Alpine Electronics : 【Investor Relations】 We made a Consolidated Financial Results for the First Nine Months of the Fiscal Year Ending March 31, 2017.

January 27, 2017

Company name: Alpine Electronics, Inc.

Listing: First Section of the Tokyo Stock Exchange Code number: 6816

URL: http://www.alpine.com/e/investor/ Representative: Nobuhiko Komeya, President

Inquiries: Hitoshi Kajiwara, Managing Director, Administration TEL: +81-3-3494-1101 (from overseas)

Scheduled date to file Quarterly Securities Report: February 7, 2017 Scheduled date to commence dividend payments: -

Preparation of supplementary material on quarterly earnings: Yes Holding of quarterly earnings performance review: None

(Millions of yen with fractional amounts discarded, unless otherwise noted)

1. Consolidated performance for the first nine months of the fiscal year ending March 31, 2017 (from April 1, 2016 to December 31, 2016)
2. Consolidated operating results (Cumulative) (Percentages indicate year-on-year changes.)

   Net sales	Operating income	Ordinary income	Profit attributable to owners of parent
   First nine months ended	Millions of yen %	Millions of yen %	Millions of yen %	Millions of yen %
   December 31, 2016	181,390 (11.7)	4,627 7.2	7,045 45.3	7,967 (28.6)
   December 31, 2015	205,446 (5.2)	4,317 (48.3)	4,847 (58.8)	11,164 29.4

   (Note) Comprehensive income

   For the first nine months ended December 31, 2016: ¥2,967 million [(68.4)%] For the first nine months ended December 31, 2015: ¥9,385 million [(43.8)%]

   Basic earnings per share	Diluted earnings per share
   First nine months ended	Yen	Yen
   December 31, 2016	115.57	115.48
   December 31, 2015	161.87	161.80

3. Consolidated financial position

4. Total assets	Net assets	Equity ratio	Net assets per share
   As of December 31, 2016 March 31, 2016	Millions of yen 205,052 205,182	Millions of yen 144,623 143,805	% 69.6 69.2	Yen 2,069.78 2,059.72

   (Reference) Equity

   As of December 31, 2016: ¥142,685 million As of March 31, 2016: ¥141,983 million

5. Cash dividends

   Annual dividends
   First quarter-end	Second quarter-end	Third quarter-end	Fiscal year-end	Total
   Fiscal year ended March 31, 2016 Fiscal year ending March 31, 2017	Yen - -	Yen 15.00 15.00	Yen - -	Yen 15.00	Yen 30.00
   Fiscal year ending March 31, 2017 (Forecast)	15.00	30.00

   (Note) Revisions to the forecasts of cash dividends most recently announced: Yes

6. Consolidated earnings forecasts for the fiscal year ending March 31, 2017 (from April 1, 2016 to March 31, 2017)

7. (Percentages indicate year-on-year changes.)

   Net sales	Operating income	Ordinary income	Profit attributable to owners of parent	Basic earnings per share
   Fiscal year ending March 31, 2017	Millions of yen % 245,000 (10.3)	Millions of yen % 4,600 (15.4)	Millions of yen % 5,900 (4.4)	Millions of yen % 6,500 (39.2)	Yen 94.29

   (Note) Revisions to the consolidated earnings forecasts most recently announced: Yes

   * Notes

8. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None

9. Application of a specific accounting procedure for preparing consolidated quarterly financial statements: None

10. Changes in accounting policies, changes in accounting estimates and restatement of prior period financial statements after error corrections

11. Changes in accounting policies due to revisions to accounting standards: None

12. Changes in accounting policies due to other reasons: Yes

13. Changes in accounting estimates: None

14. Restatement of prior period financial statements after error corrections: None

    (Note) For details, please refer to "(3) Changes in accounting policies, changes in accounting estimates and restatement of prior period financial statements after error corrections (Changes in accounting policies)" under "2. Matters Regarding Summary Information (Notes)" on page 3 of the accompanying materials.

15. Number of issued shares (common shares)

16. Total number of issued shares at the end of the period (including treasury shares)

    As of December 31, 2016	69,784,501 shares
    As of March 31, 2016	69,784,501 shares

17. Number of shares of treasury shares at the end of the period

    As of December 31, 2016	847,168 shares
    As of March 31, 2016	850,808 shares

18. Average number of shares during the period (cumulative from the beginning of the fiscal year)

19. For the first nine months ended December 31, 2016	68,936,593 shares
    For the first nine months ended December 31, 2015	68,974,375 shares

    • Indication regarding execution of quarterly review procedures

      This quarterly earnings report is not subject to the quarterly review procedures in accordance with the Financial Instruments and Exchange Act. At the time of disclosure of this quarterly earnings report, the review procedures for quarterly financial statements in accordance with the Financial Instruments and Exchange Act are incomplete.

