Implementation Conditions Regarding Quarterly Review Procedures This quarterly financial summary does not fall within the scope of the Quarterly Review Procedures referenced in the Financial Instruments and Exchange Act. At the time of disclosure of the quarterly financial summary, the Group was in the process of implementing the quarterly review procedures for its quarterly financial statements.
Disclaimer;
This document contains forward-looking statements and projections regarding business performance which are not historical facts. Please note that these statements are based on information relating to factors that may impact future business performance that was available for analysis at the time this document was printed. These factors include industry trends relating to the business areas of Funai Electric Co., Ltd. or the Funai Group, such as audio-visual devices and information communication equipment, the economic conditions of both domestic and international markets, and fluctuations in currency exchange rates. Actual performance may greatly differ from projections included in this document because of the impacts of uncertainty in such areas as the competitive conditions of the electronics industry, market trends, currency exchange rate, introduction and success of new products, and various other global conditions that may affect the tax system and other systems.
1.Qualitative Information
(1)  Consolidated Financial Results
During the first half of the consolidated fiscal year under review (April 1, 2018 to September 30, 2018), the economy in the United States, the Group’s mainstay market, continued to be steady, supported by solid private consumption against the backdrop of a continuous improvement in employment and income condition, although there were rising uncertainties, such as escalating trade frictions caused by the Trump administration’s measures to impose higher tariffs. In Europe, the economy continued expanding buoyed by a gradual decline in the unemployment rate, although there were several factors that might affect the economy, such as uncertainty over BREXIT and prospect of the Italian budget plan. In China, the outlook of the economy remained uncertain, since concerns were rising that higher tariffs imposed on Chinese exports to the United States were likely to slow down economic growth. In Japan, the economy continued recovering gradually, supported by a pickup in consumer spending and capital expenditures, although exports and production activities stagnated due the impact of natural disasters. Under these circumstance, the Group reported net sales of ¥46,731 million (down 35.2% year on year) in the first half of the year ended September 30, 2018. This was attributable to moves by retailers in North America, the Group's mainstay market, to reduce inventories in the distribution channels in the first quarter of the year ended June 30, 2018. Retailers, mainly large mass merchandisers, focused on the sales of excessive inventories instead of new products, leading to a fall in the Group’s net sales. Despite a decrease in net sales, the Group saw operating loss shrink to ¥1,645 million (an operating loss of ¥4,037 million in the previous fiscal year). This was due to the following reasons: component prices, such as LCD panels for LCD TVs, its mainstay product, declined from the previous fiscal year; it reviewed sales of unprofitable products, especially in the Mexican market and Office Solution business; and its efforts to reduce manufacturing costs and selling, general and administrative expenses paid off to some extent. The Group reported ordinary los of ¥181 million (an ordinary loss of ¥3,649 million in the previous fiscal year), since it posted foreign exchange gains of ¥ 1,247 million caused by the yen's depreciation from the end of the previous fiscal year. However, the Group’s profit attributable to owners of the parent amounted to ¥650 million (a loss attributable to owners of the parent of ¥13,083 million in the previous fiscal year), because it posted income taxes - deferred of ¥895 million associated with the merger of sales companies in North America.
Results by region
i) Japan
Following the previous fiscal year, the Company began marketing its high-end products, such as FUNAI brand new products including organic electroluminescent display (OELD) TVs, through Yamada Denki from July 14, 2018. However, as it delayed the launching date by around one month compared to the previous fiscal year (the launching date was June 2), the Company saw net sales decrease from the previous year in the second quarter ended September 30, 2018. As a result, net sales amounted to ¥16,974 million, down 16.1% year on year, and segment loss (operating loss) was ¥1,399 million (a segment loss of ¥782 million in the same quarter of the previous fiscal year).
