May 9, 2000

JVC REPORTS FISCAL 1999 FINANCIAL RESULTS

Victor Company of Japan, Ltd. (JVC) announced today it registered consolidated sales of ¥870.2 billion for fiscal 1999, 8.1% decline of the ¥946.6 billion achieved last year.

To explain the consolidated results for fiscal 1999, government programs to stabilize the financial system and stimulate the economy began to show some effect and signs of recovery were seen in some areas, but the Japanese economy remained stagnant on the whole, resulting in another extremely trying business year. Overseas, the economies of the United States and Europe continued to grow and Asia, with some exceptions, entered recovery.

JVC responded to this situation by implementing changes in its business structure designed to reinforce its new digital products and its information related components operations, and strengthen its capacity to develop and sell high value-added digital products. These efforts resulted in the launch of a new D-VHS digital video recorder capable of up to twenty-four hours of continuous digital recording and a new digital video camera capable of recording simultaneous still and moving pictures and the expansion of sales of "high-density build-up" multilayer printed wiring boards (PWBs), which are instrumental in the development of more compact, higher-performance cellular phones.

On the consolidated level, Japan domestic sales declined by 14.5% compared to last year, primarily because of slumping consumption and private-sector investment, as well as falling prices. Overseas sales were strong thanks to the continued booms in Europe and North America, but registered a 3.7% year-on-year decline due to the appreciation of the yen. This resulted in total sales of a bit more than ¥870.2 billion (a decline of 8.1% from last year's ¥946.6 billion).

The divisional breakdown shows consumer equipment to have had a particularly difficult year, plagued by the slump in Japan domestic consumption and the resulting industry-wide depression, and also by falling prices. The product breakdown shows growth for portable MD players and lightweight stereo headphones, and strong performance for digital video cameras and mini-component stereo systems. Sales of color television sets and VHS video decks declined because of stiff price competition. In overseas markets, digital video cameras and DVD players recorded strong growth, although the final yen figures were below last year's due to the appreciation of the yen. Overall, the consumer products division posted sales of just over ¥584.9 billion (down 4.5% from last year's ¥612.3 billion).

In professional electronics, slack private-sector investment resulted in a hard year for D-ILA projectors, optical communication systems, and karaoke systems on the Japan domestic market. Sales also declined in overseas markets because of inventory adjustments and price competition. Industrial equipment registered total sales of a bit more than ¥88.3 billion (down 18% from last year's ¥107.6 billion).

Electronic component devices saw growth for "high-density build-up" multilayer PWBs. However, there was a substantial drop in sales of deflection yokes due to falling prices and OEM customers shifting television production overseas. Total sales from the division came in at just over ¥66.7 billion (down 9.4% from last year's ¥73.6 billion).

Sales from the entertainment division were significantly below last year's levels because of a slump in the Japanese music industry and a lack of major video hits. The division posted total sales of a bit over ¥125.1 billion (down 16% from last year's ¥148.9 billion).

The profit and loss statement shows a current loss of ¥8.4 billion (compared to ¥546 million profit last year). This large loss was due in part to the liquidation of subsidiaries and affiliates that the company began last year and also in part due to falling market prices and the stronger yen. At the net level, the company posted a loss of ¥5.3 billion (compared to ¥8.3 billion loss last year). Factors at work in this were appraised profit on shares held by our US subsidiary, special losses taken for the special retirement fund, and losses from structural reforms.

Non-consolidated global results for the year show sales of just over ¥545.8 billion, a decline of 7.9% compared to last year.

Non-consolidated Japan domestic sales declined 13.8% to just over ¥217.2 billion (compared to ¥251.9 billion last year) because of the slump in the audio-visual (AV) industry and stagnant private-sector investments.

Exports were strong because of the continued boom in the US economy and the recovery in Europe and Asia, but the appreciation of the yen resulted in a 3.5% decline in revenues to a bit over ¥328.6 billion (compared to ¥340.4 billion last year).

The non-consolidated profit and loss statement shows a current loss of ¥14.7 billion (compared to ¥52 million profit last year) due to falling market prices and the unfavorable exchange rate, which counteracted much of our efforts to reduce production costs and fixed expenses. The net profit and loss line includes special losses taken for the special retirement fund, losses on support to affiliate companies, and losses from structural reforms. JVC posted a non-consolidated net loss of ¥24.6 billion for the year (compared to ¥51 million profit last year).

We anticipate that the Japan domestic economy will show signs of improvement in some sectors but will not enter into full-fledged recovery. There are also expectations of a slow-down in the US economy that make overseas economies unpredictable. We foresee a harsher business environment as price and service competitions intensify.

JVC has already undertaken to reform its management structures, business structures, product mix, and profit/cost structures so as to normalize management during fiscal 2000. The highlight of these reforms will be the introduction of a "company-in-company system" that will accelerate management decision-making. We will also shift more of our production overseas in order to make the company less vulnerable to exchange rates. In addition, digital and networking products will account for a higher percentage of our product mix, and we will continue with efforts to reduce fixed expenses and reinforce overall corporate health.

Below is our current full-year forecast for fiscal 2000:

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Attachment 1

Consolidated Financial Highlights for FY1999 (April 1, 1999 - March 31, 2000)

1. Selected Operating Results

2. Financial Position

3. Sales by Product Lines

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Attachment 2:

Non-Consolidated Financial Highlights for FY1999 (April 1, 1999 - March 31, 2000)

1. Selected Operating Results

2. Sales by Product Lines

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ATTACHMENT 3:

Management Policies

a. Basic philosophy

JVC's management is founded upon a recognition that while maximizing profits the company is a public institution that invests capital entrusted to it by society in such a way as to enrich and uplift human lives and contribute to culture and civilization, living in harmony with local communities, and protecting the environment.

b. Management guidelines for fiscal 2000

During fiscal 2000, JVC will embark on a visionary business path by which it will transform itself into a digital, networked company able to offer unique products and services for the twenty-first century. To accomplish this, we will finish the management reforms we initiated last year and introduce a new "company-in-company system" that will enable us to go on the attack to implement aggressive, dynamic strategies that reach beyond conventional compartmentalized business systems.

1. Business vision for the twenty-first century

JVC adds value to its AV equipment and other mainline products by adapting them for use with and as part of networks. Our vision is to become a "digital, networked company" in the twenty-first century, a company that provides original and innovative entertainment, communications, and service products based on digital and networking technologies. We are focusing on two priority goals in this regard:

2. Reforms put JVC back on the attack

JVC will implement four priority programs to establish a new and more aggressive organization capable of the "speed management" required by the increasingly software-oriented, service-oriented, global-oriented business environments of the digital, networked age:

3. Finishing basic reforms

c. Basic guidelines for the distribution of corporate profits

JVC's guiding policy is to pay dividends commensurate with profits, retaining sufficient earnings to prepare the company to anticipate future competition, to make the company more resilient in the face of changing environments, and to invest in the company’s future.

It is with deepest regret that we announce our intention to forego payment of a year-end dividend for fiscal 1999.

d. Basic policy for the relationship with parent company

JVC’s parent company is Matsushita Electric Industrial Co. , Ltd. and it possesses 52.4% of our shares. The relationship between the two companies is based on “mutual development through competition”, but in all aspects, the two implement autonomous management policies. Furthermore, the relationship of the two companies is not based on mutual financial assistance, but the two companies purchase certain parts from one another and have the authority to mutually utilize the technologies that have been developed by one or the other.

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