Matsushita Reports Fiscal 1999 Annual Results; Sales

and Earnings Impacted by Adverse Economic Conditions (Part 1/2) Osaka, Japan (PROTEXT) - Matsushita Electric Industrial Co.,Ltd. (NYSE: MC; PX) today reported its consolidated results andparent company alone results for fiscal 1999, ended March 31,1999. Consolidated Results Consolidated group sales for the fiscal year decreased 3percent, to 7,640.1 billion yen (U.S.$63.67 billion), from7,890.7 billion yen in the previous year. The decrease primarilyreflected lower Japanese demand and declines in product pricesdue to the prolonged recession in that country and worsenedeconomic conditions overseas, especially in Southeast Asia andthe CIS during the period. The Company's annual domestic sales were 3,752.1 billion yen($31.27 billion), down 4 percent from the previous year, whileoverseas sales decreased 3 percent to 3,888.0 billion yen ($32.40billion). Consolidated earnings declined mainly because of decreasedsales and price declines due to intensified worldwidecompetition, particularly in the industrial products andcomponents areas. Operating profit for the year decreased 43percent to 193.7 billion yen ($1.61 billion), from 337.6 billionyen a year ago, while income before income taxes also decreased43 percent to 202.3 billion yen ($1.69 billion), from the year-earlier 355.6 billion yen. Net income from normal operations,excluding the effects of re-evaluations of net deferred taxassets to reflect reductions in Japan's corporate income taxrate, amounted to 66.3 billion yen ($553 million), down 48percent from the prior year. After subtracting the tax effects,net income totaled 13.5 billion ($113 million), down 86 percentfrom 93.6 billion yen a year ago. Matsushita said that its efforts to lower manufacturing costsand improve overall management efficiency could not offset theaforementioned negative effects. The Company's consolidated annual net income per common shareafter the tax effects was 6.48 yen ($0.54 per American DepositaryShare (ADS), each representing 10 shares of common stock),compared with net income per common share of 41.53 yen a yearago, both on a diluted basis. Consolidated Sales Breakdown by Product Category The Company's annual consolidated sales by major productcategories are summarized as follows: Consumer Products Sales of Consumer products, consisting of video and audioequipment and home appliances and household equipment, decreased2 percent to 3,289.1 billion yen ($27.41 billion). In this category, sales of video and audio equipment increased1 percent. Favorable sales growth recorded in VCRs and DVDplayers in Japan and North America, led by digital products, morethan offset declines in such regions as Southeast Asia and theCIS. Sales of home appliances and household equipment decreased 5percent, due to generally slow demand, despite the marketingsuccess of Matsushita's new, industry-leading products, such ascentrifugal force washing machines in the domestic market, and anincrease in overseas sales of air conditioners. Industrial Products Sales of Industrial products decreased 3 percent, to 2,866.6billion yen ($23.89 billion). Within this product category, salesof information and communications equipment decreased 5 percent,due primarily to price declines in computer peripherals, such asPC displays and hard disk drives. Steady growth was, however,achieved mainly in overseas sales of mobile communicationsequipment, including cellular phones, broadcast- and business-use video systems, and printers. Industrial equipment sales increased 2 percent, as stronggrowth of car audiovisual equipment sales in both domestic andoverseas markets more than offset negative effects of cuts incapital spending for factory automation and other industrialequipment. Components Sales of Components decreased 5 percent to 1,484.4 billion yen($12.37 billion), reflecting continued slow demand forsemiconductors and general electronic components. However, salesof high-energy-density rechargeable batteries and overseas salesof compressors for air conditioners and electric motors advanced. Non-Consolidated (Parent Company Alone) Results On a parent company alone basis, annual sales and earningsboth decreased. Sales decreased 6 percent to 4,597.5 billion yen,from the previous year's 4,874.5 