ii)  Americas
In the current fiscal year, the Company struggled to expand sales of LCD TVs, since large mass merchandisers gave priority to the disposal of inventories because excessive inventories continued remaining in the North America market from the previous fiscal year. Furthermore, demand of DVD and BD related equipment decreased owing to the impact of moving video distribution services via the Internet, resulting in a fall in the Company’s net sales. Consequently, net sales amounted to ¥28,943 million, down 43.9% year on year, and segment loss (operating loss) was ¥166 million (a segment loss of ¥762 million in the same quarter of the previous fiscal year).
iii) Asia
Although the Company terminated sales of LCD TVs after reviewing sales of unprofitable products, sales of components increased. As a result, net sales amounted to ¥788 million, up 232.4% year on year, and segment profit (operating profit) was ¥202 million (a segment loss of ¥2,462 million in the same quarter of the previous fiscal year).
iv) Europe
Sales of ink-cartridge decreased. Consequently, net sales amounted to ¥24 million, down 62.7% year on year, and segment loss (operating loss) was ¥9 million (a segment loss of ¥41 million in the same quarter of the previous fiscal year).
Results by product Segment
i)  Audiovisual Equipment In the audiovisual equipment segment, sales decreased from the previous year, particularly due to a fall in sales of LCD TVs and DVD and BD related products caused by the reduction of unwanted inventory in the distribution channel in the North America market. As a result, net sales amounted to ¥42,014 million, down 38.7% year on year.
ii)  Information Equipment
In the information equipment segment, sales increased from the previous year, since the Company continued marketing ink cartridges for ink jet printers (despite it reduced sales of unprofitable ink jet printers) and started marketing coupon printers, new products, and sales of commercial-use ink cartridges grew. Consequently, net sales amounted to ¥1,929 million, up 2.6% year on year.
iii) Other Products
In other equipment segment, sales of medical and healthcare-related products, such as CT for dental clinics and bed modules for the nursing care field, increased from the previous year. As a result, net sales amounted to ¥2,786 million, up 61.1% year on year.
(2) Consolidated Financial Position
> > > > Total assets increased by ¥5,102 million compared to the end of the last fiscal year. The primary components of the change were as follows: Increase of ¥4,363 million in cash and deposits, and ¥3,686 million in raw materials and inventory goods. Decrease of ¥1,866 million in merchandise and finished goods, and ¥2,053 million in etc. Total liabilities increased by ¥3,114 million compared to the end of the last fiscal year. The primary components of the change were as follows: Increase of ¥6,442 million in notes and accounts payable-trade. Decrease of ¥1,316 million in accounts payable included in other. Net assets increased by ¥1,987 million compared to the end of the last fiscal year. The primary components of the change were increase of ¥650 million in retained earnings and increase of ¥1,339 million in the foreign currency translation adjustment. Also, the company apply to Partial Amendments etc. to "Accounting standard for tax effect accounting" (Corporate Accounting Standards No. 28, 16 February 2018) since beginning of the year of the first quarter consolidated accounting period. As for the financial condition, we compare by the retroactive processed numerical value at the end of the previous consolidated fiscal year.
(3) Consolidated Financial Forecast
There is change in the consolidated financial results forecast for first half consolidated fiscal year and full year forecasts announced in "FY2018 Financial Report" on May 14, 2018.For details, please see the "Notice on non- operating income (Foreign exchange gains) and Income taxes-deferred to the Consolidated Financial Forecasts for the first Six Months of the fiscal period and Full Year" announced on November 5, 2018. Note: The above forecasts are based on information currently available to the Group and contain risk and uncertainty. Actual results may differ from these forecasts due to various factors including changes in the economic conditions of overseas markets such as the United States, and significant fluctuations in product prices and foreign exchange.

