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

OSAKA, Japan (PROTEXT) - Matsushita Electric Industrial Co.,Ltd. (NYSE: MC; PCX) today reported its consolidated financialresults for the fiscal second quarter and first half, endedSeptember 30, 1999, and non- consolidated (parent company alone)results for the fiscal first half. Consolidated Second-quarter Results Consolidated group sales for the second quarter decreased 9%to 1,837.3 billion yen (U.S.$17.17 billion), from 2,016.0 billionyen in the same period a year ago. This decrease reflects thecurrent Japanese economic environment, continued sluggish demandin emerging countries and the adverse effects of the strong yen. The Company's second-quarter domestic sales were 902.7 billionyen ($8.44 billion), down 4% from the comparable quarter a yearago, despite moderate signs of recovery in several product linesin Industrial products and Components. Overseas sales decreased13% to 934.6 billion yen ($8.74 billion), due to a setback insales in the CIS, Latin America and China and the negative effectof the yen's higher exchange rate when translating overseas salesinto domestic currency for consolidation. Consolidated operating profit for the second quarter decreased30% to 50.8 billion yen ($475 million), from 72.5 billion yen ayear ago. Despite efforts to reduce production costs and improveoverall efficiency, operating profit declined due to a salesdecrease, lower product prices, and a strong yen. However,consolidated income before income taxes increased 82% to 51.2billion yen ($479 million), compared to 28.1 billion yen in thesame quarter a year ago, when the Company incurred a one-timenon-operating loss of 46.5 billion yen on valuation of investmentsecurities. Improvement in equity earnings of associatedcompanies also contributed to net income, which increased to 24.5billion yen ($229 million) compared to a net loss of 1.6 billionyen in the same quarter a year ago. Consolidated net income per common share for the secondquarter was 11.40 yen ($1.07 per American Depositary Share (ADS),each representing 10 shares of common stock), compared to a netloss per common share of 0.59 yen for the same period a year ago,both on a diluted basis. Consolidated First-half Results Consolidated group sales for the first half decreased 8% to3,592.7 billion yen ($33.58 billion) from 3,891.8 billion yen inthe same six- month period a year ago, reflecting theaforementioned market factors and a strong yen. Domestic salesslipped 3% to 1,755.9 billion yen ($16.41 billion), whileoverseas sales declined 12% to 1,836.8 billion yen ($17.17billion). First-half operating profit decreased 38% to 65.2 billion yen($609 million), compared to 105.6 billion yen for the same perioda year ago. Primarily due to the previous year's non-operatingloss on valuation of investment securities, income before incometaxes increased 28% to 84.3 billion yen ($788 million) comparedto 65.8 billion yen a year ago, and net income increased by 258%to 34.1 billion yen ($318 million) from 9.5 billion yen in thesame period last year. Consolidated net income per common share on a diluted basisfor the six- month period was 15.95 yen ($1.50 per ADS), comparedto 4.51 yen for the same period a year ago. Consolidated First-half Sales Breakdown by Product Category The Company's first-half consolidated sales by major productcategories are summarized as follows: Consumer Products Sales of Consumer products decreased 11% to 1,488.5 billionyen ($13.91 billion) compared to the previous year's first half.Sales of video and audio equipment declined 13%. Althoughdomestic and overseas sales of DVD players increased, stagnantsales of TVs and VCRs in the CIS, China, and the rest of Asiareduced sales in this category. Sales of home appliances and household equipment fell by 9%,reflecting continued sluggish demand in the domestic and overseasmarkets. However, the Company's "product firsts" such as thecentrifugal washing machine and the high powered, energy savingvacuum cleaner continued to receive favorable response in Japan. Industrial Products Sales of Industrial products for the first half were 1,351.5billion yen ($12.63 billion), down 7% from the same period lastyear. Sales of information and communications equipment declinedby 10% despite continued growth in mobile communications productssuch as cellular phones and personal computers. This decline wascaused mainly by sharp price decreases in computer peripherals,such as CRT display monitors and hard disk drives. Sales of Industrial equipment, driven by continued stronggrowth of car AV equipment in both the domestic and overseasmarkets, increased 3% over last year. Components Although sales of Components edged down 1% to 752.7 billionyen ($7.04 billion), several product lines, specificallysemiconductors, liquid crystal display panels, and compressorsfor use in air conditioners achieved double- digit sales growth. Non-consolidated (Parent Company alone) First-half Results First-half parent company sales decreased 5% to 2,200.7billion yen, from 2,312.1 billion yen a year ago, for virtuallythe same reasons as the consolidated results. Domestic salesdecreased 2% to 1,432.5 billion yen, while exports dropped 10% to768.1 billion yen. Parent company operating profit decreased 9% to 30.6 billionyen, from 33.7 billion yen in the first half of 1998, withrecurring profit decreasing 15% to 51.1 billion yen, from 59.8billion yen. Parent company net income for the first halfincreased 373% to 36.7 billion yen, compared to 7.8 billion yenin the same period a year ago. This increase is due mainly to anon-recurring loss on valuation of investment securities, whichthe Company incurred in the first half of last year, and to theimplementation of tax effect accounting in accordance with arevision in Japanese accounting rules. Parent company net income per common share (basic) was 17.79yen for the first six months, compared with 3.68 yen a year ago. Interim Dividend The Matsushita Board of Directors voted today to distribute aninterim cash dividend of 6.25 yen per common share, payableDecember 10, 1999, to shareholders of record on September 30,1999. Outlook for the Full Fiscal Year 2000 Matsushita announced today a revision of its earlier forecastsfor consolidated and non-consolidated sales and earnings for thecurrent fiscal year, ending March 31, 2000. Given the currentconditions, the Company expects annual consolidated sales todecrease 4% from the last fiscal year, to about 7,300 billionyen. Annual consolidated operating profit is forecast to decline15%, to about 164 billion yen. Consolidated pre-tax income for fiscal 2000 is anticipated toincrease 11%, to approximately 225 billion yen. The projectedincrease in pre-tax income includes the effect of non-operatingprofit on the sale of shares in EPCOS AG in Germany in whichMatsushita holds a minority equity interest. EPCOS AG, aspreviously announced, went public in October 1999. Annual consolidated net income is expected to total about 95billion yen, up 604%, compared to the previous year's net incomeof 13.5 billion yen. Fiscal 1999 net income includes a 52.8billion yen deduction, adjusting net deferred tax assets toreflect a reduction in Japan's corporate income tax rate.Excluding this tax effect, annual net income is projected toincrease 43% compared to the previous fiscal year. On a parent company alone basis, sales for fiscal 2000 areexpected to decrease 2% to approximately 4,520 billion yen.Parent company annual operating profit is projected to decrease7% to approximately 75 billion yen, and recurring profit todecrease 9% to approximately 112 billion yen. Parent companyannual net income is expected to increase 23% to approximately 76billion yen. Statements made in the Outlook for the Full Fiscal Year 2000and 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 restrictions by other countries of imports,or exchange or other limitations imposed by other countries inwhich Matsushita conducts significant production and marketingoperations; fluctuation in market prices of securities of whichMatsushita has substantial holdings; and Matsushita's ability tomaintain its strength in many product and geographical areas,through such means as new product introductions, in a market thatis 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'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, Pacific,and Paris stock exchanges.

