JVC Reports Business Results for the First Half of Fiscal 2007.

Tokyo, Japan, Oct 26, 2006 - (JCN Newswire) - Victor Company of Japan, Ltd. (JVC) today announced its business results for the first half of fiscal 2007 (April 1, 2006 - September 30, 2006). Consolidated total sales decreased 4% to 371.2 billion yen, but operating income increased 3 billion to a loss of 684 million yen. Operating income gained upward momentum almost exactly according to plan, and all segments generated operating profits for the second quarter of fiscal 2007. Furthermore, inventories were significantly reduced.

Consolidated net sales in Japan in the first half were 113.4 billion yen, down 10.0% year-on-year by 12.5 billion yen. Although sales were up in the Software & Media segment, it was offset by sales declines in the Consumer Electronics and Professional Electronics segments. Outside of Japan, net sales were down in the Americas but were up year-on-year in Europe and Asia. Consolidated net sales outside of Japan were 257.8 billion yen, down 1.3% year-on-year by 3.4 billion yen. As a result, total sales were 371.2 billion yen in the first half, down 4.1% year-on-year by 16.0 billion yen.

I. Consolidated* Financial Highlights for the First Half of Fiscal 2007 (April 1, 2006 - September 30, 2006)

Selected Operating Results                             (millions of yen)
-------------------------------------------------------------------------
                             1H FY2007         1H FY2006
                        (April 1, 2006/   (April 1, 2005/  Compared with
                        Sept. 30, 2006)   Sept. 30, 2005)    year before
-------------------------------------------------------------------------

Net Sales                      371,241           387,264          96 %

Operating Income (Loss)           (684)           (3,733)           -

Ordinary Income (Loss)          (3,436)           (8,467)           -

Net Income (Loss)                5,025           (15,310)           -

Net Income (Loss)
 per Share (yen)                 19.79            (60.28)           -

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* 72 consolidated companies (JVC and its consolidated subsidiaries).

Segment Information

By segment, the Consumer Electronics segment declined year-on-year in Japan. Sales of hard disk camcorders were up, but it was not enough to offset poor LCD television sales and the impact of eliminating available models of DVD recorders. In markets outside of Japan, sales in the Americas were down year-on-year in local currency terms. Although sales of D-ILA hybrid projection TVs and digital video cameras were up, it was not enough to offset a major decline in sales of CRT televisions. In Europe, sales of digital video cameras and LCD televisions were up significantly year-on-year. In Asia, sales of CRT televisions were poor but car electronic sales were up as were digital video camera sales in China. As a result, sales were up year-on-year in the Asia region. Total sales in the Consumer Electronics segment were 272.3 billion yen in the first half, down 5.4% year-on-year from 288.0 billion yen.

In the Professional Electronics segment, sales in Japan declined year-on-year. Sales of security products including surveillance camera systems were up year-on-year, but were not enough to offset sluggish sales of professional audio products. Sales outside Japan were up year-on-year due to healthy sales of security products. Total sales in the professional electronics segment were 29.4 billion yen in the first half, down 6.3% year-on-year from 31.3 billion yen.

The Electronic Components & Devices segment improved its performance year-on-year due to healthy sales of motors for hard disk drives. Total sales in the Electronic Components & Devices segment were 16.7 billion yen in the first half, up 16.8% from 14.3 billion yen.

The Software & Media segment performed at the same level year-on-year. The company's major artists continued to produce hits through Victor Entertainment, Inc. and Teichiku Entertainment, Inc., but the segment was impacted by sharp declines in selling prices for blank media. Total sales in the Software & Media segment were 50.3 billion yen in the first half, down 1.3% year-on-year from 51.0 billion yen.

Other segments recorded total sales of 2.3 billion yen in the first half, compared with 2.4 billion in the first half last year.

Consolidated Sales by Segment

                                                        (millions of yen)
-------------------------------------------------------------------------
                            1H FY2007          1H FY2006
                        (April 1, 2006/   (April 1, 2005/  Compared with
                        Sept. 30, 2006)   Sept. 30, 2005)    year before
-------------------------------------------------------------------------

Consumer Electronics     272,364   73%     288,055   74%         95%

Professional Electronics  29,406    8%      31,393    8%         94%

Components & Devices      16,791    4%      14,382    4%        117%

Software & Media          50,316   14%      51,002   13%         99%

Others                     2,362    1%       2,482    1%         97%

Total                    371,241  100%     387,264  100%         96%

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Domestic                 113,439   31%     126,003   33%         90%

Overseas                 257,802   69%     261,260   67%         99%

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Profit and Loss Statement

The profit and loss statement showed an overall operating loss of 600 million yen in the first half, improving by 3.0 billion yen from the loss of 3.7 billion yen recorded in the first half last year. Operating income was up year-on-year while the company lowered costs by driving down purchasing costs and fixed costs through implementation of design improvements. The company also improved its business structure as a result of continuous structural reform. However, there were negative factors including further declining selling prices for digital appliances such as displays and digital video cameras and for blank media and weak sales of CRT televisions and other products.

