Matsushita Reports First Quarter Results / Sales and

Earnings Impacted by Economic Conditions Osaka, Japan (PROTEXT) - Matsushita Electric Industrial Co., Ltd. (NYSE: MC) today reported its consolidated financial results for the first quarter, ended June 30, 1999, of the current fiscal year ending March 31, 2000. First-quarter Results Consolidated group sales for the first quarter decreased 6% to 1,755.4 billion yen (U.S.$14.51 billion), from 1,875.8 billion yen in the same period a year ago. Domestic sales decreased 1% to 853.2 billion yen (U.S.$7.05 billion), down from 862.9 billion yen a year ago. Domestic sales in consumer products continued to decline, however, within the industrial products and components sectors several product lines showed signs of recovery. Although declining consumer confidence and financial industry difficulties appear to have abated, consumer spending and capital investments were affected by lingering adverse economic conditions. Overseas sales decreased 11% to 902.2 billion yen (U.S.$7.46 billion), compared to 1,012.9 billion yen in the first quarter of the previous year. Economic conditions in North America continued to be strong backed by brisk consumer spending. However, overseas sales were negatively influenced overall by a strong yen, decreased sales in the CIS, Latin America, and China, and slowed European economic growth. Although Asian economies showed partial signs of recovery, sales in Southeast Asia remained weak. Profits were negatively impacted by further intensified price competition, decreased domestic sales of consumer products, and a strong yen. This occurred despite continued efforts to lower production costs and increase overall efficiency. Operating profit for the quarter declined 57% to 14.4 billion yen (U.S.$119 million), compared to 33.1 billion yen a year ago. Income before income taxes fell 12% to 33.0 billion yen (U.S.$273 million), compared to 37.7 billion yen a year ago. Net income decreased 14% to 9.6 billion yen (U.S.$79 million), compared to 11.1 billion yen a year ago. Matsushita noted that pretax income for this first quarter included a one-time non-operating profit of 7.2 billion yen from the sale of shares of a U.S. communications operator. Consolidated net income per common share for the quarter was 4.55 yen (38 cents per American Depositary Share, each representing 10 shares of common stock), compared to 5.10 yen per common share in the quarter a year ago, on a diluted basis. First-quarter Sales Breakdown by Product Category The Company's first-quarter consolidated sales by major product categories are summarized as follows: Consumer Products Consumer products sales fell 13% to 706.9 billion yen (U.S.$5.84 billion), compared to the same period a year ago. Total sales of video and audio equipment decreased 16%. This decline reflected sluggish domestic demand for televisions and VCRs, and decreased overseas sales in Southeast Asia, China and the CIS. Steady sales growth of audiovisual (AV) equipment in North America such as televisions and DVD players, was insufficient to offset these negative factors and lower overseas sales revenue due to the higher yen exchange rate. Although the Company's campaign of "product firsts," including its centrifugal force washing machine, continued to receive favorable market response, overall home appliances and household equipment sales remained depressed, decreasing 10%. Industrial Products Sales of industrial products for the first quarter were 674.9 billion yen (U.S.$5.58 billion), down 3% from the same period last year. Sales of information and communications equipment decreased 6%. While sales of mobile communications equipment such as cellular phones and personal computers continued experiencing strong growth, sales of computer peripherals such as PC displays and hard disk drives decreased due to price declines. Sales of industrial equipment grew 6%, reflecting rapid expansion of car AV equipment in both overseas and domestic markets and a turnaround in factory automation equipment sales in Japan. Components Sales of components increased 2% to 373.6 billion yen (U.S.$3.09 billion). This increase is attributed to sales of semiconductors, liquid crystal display panels, and compressors for use in air conditioners, all of which recorded double-digit sales growth. Outlook for the Fiscal First Half Based on its first quarter results, Matsushita today announced forecasts for consolidated sales and earnings for the first six months ending September 30, 1999. Half-year group sales are forecast to decrease 9% from the previous year's six-month period, to approximately 3,560 billion yen. Assuming the current conditions continue, the Company expects first-half operating profit to decline 56% to approximately 46 billion yen. Consolidated pre-tax income is anticipated to decrease 4% to approximately 63 billion yen, and six-month net income