Notes to consolidated financial statements:

1.

The Company's consolidated financial statements areprepared in conformity with United States generally acceptedaccounting principles.

2.

The Company has not applied SFAS No.115 in accountingfor certain investments in debt and equity securities. If SFASNo.115 had been adopted as of September 30, 1999, and March 31,1999, the combined carrying amounts of marketable securities andinvestments and advances would increase by 259.7 billion yen($2,427 million) and 197.6 billion yen, respectively.Stockholders' equity would also increase by 145.7 billion yen($1,362 million) and 109.1 billion yen, on the respective dates.

3.

For the fiscal first half ended September 30, 1999,comprehensive loss totaled 43.1 billion yen ($403 million), ascompared with comprehensive loss of 1.8 billion yen a year ago.In calculating comprehensive income (loss), the Company hasapplied SFAS No.115. Comprehensive income (loss) includes netincome, increases (decreases) in cumulative translationadjustments, and unrealized holding gains of available-for-salesecurities.

4.

Number of consolidated companies: 327

5.

Number of companies reflected by the equity method: 60

6.

United States dollar amounts are translated from yenfor convenience at the rate of U.S. $1.00 = 107 yen, theapproximate rate on the Tokyo Foreign Exchange Market onSeptember 30, 1999.

7.

Each American Depositary Share (ADS) represents 10shares of common stock.

Matsushita Electric Industrial Co., Ltd.