    • Proper use of earnings forecasts and other special matters

    The earnings forecasts are based on information currently available to the Company at the time of the release of these materials. Actual business results may differ from the forecasts due to various factors. For information regarding the assumptions on which earnings forecasts are based and points to note when using the earnings forecasts, please refer to "(3) Information regarding consolidated earnings forecasts and other forward-looking statements" under "1. Qualitative Information Regarding Settlement of Accounts for the First Nine Months" on page 2 of the accompanying materials.

    (Method of accessing supplementary material on quarterly earnings)

    Supplementary material on quarterly earnings will be available on the Company's website, on Friday, January 27, 2017.

    1. Qualitative Information Regarding Settlement of Accounts for the First Nine Months (1) Information regarding operating results

    In the global economy during the first nine months ended December 31, 2016, US domestic demand was firm, and in Europe, economic activity continued to recover in spite of patchy performance from country to country. Meanwhile, concerns intensified about a possible economic downturn in emerging countries, such as China, as well as resource producing countries, due to slowing of growth in those countries. In the Japanese economy, there were signs of a moderate recovery; however a mood of uncertainty surrounded the future outlook due to increased uncertainty in overseas economies, such as fluctuations in exchange rates, caused by the issues arising from the U.K.'s leaving from the EU and the effects of the United States presidential elections, as well as risks in European financial and capital markets.

    In the car electronics industry, collaboration between the in-car IT field which centers on infotainment systems, and new fields such as the use of electronics in cars, vehicle automation and artificial intelligence (AI) is expanding and it leads competition to be intensified regardless of business area or type.

    Under these circumstances, the Alpine Group (the "Group") regards this fiscal year as a year to implement reforms in order to build the foundation for the growth described in VISION2020, its corporate vision targeting the 2020 fiscal year. To this end, it is working to enhance its corporate standing through means such as organizational reform of the R&D division, improving efficiency of R&D investment, and promoting to lower cost prices.

    Furthermore, on the growth front, Alpine Electronics, Inc. (the "Company") exhibited at motor shows in China, which is the world's largest automobile market where it presented its solutions tailored to specific vehicle models, revolving around navigation systems and premium sound systems. In addition, the Company aimed at expansion of sales by rolling out high value added new models, in the domestic and overseas aftermarket. In addition, with the EV (Electric Vehicle) market rapidly expanding in China, the Company implemented a capital increase in an entity accounted for using equity method, which has been focusing on EV-related business such as development of next-generation battery control systems, in working to strengthen its development functions.

    Moreover, the Company has made a strategic move to the future growth, such as by commencing development of next-generation in-car systems in collaboration with IBM Japan, Ltd., in preparation for self-driving cars becoming common place, and by entering a strategic business alliance with TOSHIBA CORPORATION, in order to create new businesses that utilize compact unmanned aerial vehicles, drones, and apply the position control technology fostered through the development of car navigation systems. In addition, the Company has worked to strengthen its business platforms by promoting efforts for reorganization of its production system, in preparation for business integration of domestic manufacturing subsidiaries in April 2017.

    Nevertheless net sales declined due to worsening of external conditions, such as abrupt short-term fluctuations in exchange rates. Meanwhile, operating income increased slightly, mainly due to curtailed non- current expenses.

    As a result, during the first nine months ended December 31, 2016, consolidated net sales decreased 11.7% compared with the corresponding period of the previous fiscal year, to ¥181.3 billion. Operating income increased 7.2% to ¥4.6 billion, and ordinary income increased 45.3% to ¥7.0 billion, due to an increase in share of profit of entities accounted for using equity method. Profit attributable to owners of parent decreased 28.6% to

    ¥7.9 billion, owing to a decrease in gain on sales of shares of subsidiaries and associates that was recorded under extraordinary income.

    Segment information is summarized below. Sales figures indicate sales to outside customers.

    In the Audio Products segment, although there was a trend toward a decline in sales to the aftermarket as well as to the OEM market as a result of audio functions being combined with information and communication equipment such as navigation systems and display products, the Company focused on sales expansion by conducting promotion activities for sound systems to the aftermarket, etc. Furthermore, in the OEM market, the Company focused on increasing orders for slim-line and lightweight speakers aid in vehicle's fuel consumption and environmental footprint, in addition to speakers and amplifiers that offer realistically reproduced high- quality audio tailored to luxury vehicle models with exceptionally quiet cabins. However, segment sales overall were impacted by a harsh business environment for the aftermarket as well as the OEM market.

    Accordingly, segment sales decreased 20.1% compared with the corresponding period of the previous fiscal year, to ¥32.5 billion.

    In the Information and Communication Products segment, the Company worked to create differentiation from rival companies by launching the Big X series of new 11-inch large-screen navigation systems in the domestic aftermarket, in which competition has intensified for large-screen navigation systems for minivans, as well as proposing total systems including rear monitors and front cameras to customers, particularly drivers in their child-rearing years. In addition, through alliances with car sharing companies, the Company installed system products in minivans, aiming at acquiring new purchasers. Furthermore, the Company commenced sales of new

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