billion yen. Steady sales growth of digital video and audio equipment andmobile communications equipment could not offset the decline ofsales in other product lines. Domestic sales decreased due mainlyto setbacks in housing- related consumption and in demand frombusiness and industrial corporations, while export salesdecreased largely because of aggravated market conditions inseveral emerging nations and worldwide price declines. Operating profit decreased 35 percent to 80.5 billion yen,from 123.4 billion yen in fiscal 1998, and recurring profitdecreased 21 percent to 122.7 billion yen, from 156.4 billionyen. Net income decreased 32 percent to 62.0 billion yen, versus91.2 billion yen a year ago. Parent company net income per common share (basic) was 29.67yen, compared with 43.18 yen a year ago. Proposed Year-end Dividend Matsushita today proposed a year-end cash dividend of 7.75 yenper common share, comprising an ordinary year-end dividend of6.25 yen, plus a 1.50 yen commemorative dividend marking theCompany's 80th anniversary, subject to approval at the annualgeneral meeting of shareholders on June 29, 1999. If approved,total dividends for fiscal 1999, including an interim dividend of6.25 yen per common share paid in December 1998, will be 14.00yen per common share, compared with 12.50 yen for the previousfiscal year. Outlook for Fiscal Year 2000 Matsushita expects difficult business conditions to persist inthe new fiscal year. The Japanese economy has yet to see clearsigns of recovery, and uncertainty also exists in North Americanand European markets. To counter these adverse circumstances, Matsushita plans toconcentrate its efforts on the development and introduction ofinnovative, value-added products companywide. It will also striveto reinforce its corporate structure and to create newbusinesses, with emphasis on promoting its five priority businessareas to achieve greater progress in the approaching millennium. For fiscal 2000, ending March 31, 2000, the Company forecastsa 3 percent decrease in consolidated sales to approximately 7,400billion yen, while operating profit is expected to increase 7percent to approximately 208 billion yen, and pre-tax income torise 9 percent to approximately 220 billion yen. Net income isanticipated to total about 92 billion yen, up 39 percent whencompared with fiscal 1999 net income excluding the tax effects. On a parent company alone basis, sales for fiscal 2000 areexpected to stay at approximately 4,600 billion yen, nearly levelwith fiscal 1999, while operating profit is forecast to rise 5percent to approximately 84.5 billion yen. Recurring profit isprojected to increase 2 percent to approximately 125 billion yen,and net income is estimated to increase 34 percent toapproximately 83 billion yen. Statements made in the Outlook for Fiscal Year 2000 sectionand other statements herein that are not historical facts areforward-looking statements about the future performance ofMatsushita and its group companies which are based onmanagement's assumptions and beliefs in light of informationcurrently available to it and involve risks and uncertainties.Actual results may differ materially from these forecasts.Potential risks and uncertainties include, but are not limitedto: general economic conditions in Matsushita's major markets,particularly Japan and elsewhere in Asia, the United States andEurope; general consumer spending; rapid exchange ratefluctuations, particularly between the yen and U.S. dollar, euroand other currencies in which Matsushita makes significant salesor in which Matsushita's assets and liabilities are denominated;direct and indirect restriction by other countries of imports, orexchange or other limitations imposed by other countries in whichMatsushita conducts significant production and marketingoperations; and fluctuation in market prices of securities ofwhich Matsushita has substantial holdings. Matsushita Electric Industrial Co., Ltd. is one of the world'sleading producers of electronic and electric products forconsumer, business and industrial use, which it markets aroundthe world under the "Panasonic," "National," "Technics" and"Quasar" brand names. Matsushita's shares are listed outsideJapan on the Amsterdam, Dusseldorf, Frankfurt, New York, Pacificand Paris stock exchanges.