Consolidated Statement of Income *

(Three Months Ended September 30)

Yen

U.S.Dollars

(millions)

Percentage(millions)

1999

1998

1999/19981999 Net sales

Y1,837,286 Y2,015,996

91%$17,171 Cost of sales (1,305,343) (1,414,186)(12,199) Selling, general and

administrative

expenses

(481,138)

(529,290)(4,497) Operating profit 50,805

72,520

70%475 Other income (deductions): Interest income 9,799

15,38292 Dividend income 3,225

51430 Interest expense (11,459)

(15,548)(107) Loss on valuation of

investment securities(2,670) (46,521)(25) Other income (loss), net

1,533

1,778

14 Income before income taxes

51,233 28,125

182%

479 Provision for

income taxes

(22,845) (20,716)

(214) Minority interests

(8,777) (8,003)

(82) Equity in earnings (losses)

of associated companies

4,903 (1,014)

46 Net income (loss)

Y24,514 Y(1,608)

--

$229 Net income (loss)

per share, basic

per common share 11.89 yen (0.75) yen

11 cents

per American Depositary

Share(ADS)

119 yen

(8) yen

1.11dollars Net income (loss) per share, diluted

per common share 11.40 yen (0.59) yen

11 cents

per ADS

114 yen

(6) yen

1.07dollars (Parentheses indicate expenses or deductions.) * See notes to consolidated financial statements.

Supplementary Information

(Three months ended September 30)

Yen

U.S. Dollars

(millions)

(millions)

1999

1998

1999 Depreciation:

Y92,326

Y92,289

$863 Capital investment: Y87,404

Y103,449

$817 R&D expenditures: Y134,577

Y127,407

$1,258

Matsushita Electric Industrial Co., Ltd.

Consolidated Statement of Income *

(Six Months Ended September 30)

Yen

U.S.Dollars

(millions)

Percentage (millions)

1999

1998

1999/1998

1999 Net sales Y3,592,692

Y3,891,842

92%

$33,577 Cost of sales (2,547,047) (2,720,264)

(23,804) Selling, general and

administrative

expenses

(980,489)

(1,065,937)

(9,164) Operating profit 65,156

105,641

62%

609 Other income (deductions): Interest income 20,137

30,124

188 Dividend income 8,019

5,359

75 Interest expense (23,588)

(32,215)

(220) Loss on valuation of

investment securities (2,670)(46,521)

(25) Other income, net 17,218

3,396

161 Income before

income taxes

84,272

65,784

128%

788 Provision for

income taxes

(42,053) (41,944)

(393) Minority interests (15,742) (9,819)

(147) Equity in earnings (losses)

of associated companies

7,589

(4,513)

70 Net income

Y34,066

Y9,508

358%

$318 Net income per share, basic

per common share 16.52 yen 4.51 yen

15 cents

per ADS

165 yen

45 yen

1.54dollars Net income per share, diluted

per common share 15.95 yen 4.51 yen

15 cents

per ADS

160 yen

45 yen

1.50dollars (Parenthesis indicate expenses or deductions.) * See notes to consolidated financial statements.

Supplementary Information

(Six months ended September 30)

YenU.S.Dollars

(millions)(millions)

1999

1998

1999 Depreciation: Y178,201

Y179,996

$1,665 Capital investment: Y155,689 Y183,468

$1,455 R&D expenditures:

Y262,513 Y250,453

$2,453 Total employees (September 30):

290,436 284,720

Matsushita Electric Industrial Co., Ltd.

Consolidated Balance Sheet *

September 30, 1999

With Comparative Figures for March 31, 1999

Yen

U.S. Dollars

(millions)

(millions)

Sept. 30, 1999

March 31, 1999 Sept. 30, 1999 Assets Current assets: Cash

Y1,519,891

Y1,529,584

$14,204 Marketable securities

141,774

128,328

1,325 Trade receivables

(notes and accounts)

1,239,274

1,321,303

11,582 Inventories 995,307

1,018,663

9,302 Other current assets

438,667

411,428

4,100 Total current assets

4,334,913

4,409,306

40,513 Noncurrent receivables

279,806

276,311

2,615 Investments and advances

1,293,842

1,279,828

12,092 Property, plant and equipment, net of

accumulated depreciation

1,435,180

1,493,551

13,413 Other assets 494,453

479,252

4,621 Total assets Y7,838,194

Y7,938,248

$73,254 Liabilities and Stockholders' Equity Current liabilities: Short-term borrowings

Y661,977

Y650,147

$6,187 Trade payables

(notes and accounts)

591,678

635,351

5,530 Other current liabilities

1,337,007

1,305,441

12,495 Total current liabilities

2,590,662

2,590,939

24,212 Long-term liabilities

1,195,949

1,205,174

11,177 Minority interests

612,707

609,080

5,726 Common stock

209,554

209,444

1,959 Capital surplus 569,374

567,696

5,321 Retained earnings

2,929,016

2,910,932

27,374 Cumulative translation

adjustments (268,528)

(154,765)

(2,510) Treasury stock

(540)

(252)

(5) Total liabilities and

stockholders' equity

Y7,838,194

Y7,938,248

$73,254 * See notes to consolidated financial statements. With respectto SFAS No.115, please refer to note 2.

