Matsushita Reports Second Quarter and First Half Results / Sales and Operating Profit Decline, Net Income Rises (PART TWO)

OSAKA, Japan (PROTEXT) - ... * To conform to a revision in Japanese corporate accounting standards, local enterprise tax previously included in selling, general and administrative expenses has been transferred to provision for income taxes for the fiscal first half ended September 30, 1999, without retroactive restatement for prior periods. For the first-half period a year ago, the local enterprise tax totaled 3.5 billion yen. ** Net income per common share, basic Six Months Ended Six Months Ended Sept. 30, 1999 Sept. 30, 1998 17.79 yen 3.68 yen *** See notes to parent-alone financial statements. Matsushita Electric Industrial Co., Ltd. (Parent Alone) Balance Sheet * Sept. 30, 1999 With Comparative Figures for March 31, 1999 Yen (millions) As of As of Assets Sept. 30, 1999 March 31,1999 Current assets: Cash Y647,893 Y633,932 Trade receivables (notes and accounts) 587,691 651,676 Inventories 207,864 210,786 Other current assets 200,137 110,184 Total current assets 1,643,586 1,606,579 Fixed assets: Tangible fixed assets 340,097 343,808 Intangibles 11,519 12,046 Investments and advances 2,315,462 2,203,426 Total fixed assets 2,667,078 2,559,281 Total assets Y4,310,664 Y4,165,861 Liabilities and Shareholders' Equity Current liabilities: Trade payables (notes and accounts) Y520,285 Y574,640 Accrued income taxes 23,245 38,190 Other current liabilities 648,854 645,514 Total current liabilities 1,192,385 1,258,345 Long-term debt and employee retirement and severance benefits 536,505 531,101 Total liabilities 1,728,891 1,789,447 Shareholders' equity: Capital 209,554 209,444 Statutory reserves 292,200 292,085 Retained earnings 2,080,019 1,874,884 Total shareholders' equity 2,581,773 2,376,413 Total liabilities and shareholders' equity Y4,310,664 Y4,165,861 * See notes to parent-alone financial statements. Matsushita Electric Industrial Co., Ltd. (Parent Alone) Sales Breakdown * Yen (billions) Six Months Ended Six Months Ended Percentage Sept. 30, 1999 Sept. 30, 1998 1999/1998 Consumer products Video and audio equipment Y350.0 Y423.8 83% Home appliances and household equipment 400.8 436.7 92% Subtotal 750.9 860.5 87% Industrial products Information and communications equipment 625.4 668.9 94% Industrial equipment 240.0 236.6 101% Subtotal 865.5 905.6 96% Components 584.1 545.9 107% Total Y2,200.7 Y2,312.1 95% Domestic sales 1,432.5 1,456.1 98% Exports 768.1 856.0 90% * Amounts less than one-tenth of a billion yen have been omitted. Prior period figures may differ slightly with previously released statements. Notes to parent-alone financial statements: 1. In accordance with the Regulations concerning Corporate Financial Statements under the Japanese Commercial Code, amounts less than 1 million yen have been omitted in the accompanying parent alone financial statements. The sum of the subtotals may differ from the actual total. 2. Beginning the fiscal first half ended September 30, 1999, tax effect accounting was applied in accordance with the revised Japanese corporate accounting standards, without retroactive restatement for prior periods. The Year 2000 Issue 1. State of readiness (1) Policy The Company recognizes the "Year 2000 issue (Y2K)" as potentially one of the most important business problems from the view points of products and services provided to the customers and our internal information systems, production facilities and business continuity. Therefore, Matsushita has been implementing corporate-wide projects to resolve any potential issues arising from Y2K. (2) Project Steps to deal with Y2K began in fiscal year 1996, and since July 1997 have expanded to all segments of our corporate structures. In June 1998, management started the Matsushita Group-wide project "Group-Wide Council Towards Readiness for the Year 2000 Issue." The Council investigates the state of the Company's products, internal information systems, manufacturing facilities, raw materials and parts suppliers, and other infrastructure such as buildings and other facilities. It identifies potential problems, collects information on the status of readiness, implements and advances corrective measures, and regularly reports to management on progress. The Council confers with management regarding appropriate measures to be instituted and engages in various educational activities both within the Matsushita Group and with related parties. The Council is headed by the Executive Vice President of the Company in charge of corporate planning. Management also established in July 1999 a "Corporate Risk Management Headquarters" to set-up a Matsushita Group-wide control system to deal with potential risks arising from Y2K. (3) State of readiness The Company had almost completed all conceivable preventive measures by the end of September 1999. The following is a breakdown of each relevant section. The Company's products By the end of March 1999, measures to notify all relevant customers of any required corrected actions were practically finished. The Company had almost completed the corrective measures requested by customers by the end of September 1999. Through its Internet home page, the Company supplies customers with detailed information regarding relevant products. It intends to promote this activity through Company- wide collaboration. Corporate information system Overseas and domestic system adjustments and reinstallation were started in fiscal 1996. Verification tests were almost completed by the end of September 1999. Production facilities The Company finalized its investigation of production and automated warehouses and had completed all-necessary measures by the end of September 1999. In accordance with Japanese customs, the Company ceases operations during the year end and New Year's season. It is also preparing contingency plans at all levels of the Company for the possibility of disconnection within the Matsushita infrastructure. Infrastructure such as raw material supply chains, buildings and related facilities, etc. The Company has been monitoring the present status of its supply sources, property owners, and other relevant parties and promoting completion of their respective corrective plans. 2. Costs Costs required to be Y2K compliant with respect to internal information systems and production facilities are difficult to calculate. Most measures are mainly handled by the Company's information systems department as part of their routine operation. The cost of outside sources used to modify, enhance, or replace existing systems is estimated at approximately 19 billion yen. A substantial portion of this has already been realized as expense on the Group's financial statements for the year ended September 1999 and on previous statements. 3. Contingency plans Preparing for the worst case scenario, the Company established contingency plans and internal systems to deal with customers, internal information systems, raw materials and other issues by the end of July 1999. Since the end of September 1999, the heads of each Business Unit and project members have been conducting final checks and contingency training. A total of 9,000 staff members in the Customer Support Center and related departments will be standing by during the year end/beginning. Cautionary Statements In the foregoing statements the Company makes forward-looking statements with respect to the Year 2000 issue. However, this issue involves a number of outside parties and the effect, if any, of failure by one party or segment is likely to be widespread, and, therefore many aspects of the Company's Year 2000 project are outside of its control. These factors could cause the Group's actual results to differ from those stated in the forward-looking statements. Furthermore, as the Group's operations encompass many different countries, there is no assurance that the Year 2000 issue will be addressed with the same degree of attention in different parts of the world. Thus, there may be unforeseen problems in different countries. These factors make it impossible for the Company to ensure that it will avoid material adverse effects on its operations or business or insulate itself from third party liability arising from the Year 2000 issue. ots Original Text Service: Matsushita Electric Industrial Co., Ltd. Internet: http://www.newsaktuell.de Contact: Akihiro Takei of Panasonic Finance (America), Inc. 212- 371-5447 Subscribers please note that material bearing the slug "PROTEXT" is not part of CTK's news service and is not to be published under the "CTK" slug. Protext is a commercial service providing distribution of press releases from clients, who are identified in the text of Protext reports and who bear full responsibility for their contents. 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