Matsushita Electric Industrial Co., Ltd.

and Consolidated Subsidiaries

Financial Summary *

(Year ended March 31)

U.S. Dollars

Yen (billions)

Percentage (millions)

1999

1998

1999/1998

1999Net sales

Y7,640.1

Y7,890.7

97%

$63,668Operating profit

193.7

337.6

57%

1,614Income beforeincome taxes

202.3

355.6

57%

1,686Net income

13.5

93.6

14%

113Net income excludingre-evaluation of netdeferred tax assets

66.3

126.9

52%

553Net income per share, basicper common share

6.48 yen

44.32 yen

5 cents per American DepositaryShare (ADS)

65 yen

443 yen

54 cents Net income per share, dilutedper common share

6.48 yen

41.53 yen

5 cents per ADS

65 yen

415 yen

54 cents

U.S. Dollars

Yen (billions)

(millions)

1999

1998

1999 Capital investment

Y352.4

Y473.6

$2,937 Depreciation

Y366.0

Y360.0

$3,050 R&D expenditures

Y500.0

Y480.5

$4,167 Total assets (at year-end)

Y7,938.2

Y8,563.5

$66,152 Total employees (at year-end)

282,153

275,962 * See notes to consolidated financial statements. Notes to consolidated financial statements: 1. The Company's consolidated financial statements areprepared in conformity with the United States generally acceptedaccounting principles. 2. Fiscal 1999 and 1998 net income figures are aftersubtracting impacts of approximately 52.8 billion yen ($440million) and approximately 33.3 billion yen in the respectiveperiods, attributable to re-evaluations of net deferred taxassets reflecting reductions in Japan's corporate income taxrate. 3. The Company has adopted SFAS No. 130, "ReportingComprehensive Income," from the fiscal year beginning April 1,1998. In calculating comprehensive income (loss), the Company hasnot applied SFAS No.115 in accounting for certain investments indebt and equity securities. Comprehensive income (loss) includesnet income (loss) and increases (decreases) in cumulativetranslation adjustments. For the fiscal year ended March 31,1999, comprehensive loss totaled 108.7 billion yen ($906million), compared with comprehensive income of 104.1 billion yena year ago. 4. The Company has not applied SFAS No.115. If SFAS No.115 hadbeen adopted as of March 31, 1999 and March 31, 1998, thecarrying amounts of marketable securities and investments andadvances in the aggregate would increase by 197.6 billion yen($1,647 million) and 173.8 billion yen, and stockholders' equitywould increase by 109.1 billion yen ($909 million) and 83.6billion yen, on the respective dates, on the Company's balancesheet. If SFAS No.115 had been adopted for the fiscal year endedMarch 31, 1999, comprehensive loss would amount to 83.2 billionyen ($693 million), compared with comprehensive income of 41.6billion yen a year ago. In this case, comprehensive income (loss)includes net income (loss), increases (decreases) in cumulativetranslation adjustments and unrealized holding gains (loss) ofavailable-for-sale securities. 5. Number of consolidated companies: 326 6. Number of companies reflected by the equity method: 59 7. United States dollar amounts are translated for convenienceat th rate of U.S. $1.00 = 120 yen, the approximate rate on theTokyo Foreign Exchange Market on March 31, 1999.

Matsushita Electric Industrial Co., Ltd.

Consolidated Statement of Income *

(Year ended March 31)

U.S. Dollars

Yen (millions)

(millions)

1999

1998

1999 Net sales

Y7,640,119

Y7,890,662

$63,668 Cost of sales

(5,346,914)

(5,494,746)

(44,558) Selling, general and administrative expenses

(2,099,521)

(2,058,358)

(17,496) Operating profit

193,684

337,558

1,614 Other income (deductions): Interest and dividend income

64,295

68,164

536 Interest expense

(62,083)

(61,573)

(517) Other income (loss), net

6,397

11,475

53 Income before income taxes

202,293

355,624

1,686 Provision for income taxes

(175,450)

(234,849)

(1,462) Minority interests

(7,632)

(25,777)

(64) Equity in earnings of associated companies

(5,670)

(1,394)

(47) Net income

Y13,541

Y93,604

$113 (Parentheses indicate expenses or deductions.)

Consolidated Quarterly Sales and Net Income (Loss) *

Yen

U.S. Dollars Sales:

(millions)(millions) 1st quarter ended June 30, 1998

Y1,875,846

$15,632 2nd quarter ended Sept. 30, 1998

2,015,996

16,800 3rd quarter ended Dec. 31, 1998

1,938,354

16,153 4th quarter ended March 31, 1999

1,809,923

15,083 Year total

Y7,640,119

$63,668 Net income (loss): 1st quarter ended June 30, 1998

Y11,116

$93 2nd quarter ended Sept. 30, 1998

(1,608)

(13) 3rd quarter ended Dec. 31, 1998

20,295

169 4th quarter ended March 31, 1999

(16,262)

(136) Year total

Y13,541

$113 * See notes to consolidated financial statements.

Matsushita Electric Industrial Co., Ltd.

Consolidated Balance Sheet *

(As of March 31)

U.S. Dollars

Yen (millions)

(millions) Assets

1999

1998

1999 Current assets: Cash

Y1,529,584

Y1,906,226

$12,746 Marketable securities 128,328

130,204

1,069 Trade receivables (notes and accounts) 1,321,303

1,349,520

11,011 Inventories

1,018,663

1,101,613

8,489 Other current assets 411,428

437,006

3,429 Total current assets 4,409,306

4,924,569

36,744 Noncurrent receivables 276,311

282,838

2,303 Investments and advances 1,279,828 1,329,180

10,665 Property, plant and equipment, net of accumulated depreciation

1,493,551

1,521,867

12,446 Other assets

479,252

505,058

3,994 Total assets

Y7,938,248

Y8,563,512

$66,152 Liabilities and Stockholders' Equity Current liabilities: Short-term borrowings Y650,147

Y1,026,301

$5,418 Trade payables (notes and accounts)

635,351

679,499

5,294 Other current liabilities

1,305,441

1,324,418

10,879 Total current liabilities

2,590,939

3,030,218

21,591 Long-term liabilities

1,205,174

1,145,546

10,043 Minority interests

609,080

617,634

5,076 Common stock

209,444

209,416

1,745 Capital surplus

567,696

570,628

4,731 Retained earnings

2,910,932

3,022,578

24,258 Cumulative translation adjustments

(154,765)

(32,508)(1,290) Treasury stock

(252)

--

(2) Total liabilities and stockholders' equity Y7,938,248

Y8,563,512

$66,152 * See notes to consolidated financial statements.