Matsushita Electric Industrial Co., Ltd.

Consolidated Sales Breakdown * **

(Three Months Ended September 30)

Yen

U.S.Dollars

(billions)

Percentage(millions)

1999

1998

1999/1998

1999 Consumer products Video and audio

equipment Y449.4

Y500.0

90%

$4,200 Home appliances and

household equipment

332.2

362.0

92%

3,105 Subtotal

781.6

862.0

91%

7,305 Industrial products

Information and

communications

equipment 488.2

570.0

86%

4,562 Industrial equipment

188.4

186.9

101%

1,761 Subtotal

676.6

756.9

89%

6,323 Components

379.1

397.1

95%

3,543 Total

Y1,837.3

Y2,016.0

91%

$17,171 Domestic sales 902.7

943.9

96%

8,436 Overseas sales 934.6

1,072.1

87%

8,735

(Six Months Ended September 30)

Yen

U.S.Dollars

(billions)

Percentage (millions)

1999

1998

1999/1998

1999 Consumer products Video and audio

equipment Y841.3

Y964.7

87%

$7,863 Home appliances and

household equipment

647.2

711.5

91%

6,048 Subtotal

1,488.5

1,676.2

89%

13,911 Industrial products Information and

communications

equipment

995.3

1,105.8

90%

9,302 Industrial equipment

356.2

345.8

103%

3,329 Subtotal

1,351.5

1,451.6

93%

12,631 Components

752.7

764.0

99%

7,035 Total

Y3,592.7

Y3,891.8

92%

$33,577 Domestic sales 1,755.9

1,806.8

97%

16,410 Overseas sales 1,836.8

2,085.0

88%17,167

* See details of product categories. ** See notes to consolidated financial statements. [Domestic/Overseas Sales Breakdown for Six Months EndedSeptember 30, 1999] (in yen only)

Yen (billions)

Yen (billions)

Domestic Sales

Percentage Overseas SalesPercentage

1999

1999/1998

19991999/1998 Consumer products

Video and audio

equipment

Y283.3

89%

Y558.087%

Home appliances and

household equipment 482.2

94%

165.082% Subtotal

765.5

92%

723.086% Industrial products

Information and

communications

equipment

434.1

101%

561.283%

Industrial equipment 224.8

103%

131.4104% Subtotal

658.9

101%

692.686% Components

331.5

101%

421.296% Total

Y1,755.9

97%

Y1,836.888%

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 DVD/CD-ROM car navigation equipment, etc.) Components (semiconductors, cathode-ray tubes, printed circuit boards,PDP and LCD devices, tuners, capacitors, other generalcomponents, speakers, electric motors, compressors, drybatteries, storage batteries, etc.) Please Note: The following are financial statements on a parent companyalone basis, and should not be confused with the aforementionedconsolidated results.

Matsushita Electric Industrial Co., Ltd.

(Parent Alone)

Statement of Income * ** ***

Yen (millions)

Six Months Ended

Six Months EndedPercentage

Sept. 30, 1999

Sept. 30, 19981999/1998 Net sales

Y2,200,717

Y2,312,182

95% Cost of sales

(1,860,148)

(1,919,882) Selling, general and

administrative expenses (309,964)

(358,602) Operating profit

30,605

33,697

91% Interest income

6,396

8,178 Dividend income

27,868

36,226 Other income

14,559

12,992 Interest expense

(12,736)

(12,935) Other expenses

(15,611)

(18,351) Recurring profit

51,082

59,807

85% Non-recurring profit

342

-- Non-recurring loss

(403)

(45,555) Income before income taxes 51,020

14,252

358% Provision for income taxes

Current

(25,460)

(6,500)

Deferred

11,130

-- Net income

Y36,690

Y7,752

473% Unappropriated retained earnings

at beginning of period 40,639

40,852 Adjustment for

prior-year tax effects 184,690

-- Unappropriated retained earnings

at end of period

262,019

48,604 (Parentheses indicate expenses or deductions.) * To conform to a revision in Japanese corporate accountingstandards, local enterprise tax previously included in selling,general and administrative expenses has been transferred toprovision for income taxes for the fiscal first half endedSeptember 30, 1999, without retroactive restatement for priorperiods. For the first-half period a year ago, the localenterprise tax totaled 3.5 billion yen. ** Net income per common share, basic

Six Months Ended

Six MonthsEnded

Sept. 30, 1999

Sept. 30,1998

17.79 yen

3.68 yen *** See notes to parent-alone financial statements. END of PART ONE ots Original Text Service: MatsushitaElectric Industrial Co., Ltd. Internet: http://www.newsaktuell.deContact: Akihiro Takei of Panasonic Finance (America), Inc. 212-371-5447

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