(4) Consolidated Quarterly Statements of Income
(Notes for Continuing Enterprises) Not Applicable (Notes of remarkable changes in Shareholders Equity) Not Applicable (Changes in scope of consolidation or scope of application of equity method) (Significant changes in scope of consolidation) Since the first quarter consolidated accounting period, FUNAI CORPORATION, INC., which was a consolidated subsidiary, was excluded from the scope of consolidation due to the disappearance of the consolidated subsidiary P&F USA, Inc. as a surviving company. The trade name of P&F USA, Inc. has been changed to FUNAI CORPORATION, INC. (Adoption of special accounting methods of Quarterly consolidated financial statements) [Calculate tax expense] Tax expenses are calculated by multiplying income before income taxes by a reasonably estimated effective tax rate for income before income taxes after application of deferred tax accounting. (Changes in accounting policies) Overseas consolidated subsidiaries except Americas apply IFRS No. 15 (Revenue from Contracts with Customers) since the first quarter consolidated accounting period. The impact of application of the accounting standards on consolidated financial statements is slight. (Additional Information) [Application of Partial Amendments etc. to "Accounting standard for tax effect accounting"] The company apply to Partial Amendments etc. to "Accounting standard for tax effect accounting" (Corporate Accounting Standards No. 28, 16 February 2018) since beginning of the year of the first quarter consolidated accounting period. Therefore, Deferred Tax Assets is presented division of Investments and other assets and Deferred Tax Liabilities is presented division of Noncurrent liabilities. (Consolidated quarterly statements of income) *Notes.1 Impairment loss The Group recorded losses on impairment in the following asset groups for second quarter of last fiscal year. The Group group's business assets on the basis in management accounting of consolidated group. The idle
markedly decreased, and recorded such reduction (9,991 million yen) as impairment loss for the First half of this fiscal year. The recoverable value of buildings and structures is measured using net sales value that is based on appraisal value reasonably calculated by real estate appraisers. The recoverable value of assets other than the aforementioned ones is measured using net sales value that is estimated at zero. l. Second Quarter of the last fiscal year (April 1, 2017 to September 30, 2017) Information Regarding Net Sales and Profit/Loss Conditions by Reporting Segment
1. ¥ 11 million adjustment amount under segment income includes items such as ¥ 2 million relating to the cancellation of inter-segment transactions, ¥ -395 million of overall Group expenses that are not apportioned to each reporting segment, and ¥ 404 million adjustment relating to inventory assets. Overall Group expenses are comprised of general administrative expenses that do not belong to a specific reporting segment. 2. Segment income has been adjusted to operating income noted on the third quarter consolidated income statement. II. Second Quarter of this fiscal year (April 1, 2018 to September 30, 2018) Information Regarding Net Sales and Profit/Loss Conditions by Reporting Segment
1. ¥ -271 million adjustment amount under segment income includes items such as the ¥ 3 million relating to the cancellation of inter-segment transactions, ¥ 233 million of overall Group expenses that are not apportioned to each reporting segment, and the ¥ -508 million adjustments relating to inventory assets. Overall Group expenses are comprised of general administrative expenses that do not belong to a specific reporting segment. 2. Segment income has been adjusted to operating income noted on the third quarter consolidated income statement.
3. Others
(Important Information about Going Concern Assumption) Since the Group recorded a significant operating loss, ordinary loss, and negative operating cash flow in the previous consolidated fiscal year and the first quarter of this fiscal year, events or circumstances that cast significant doubt on the going concern assumption exist now. Since the Group's balance of cash and deposits is sufficient to cover working capital for some time, there is no significant concern about fundraising. Since the Group conducts the following countermeasures step by step based on the medium-term management policy formulated in the previous consolidated fiscal year, the Group believes that a resolution of the matter can be achieved.の
Display Business (LCD-TV business)
• Increase sales at existing customers in the North American market and develop new customers. • Concentration of management resources in developing FUNAI brand products and OEM products in the Japanese market. Digital Media Business (DVD, BD business) β • Development of product-focused niche strategy in the North American market. • Enhancement of FUNAI brand products and development of new OEMs in the Japanese market. (3) Office Solution Business (information equipment-related business) • Improve profit margin by increasing sales of high value-added printer products. • Development of derivative business utilizing of microfluidic control technology. 4 New Business • Increase sales by developing and launching new products related to health care, medical, and the automotive market. Accordingly, Funai judges that there is no significant uncertainty related to the going concern assumption as of the end of the second quarter consolidated accounting period and has omitted the Notes on Going Concern Assumption from the consolidated financial statements.