Press Release
January 30, 2008
Victor Company of Japan, Ltd.
Funai Electric Co., Ltd.
Notice of Basic Agreement concerning a Business Alliance between Victor
Company of Japan and Funai Electric

Victor Company of Japan, Ltd., known as JVC, and Funai Electric Co., Ltd., known as
Funai Electric, have reached and signed a basic agreement today to implement awide-ranging business alliance between their two companies centered on display
equipment in the video equipment business sector. The details are as follows.
Under this alliance, the two companies will operate cooperative business, including
joint development, mutually contracted development, joint production and mutuallycontracted production in the display equipment and multifunction video equipment
businesses.
The partnership aims to effectively use and mutually complement the management
resources of both companies, to capitalize on economies of scale through businesscooperation, and to strengthen their management infrastructure in the video equipment
business.
JVC and Funai Electric believe that this business alliance will contribute tostrengthening the business infrastructure and competitiveness of their video equipment
business as part of the larger framework of the capital and business alliance andmanagement integration of JVC and Kenwood Corporation, which is already under way.

1. Objectives of the Alliance
Both JVC and Funai Electric are working to strengthen respective managementfoundations in order to cope with intensifying competition on a global scale in theelectronics industry. As part of such efforts, both companies have been considering
ways to strengthen their video equipment businesses through alliances with othercompanies, while benefiting from each company’s unique strengths.
The two companies arrived at a basic agreement through common understandingthat a comprehensive business alliance focusing on display equipment in the video
equipment segment, part of the core business of both companies, would be an effective
way to mutually complement the strengths of respective management resources andcreate new synergy effects and economies of scale.

1

Funai Electric is strengthening its globally-optimized production system through costcompetitiveness achieved by its unique “Funai Production System (FPS)” and mass
production technology, and selling its products in popular price ranges primarily in themarkets of the Americas. On the other hand, JVC is operating its worldwide business ofhigh value-added products utilizing high resolution technology, focusing also onmarkets in Japan and Europe.
Under the alliance, the partners will exploit each other’s strengths and expertise asaudio-visual equipment manufacturers to benefit from concentrated production
achieved by mutual sharing of the European and American production bases. They willcomplement and enhance the product mix in different price ranges and regions throughmutual supply of products offering unique features each can provide. The companies
will improve development efficiency and reduce investment costs through joint platform
development for digital video equipment, and take advantage of the cooperative efforts
in other ways over a wide spectrum of areas.

2. Major Points in the Agreement on the Comprehensive Business Alliance(1) Business Segments Covered by the Alliance1) Display equipment business2) Multifunction video equipment, other video equipment businesses(2) Operations in the Business Alliance
1) Joint production and mutually contracted production(i) Production of products for the Americas contracted to JVC by Funai Electric・Funai Electric will entrust the production of LCD televisions with and without
built-in DVD players to JVC’s factory for the Americas in Mexico, which will beginby February 2008.
(ii) Production of products for Europe contracted to Funai Electric by JVC・JVC will entrust the production of LCD televisions to Funai Electric ’s Europeanfactory in Poland, which will begin by the first half of 2008.
2) Joint development and mutually contracted development(i) Development of LCD televisions contracted to JVC by Funai Electric・Funai Electric will entrust the development of LCD televisions to be sold primarilyin Europe to JVC by June 2008.
(ii) Joint development of LCD televisions for JVC・The two companies will jointly develop LCD televisions to be sold by JVC
primarily in Europe and Americas, and Funai Electric will launch the productionof these by the second half of 2008.
(3) Other important considerations
1) Joint purchasing: Promote a joint purchasing strategy to maximize synergy effects
such as reduction of raw material costs and strengthening of purchasing power.
2) Logistic cooperation: Promote sharing of distribution infrastructure to maximize
synergy effects such as reduction of distribution costs and improvement of supplychains.
23) Cooperation for production technology: Promote cooperation in production
technology to further increase the manufacturing capacity.
4) Cooperation in after-sales service: Promote cooperation in after-sales service toimprove customer satisfaction.
5) Cooperation in environmental protection: Promote cooperation in environmental
protection to improve environmental management.
3. Capital and Business Alliance between Victor Company of Japan, Ltd. andKenwood Corporation
JVC concluded a capital and business alliance agreement with Kenwood Corporation
on July 24, 2007, and the two companies have been making specific plans formanagement integration. Within the larger framework of the management integration
between JVC and Kenwood, the new business alliance between JVC and Funai Electricaims to improve the business infrastructure and competitiveness of JVC and Funai
Electric, focusing on display equipment in their video equipment business.

4．Overview of Victor Company of Japan, Ltd.
(1) Name:
Victor Company of Japan, Ltd.
(2) Major Business Operations: Production, manufacture, and sale of audio and video
equipment, information and communications equipment, and playback media and recorded media
for audio, video, data, etc.
(3) Date of establishment:
September 13, 1927
(4) Location of Head Office:Yokohama City, Kanagawa Prefecture(5) Executive officer:
Representative Director, Kunihiko Satoh(6) Capital:
51,615 million yen(7) No. of employees: Non-consolidated:6,452
Consolidated: 25,540（domestic: 8,083, overseas: 17,457）(8) Large shareholder structure and shareholding ratio (as of September 30, 2007）
Matsushita Electric Industrial Co., Ltd.
36.81％
Kenwood Corporation
17.00％(9) Relationship with Funai Electric Co. Ltd.: Victor Company of Japan has no capital
relationship or human relationship with Funai Electric.
(10) Schedule
January 30, 2008
Board of Directors Resolution
January 30, 2008
Signing of the Basic Agreement(11) Future Outlook
This alliance will have little effect on the settlement of accounts for the Fiscal Year ending
March 2008.

5．Overview of Funai Electric Co., Ltd.
(1)
(2)
(3)
(4)

Name:
Funai Electric Co., Ltd.
Major Business Operations: Manufacture and sale of electrical equipment and machinery
Date of establishment:
August 9, 1961
Location of Head Office:Daitoh City, Osaka Prefecture
3

(5)
(6)
(7)

Executive officer:
Capital:No. of employees:

President and CEO, Tetsuro Funai
31,278 million yen
Non-consolidated: 1,213
Consolidated: 15,296（domestic:1,838, overseas: 13,458）※Includes 12,330 contract manufacturing factory employees.
(8) Large shareholder structure and shareholding ratio (as of September 30, 2007）
Tetsuro Funai
35.5％
4.8％
Tetsuo Funai(9) Relationship with Victor Company of Japan, Ltd.: Funai Electric has no capital relationship orhuman relationship with Victor Company of Japan.
(10) Schedule
January 30, 2008
Board of Directors Resolution
January 30, 2008
Signing of the Basic Agreement(11) Future Outlook
The effect of this partnership on business results is unknown at this stage. However, in thefuture we will factor in expected results according to the progress of this business partnership.

##For further information, please contact:
For JVC
Toshiya Ogata, Senior Staff Manager,
Public Relations Office
Corporate Communications Department
Victor Company of Japan, Limited (JVC)
Tel: +81-(0)45-450-2951, 2952
Fax: +81-(0)45-450-2959
E-mail: ogata-toshiya@jvc-victor.jp
URL: www.jvc.jp/english
For Funai Electric
Mutsuo Takei, General Manager
Investor/Public Relations Department
Funai Electric Co., Ltd.
Tel: +81-(0)72-870-4395, +81-(0)3-3254-5612
Fax: +81-(0)72-874-8027, +81-(0)3-3254-0168
E-mail: tky-takei@funai.co.jp
URL: www.funai.jp/GLOBAL

4#