is expected to increase 95% to about 18.5 billion yen. In the above forecasts, the smaller decrease rate in pre-tax income and the increase in net income are mainly due to the expectation that a non- operating loss on valuation of investment securities will not be incurred in this first half period. The Company incurred such a loss at the end of last year's first half. Statements made in the Outlook for the Fiscal First Half and other statements herein that are not historical facts are forward-looking statements about the future performance of Matsushita and its group companies which are based on management's assumptions and beliefs in light of information currently available to it and involve risks and uncertainties. Actual results may differ materially from these forecasts. Potential risks and uncertainties include, but are not limited to: general economic conditions in Matsushita's major markets, particularly Japan and elsewhere in Asia, the United States and Europe; general consumer spending; rapid exchange rate fluctuations, particularly between the yen and U.S. dollar, euro and other currencies in which Matsushita makes significant sales or in which Matsushita's assets and liabilities are denominated; direct and indirect restrictions by other countries of imports, or exchange or other limitations imposed by other countries in which Matsushita conducts significant production and marketing operations; fluctuation in market prices of securities of which Matsushita has substantial holdings; and Matsushita's ability to maintain its strength in many product and geographical areas, through such means as new product introductions, in a market that is highly competitive in terms of both price and technology, pertinent to the industry to which the Company primarily belongs. Matsushita Electric Industrial Co., Ltd. is one of the world's leading producers of electronic and electric products for consumer, business, and industrial use, which it markets around the world under the "Panasonic", "National", "Technics", and "Quasar" brand names. Matsushita's shares are listed outside Japan on the Amsterdam, Dusseldorf, Frankfurt, New York, Pacific, and Paris stock exchanges. Matsushita Electric Industrial Co., Ltd. and Consolidated Subsidiaries Financial Summary (Three months ended June 30) Yen U.S. Dollars (billions) Percentage (millions) 1999 1998 1999/1998 1999 Net sales 1,755.4 y 1,875.8 y 94% $14,508 Operating profit 14.4 33.1 43% 119 Income before income taxes 33.0 37.7 88% 273 Net income 9.6 11.1 86% 79 Net income per share, basic per common share 4.63 yen 5.26 yen 4 cents per American Depositary Share (ADS) 46 yen 53 yen 38 cents Net income per share, diluted per common share 4.55 yen 5.10 yen 4 cents per ADS 46 yen 51 yen 38 cents Notes to consolidated financial statements: 1. The Company's consolidated financial statements are prepared in conformity with the United States generally accepted accounting principles. 2. The Company has not applied SFAS No.115 in accounting for certain investments in debt and equity securities. If SFAS No.115 had been adopted as of June 30, 1999, and March 31, 1999, the combined carrying amounts of marketable securities and investments and advances would increase by 210.1 billion yen ($1,736 million) and 197.6 billion yen, respectively. Stockholders' equity would also increase by 117.6 billion yen ($972 million) and 109.1 billion yen, on the respective dates. 3. For the fiscal first quarter ended June 30, 1999, comprehensive income totaled 23.4 billion yen ($194 million), as compared to 73.9 billion yen in the comparable first quarter a year ago. In calculating comprehensive income, the Company has applied SFAS No. 115. Comprehensive income includes net income, increases in cumulative translation adjustments, and unrealized holding gains of available- for-sale securities. 4. Number of consolidated companies: 327 5. Number of companies reflected by the equity method: 60 6. United States dollar amounts are translated from yen for convenience at the rate of U.S. $1.00 =121 yen, the approximate rate on the Tokyo Foreign Exchange Market on June 30, 1999. 7. Each American Depositary Share (ADS) represents 10 shares of common stock. Matsushita Electric Industrial Co., Ltd. Consolidated Statement of Income * (Three months ended June 30) Yen U.S. Dollars (millions) (millions) 1999 1998 1999 Net sales 1,755,406 y 1,875,846 y $14,508 Cost of sales (1,241,704) (1,306,078) (10,262) Selling, general and administrative expenses (499,351) (536,647) (4,127) Operating profit 14,351 33,121 119 Other income (deductions): Interest and dividend income 15,132 19,587 125 Interest expense (12,129) (16,667) (100) Other income (loss), net 15,685 1,618 129 Income before income taxes 33,039 37,659 273 Provision for income taxes (19,208) (21,228) (159) Minority interests (6,965) (1,816) (57) Equity in earnings (losses) of associated