Matsushita Electric Industrial Co., Ltd.

Consolidated Sales Breakdown * **

(Year ended March 31)

U.S.Dollars

Yen (billions)

Percentage(millions)

1999

1998

1999/1998

1999 Consumer products Video and audio equipment

Y1,894.8 Y1,885.3

101%

$15,791Home appliances andhousehold equipment 1,394.3

1,473.8

95%

11,619 Subtotal

3,289.1

3,359.1

98%

27,410 Industrial products Information and communications equipment

2,149.8

2,264.4

95%

17,915 Industrial equipment 716.8

700.8

102%

5,973 Subtotal

2,866.6

2,965.2

97%

23,888 Components

1,484.4

1,566.4

95%

12,370 Total

Y7,640.1

Y7,890.7

97%

$63,668 Domestic sales

3,752.1

3,891.0

96%

31,268 Overseas sales

3,888.0

3,999.7

97%

32,400 [Domestic/Overseas Sales Breakdown] (in yen only)

Yen (billions)

Yen (billions)

Domestic Sales

Percentage Overseas SalesPercentage

1999

1999/1998

1999 1999/1998 Consumer products Video and audio equipment

Y693.9

104%

Y1,200.9

98% Home appliances and household equipment

1,040.9

96%

353.4

92% Subtotal

1,734.8

99%

1,554.3

97% Industrial products Information and communications equipment

885.1

97%

1,264.7

94% Industrial equipment

475.0

97%

241.8

114% Subtotal

1,360.1

97%

1,506.5

96% Components

657.2

89%

827.2

100% Total

Y3,752.1

96%

Y3,888.0

97% * See Details of Product Categories. ** See notes to consolidated financial statements. Details of Product Categories Consumer Products Video and audio equipment:

(video cassette recorders, video camcorders, TVs, TV/VCRcombination units, DVD players, satellite broadcast receivers,radios, radio/cassette stereos, portable headphone players, CDand MD players, stereo hi-fi equipment, electronic musicalinstruments, 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-watersupply 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 andLCD displays, hard disk drives, CD-ROM, DVD-ROM/RAM and otheroptical disk drives, CATV systems, AV systems for commercial andindustrial 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 audioand car navigation equipment, etc.) Components (semiconductors, cathode-ray tubes, printed circuit boards,PDP and LCD devices, tuners, capacitors, other generalcomponents, speakers, magnetic recording heads, electric motors,compressors, dry batteries, storage batteries, etc.)

Matsushita Electric Industrial Co., Ltd.

Consolidated Information by Segments *

(Year ended March 31) By Business Segment:

U.S. Dollars

Yen (billions)

Percentage (millions) [Sales]

1999

1998

1999/1998

1999 Consumer products Y3,296.0

Y3,365.7

98%

$27,467 Industrial products 2,874.8

2,970.6

97%

23,957 Components

2,245.7

2,334.5

96%

18,714 Subtotal

8,416.5

8,670.8

97%

70,138 Corporate and elimination

(776.4)

(780.1)

--

(6,470) Consolidated total Y7,640.1

Y7,890.7

97%

$63,668 [Operating Profit] Consumer products

Y90.7

Y99.6

91%

$756 Industrial products

153.5

222.4

69%

1,279 Components

18.3

85.9

21%

152 Subtotal

262.5

407.9

64%

2,187 Corporate and elimination

(68.8)

(70.3)

--

(573) Consolidated total Y193.7

Y337.6

57%

$1,614 By Domestic and Overseas Company Location:

U.S. Dollars

Yen (billions)

Percentage (millions) [Sales]

1999

1998

1999/1998

1999 Japan

Y5,966.0

Y6,256.2

95%

$49,717 Americas

1,160.3

1,100.0

105%

9,669 Europe

767.2

641.7

120%

6,393 Asia and others

1,333.0

1,382.1

96%

11,109 Subtotal

9,226.5

9,380.0

98%

76,888 Corporate and elimination(1,586.4)

(1,489.3)

--

(13,220) Consolidated total

Y7,640.1

Y7,890.7

97%

$63,668 [Operating Profit] Japan

Y194.0

Y325.6

60%

$1,617 Americas

6.7

11.2

60%

56 Europe

11.1

14.7

76%

92 Asia and others

51.4

51.6

100%

428 Subtotal

263.2

403.1

65%

2,193 Corporate and elimination (69.5)

(65.5)

--

(579) Consolidated total

Y193.7

Y337.6

57%

$1,614 * See notes to consolidated financial statements. Please Note: The following are financial statements on a parent companyalone basis, and should not be confused with consolidatedresults.