Ordinary income posted a loss of 3.4 billion yen in the first half, improving by 5.0 billion yen from the loss of 8.4 billion yen recorded in the first half last year. The situation was impacted by a loss of 2.7 billion yen in non-operating revenue. Net income was 5.0 billion yen in the first half, compared with a loss of 15.3 billion yen in the first half last year. Contributing factors included profits from the sale of idle real estate assets.

II. Non-consolidated Financial Highlights for the First Half of Fiscal 2007 (April 1, 2006 - September 30, 2006)

Selected Operating Results                              (millions of yen)
-------------------------------------------------------------------------
                            1H FY2007          1H FY2006
                        (April 1, 2006/   (April 1, 2005/  Compared with
                        Sept. 30, 2006)   Sept. 30, 2005)    year before
-------------------------------------------------------------------------

Net Sales                      182,517          214,660           85%

Operating Income (Loss)         (1,826)          (3,040)           -

Ordinary Income (Loss)          (2,539)          (3,227)           -

Net Income (Loss)               10,796           (9,633)           -

Net Income (Loss)
 per Share (yen)                  0.00             0.00            -

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Non-consolidated Sales by Segment

                                                        (millions of yen)
-------------------------------------------------------------------------
                            1H FY2007          1H FY2006
                        (April 1, 2006/   (April 1, 2005/  Compared with
                        Sept. 30, 2006)   Sept. 30, 2005)    year before
-------------------------------------------------------------------------

Consumer Electronics     137,226   75%     166,326   77%         83%

Professional Electronics  29,689   14%      23,614   11%        105%

Components & Devices       6,217    3%       7,917    4%         79%

Software & Media          12,815   14%      14,952    7%         86%

Others                     1,569    1%       1,848    1%         85%

Total                    182,517  100%     214,660  100%         85%

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Domestic                  74,098   41%      86,786   40%         85%

Overseas                 108,419   59%     127,874   60%         85%

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III. Forecast for the Full-year to March 2007

We expect the business environment to remain difficult, considering heightened competition in the domestic and international markets for digital appliances, the impact of runaway oil prices, growing concerns for economic slow downs in Europe and the U.S., etc.

Within this context, JVC will attempt to increase sales mainly through the company's "Only One" strategy of producing niche-leading products and further strengthen its organizations, and will continue to work to achieve the results forecast announced on April 27, 2006.

Net sales                JPY 830.0 billion     (103% YOY)
Ordinary income (loss)  (JPY   4.0 billion)      ( - YOY)
Net income               JPY   2.0 billion       ( - YOY)

* Major Products by Segment

Consumer Electronics: LCD TVs, rear projection TVs, PDP TVs, CRT TVs, digital video

cameras, video cassette recorders, DVD players, DVD recorders, audio related equipment such as MD, CD, DVD components, etc. and car AV system

Professional Electronics: Surveillance video equipment, professional audio equipment, professional video equipment, and projectors

Components & Devices: Motors, optical pickups, high-density printed wiring boards (PWBs) and parts for display equipment

Software and Media: Music and video software, such as CDs, videodiscs, and

prerecorded music and video tapes, and blank-media

Others: Home furniture*2, information systems*3, and production facility, etc.

*2: Only included in a consolidated level.

*3: Only included in a non-consolidated level.

* Risks of Business, Etc.

Results forecasts are based on certain assumptions deemed by the company to be reasonable at the current point in time. Actual results may vary widely from forecasts. Below are the main factors of the risks that may cause results to differ from forecasts:

- Drastic changes in economic conditions and product supply and demand in major markets (Japan, Europe, The Americas, Asia etc.)

- Fierce competition of selling prices of digital related products in major domestic and international markets, etc.

- Drastic changes in interest rates and foreign exchange rates (yen-dollar, yen-euro etc.)

- Sharp moves in the capital markets

- Changes in social infrastructures caused by drastic changes in technology etc.

- Damages and lower supply

For more information on the JVC first half results and related information, please visit the company IR homepage at

http://www.jvc-victor.co.jp/english/company/ir/index.html.

About JVC

Victor Company of Japan, Ltd. (TSE: 6792; US: VJAPY), known worldwide as JVC, is well-known for its development of the VHS video standard, and has developed as an international company in the fields of audio, visual (A&V), information-related equipment, components, and entertainment for the domestic consumer market, as well as in the business market as a comprehensive provider of both hardware and software. JVC has received high praise in both domestic consumer and business markets. Visit the JVC home page at www.jvc.co.jp .

Source: JVC

Contact:

Toshiya Ogata, Senior Staff Manager, or
Akiko Sakakibara, Manager
Public Relations Office
Corporate Communications Department
Victor Company of Japan, Limited (JVC)
Tel: [phone], 2952
Fax: [phone]
E-mail: [e-mail]
[e-mail]
URL: http://www.jvc.co.jp/english

Copyright [c] 2006 JCN Newswire. All rights reserved. A division of Japan Corporate News Network K.K.