companies 2,686 (3,499) 22 Net income 9,552 y 11,116 $79 y (Parentheses indicate expenses or deductions.) * See Notes to consolidated financial statements above. Supplementary Information (Three months ended June 30) Yen U.S. Dollars (millions) (millions) 1999 1998 1999 Depreciation: 85,875 y 87,707 y $ 710 Capital investment: 68,285 y 80,019 y $ 564 R&D expenditures: 127,936 y 123,046 y $ 1,057 Total employees (June 30): 287,413 287,516 Matsushita Electric Industrial Co., Ltd. Consolidated Balance Sheet * (As of June 30, 1999) With Comparative Figures for March 31, 1999 Yen U.S. Dollars (millions) (millions) Assets June 30, 1999 March 31, 1999 June 30, 1999 Current assets: Cash 1,535,620 y 1,529,584 y $ 12,691 Marketable securities 127,815 128,328 1,056 Trade receivables and other current assets 1,708,695 1,732,731 14,122 Inventories 1,053,190 1,018,663 8,704 Total current assets 4,425,320 4,409,306 36,573 Noncurrent receivables 284,039 276,311 2,347 Investments and advances 1,316,609 1,279,828 10,881 Property, plant and equipment, net of accumulated depreciation 1,481,140 1,493,551 12,241 Other assets 477,808 479,252 3,949 Total assets 7,984,916 y 7,938,248 y $ 65,991 Liabilities and Stockholders' Equity Current liabilities: Short-term borrowings 684,367 y 650,147 y $ 5,656 Trade payables and other current liabilities 1,953,809 1,940,792 16,147 Total current liabilities 2,638,176 2,590,939 21,803 Long-term liabilities 1,198,121 1,205,174 9,902 Minority interests 616,393 609,080 5,094 Common stock 209,502 209,444 1,732 Capital surplus 567,877 567,696 4,693 Retained earnings 2,904,502 2,910,932 24,004 Cumulative translation adjustments (149,403) (154,765) (1,235) Treasury Stock (252) (252) (2) Total liabilities and stockholders' equity 7,984,916 y 7,938,248 y $ 65,991 * See Notes to consolidated financial statements above. Matsushita Electric Industrial Co., Ltd. Consolidated Sales Breakdown * ** (Three months ended June 30 Yen U.S. Dollars (billions) Percentage (millions) 1999 1998 1999/1998 1999 Consumer products Video and audio equipment 391.9 y 464.7 y 84% $3,239 Home appliances and household equipment 315.0 349.5 90% 2,603 Subtotal 706.9 814.2 87% 5,842 Industrial products Information and communications equipment 507.1 535.8 94% 4,191 Industrial equipment 167.8 158.9 106% 1,387 Subtotal 674.9 694.7 97% 5,578 Components 373.6 366.9 102% 3,088 Total 1,755.4 y 1,875.8 y 94% $14,508 Domestic sales 853.2 862.9 99% 7,052 Overseas sales 902.2 1,012.9 89% 7,456 [Domestic/Overseas Sales Breakdown] (in yen only) Yen (billions) Yen (billions) Domestic Sales Percentage Overseas Sales Percentage 1999 1999/1998 1999 1999/1998 Consumer products Video and audio equipment 128.0 y 82% 263.9 y 86% Home appliances and household equipment 227.6 94% 87.4 82% Subtotal 355.6 89% 351.3 85% Industrial products Information and communications equipment 230.0 111% 277.1 84% Industrial equipment 102.6 103% 65.2 111% Subtotal 332.6 109% 342.3 88% Components 165.0 104% 208.6 100% Total 853.2 y 99% 902.2 y 89% * See Details of Product Categories below. ** See Notes to consolidated financial statements above. Details of Product Categories Consumer Products Video and audio equipment: (video cassette recorders, video camcorders, TVs, TV/VCR combination units, DVD players, satellite broadcast receivers, radios, radio/cassette stereos, portable headphone players, CD and MD players, stereo hi-fi equipment, electronic musical instruments, prerecorded video and audio tapes and discs, etc.) Home appliances and household equipment: (refrigerators, air conditioners, home laundry equipment, vacuum cleaners, microwave ovens, other cooking appliances, kitchen fixture systems, electric, gas and kerosene hot-water supply systems, heating appliances, bath and sanitary equipment, electric lamps, cameras and flash units, bicycles, etc.) Industrial Products Information and communications equipment: (facsimiles, telephones, mobile communications equipment, personal computers, printers and peripherals, copiers, CRT and LCD displays, hard disk drives, CD-ROM, DVD-ROM/RAM and other optical disk drives, CATV systems, AV systems for commercial and industrial use, communication network equipment, etc.) Industrial equipment: (electronic-parts-mounting machines, industrial robots, welding machines, air-conditioning equipment, vending machines, electronic measuring instruments, medical equipment, car audio and car navigation equipment, etc.) Components (semiconductors, cathode-ray tubes, printed circuit boards, PDP and LCD devices, tuners, capacitors, other general components, speakers, electric motors, compressors, dry batteries, storage batteries, etc.) ots Original Text Service: Matsushita Electric Industrial Co., Ltd. Internet: http://www.newsaktuell.de Contact: Mr. Akihiro Takei of Panasonic Finance, America, Inc. (USA) 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. PROTEXT