Press Release
April 9, 2007
To Whom It May Concern:

Funai Electric Co., Ltd.
Representative: Tetsuro Funai, President and CEO(Code No.: 6839 1st section of TSE/OSE)
Inquires: Naoyuki Takanaka
Investor / Public Relations Department(Tel: 81-72-870-4395)

Notice Concerning Accounting Treatment of Supplementary TaxAssessment Amount
The Funai Electric Co., Ltd. group has carried out its business activities overseas by utilizing its global
logistics hub in Hong Kong. On June 28, 2005, the Osaka Regional Taxation Bureau ordered theimposition of a supplementary tax assessment against Funai Electric Co., Ltd. (the “Company”),allegedly pursuant to the provisions of the Special Taxation Act Concerning Tax Havens. Theassessment amounted to 19.1 billion yen (including incidental taxes) covering the business activities of
the Company's subsidiaries in Hong Kong during the past three years. Considering this tax order to be
an unreasonable tax assessment it cannot accept, the Company followed the procedures to file apetition of its objections, and currently is seeking to overturn the supplementary tax assessment order inthe Osaka District Court. Because the Company believes its tax handling will be identified as clearlyproper during the court’s hearing of the case, and believes the court will rule in the Company’s favor,
the Company has accounted for these additional taxes as “long-term suspense payments of incometaxes” on its consolidated balance sheet since the interim accounting period ended September 30, 2005.
This accounting treatment has received an audit report of unqualified opinion from MISUZU Audit
Corporation (formerly Chuo Aoyama Price Waterhouse Coopers), the Company’s independent auditors.
In an action pertinent to this accounting treatment, on March 8, 2007 The Japanese Institute of Certified
Public Accountants (Auditing and Assurance Practice Committee) issued Audit Committee Report No.
63 “Accounting Practices, Disclosure and Audit Treatment for Various Taxes.” The Report clarified theprocedure for, as a rule, accounting for supplementary tax assessments in the business fiscal year
when the supplementary assessment is received. As a result of repeated consultations with MISUZU
Audit Corporation regarding the clarifying statement, the Company will reverse the “long-term suspense
payments of income taxes” described above, and book the amount as “prior fiscal year corporation
taxes etc.” for the current consolidated fiscal year, in accordance with the recently released Committee
Report No. 63. Although the effect of this change will substantially reduce the Company’s current year
net income, the change will have a one-time effect in conjunction with the revision of the accounting
treatment for supplementary tax assessments.

The accounting treatment described above does not have any relationship to the Company’s policy
concerning the complaint for rescission of the supplementary tax order currently being heard by thecourt, and the Company will continue to assert the correctness of its position, through its lawsuit orother means in the future.
The Company presently is carefully examining its operating results for the consolidated fiscal year
ended on March 31, 2007, and will release the results as soon as they are finalized. There is no change
to the details of the Company’s dividend policy described in the Brief Statement of Account released onNovember 8, 2006.
End