Matsushita Electric Industrial Co., Ltd.

(Parent Alone)

Statement of Income

(Year ended March 31)

Yen (millions)Percentage

1999

19981999/1998 Net sales

Y4,597,561

Y4,874,526

94% Cost of sales

(3,816,977)

(4,015,887) Selling, general and administrative expenses (700,047)

(735,225) Operating profit

80,536

123,413

65% Interest and dividend income

75,586

72,916 Other income

25,359

23,671 Interest expense

(27,503)

(27,211) Other expenses

(31,232)

(36,438) Recurring profit

122,746

156,350

79% Non-recurring profit (loss)

(3,526)

(3,647) Income before taxes

119,219

152,703

78% Provision for income taxes

(57,200)

(61,500) Net income

Y62,019

Y91,203

68% Unappropriated retained earnings at beginning of period

40,852

40,577 Reversal of reserve for purchase of own shares

98,883

-- Purchase of own shares

(98,883)

-- Interim dividend

(13,102)

(13,201) Appropriation of legal reserve

(1)

(229) Unappropriated retained earnings at end of period

89,767

118,350 Notes: 1. In accordance with the Regulations concerning CorporateFinancial Statements under the Japanese Commercial Code, amountsless than 1 million yen have been omitted. 2. From fiscal 1999, the local enterprise tax previouslyincluded in selling, general and administrative expenses has beentransferred to provision for income taxes, without retroactiverestatement for the prior year, to conform to a revision inJapanese corporate accounting standards. In fiscal 1999, thelocal enterprise tax totaled 14.1 billion yen, as compared with17.2 billion yen a year ago. 3. Net income per common share:

1999

1998

Basic

29.67 yen

43.18 yen

Diluted

28.24 yen

40.49 yen

Matsushita Electric Industrial Co., Ltd.

(Parent Alone)

Balance Sheet

(As of March 31)

Yen (millions)

1999

1998 Assets Current assets: Cash

Y633,932

Y951,209 Trade receivables (notes and accounts)

651,676

663,638 Inventories

210,786

231,487 Other current assets

110,184

119,498 Total current assets

1,606,579

1,965,834 Fixed assets: Tangible fixed assets

343,808

332,934 Intangibles

12,046

14,581 Investments and advances

2,203,426

2,115,523 Total fixed assets

2,559,281

2,463,039 Total assets

Y4,165,861

Y4,428,873 Liabilities and Shareholders' Equity Current liabilities: Trade payables (notes and accounts)

Y574,640

Y608,415 Accrued income taxes

38,190

32,896 Other current liabilities

645,514

831,072 Total current liabilities

1,258,345

1,472,385 Long-term debt and employee retirement and severance benefits

531,101

516,672 Total liabilities

1,789,447

1,989,057 Shareholders' equity: Capital

209,444

209,416 Statutory reserves

292,085

292,049 Retained earnings

1,874,884

1,938,350 Total shareholders' equity

2,376,413

2,439,815 Total liabilities and shareholders' equity

Y4,165,861

Y4,428,873

Matsushita Electric Industrial Co., Ltd.

(Parent Alone)

Proposed Allocation of Income

(Year ended March 31)

Yen (millions)

1999

1998 Unappropriated retained earnings at end of period

Y89,767Y118,350 Reversal of reserve for purchase of own shares

1,116

-- Reversal of contingency reserve

--

36,000 Total

90,884

154,350 To be allocated as follows: Statutory reserve

5

6 Year-end dividend

15,982

13,201 (per common share)

(7.75 yen)

(6.25yen) Directors' bonuses

240

270 Corporate auditors' bonuses

18

20 Reserve for purchase of own shares

--

100,000 Contingency reserve

34,000

-- Unappropriated retained earnings carried forward to next period

40,639

40,852

ots Original Text Service: Matsushita Electric IndustrialCo., Ltd. Internet: http://www.newsaktuell.de Contact: AkihiroTakei Panasonic Finance (America), Inc. Tel.: (in the USA) 212-371-5447

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