Press Release
October 29, 2007
To Whom It May Concern:
Funai Electric Co., Ltd.
Representative: Tetsuro Funai, President and CEO(Code No.: 6839 1st Section of TSE/OSE)
Inquiries: Naoyuki Takanaka(Investor and Public Relations Department
TEL.: 072-870-4395)

Notice Concerning Revised Forecast of Full-Year Results
Funai Electric Co., Ltd. (the “Company”) has revised the forecast of consolidated results for the fullyear announced together with the Brief Settlement of Accounts announcement on May 10, 2007 asfollows.
1. Revised Forecasted Interim Results (April 1, 2007 - September 30, 2007)[Consolidated](Unit: Million Yen)

Interim Period Net
Income (Before
SubsidiaryDividend) Note 1

InterimPeriod Net
IncomeNet Sales

Operating
IncomeOrdinary
IncomePreviously Announced
Forecast (A)200,800

10,80013,000[10,200]

6,100

Revised Forecast (B)156,300

2,000

5,000

[2,000]–4,300

Amount of Increase/Decrease(B-A)– 44,500–8,800–8,000[–8,200]–10,400

Rate of Increase/Decrease
(%)

–22.2

–81.5

–61.5

[–80.4]–(Reference) Results from
Previous Period (Interim
Period of Fiscal Year EndedMar. 2007)

163,151

10,366

12,301[–]6,990

2. Revised Forecasted Fiscal Year Results (April 1, 2007 - March 31, 2008)[Consolidated](Unit: Million Yen)

Full-Year Net
Income (Before
SubsidiaryDividend) Note 1

Interim
Period Net
IncomeNet Sales

Operating
IncomeOrdinary
IncomePreviously Announced
Forecast (A)420,000

22,00026,500[20,100]

16,000

Revised Forecast (B)320,000

4,700

9,700

[7,800]500

Amount of Increase/Decrease(B-A)–100,000–17,300–16,800[–12,300]–15,500

Rate of Increase/Decrease
(%)

–23.8

–78.6

–63.4

[–61.2]–96.9(Reference) Results fromPrevious Period (Fiscal Year
Ended Mar. 2007)

396,712

20,766

26,591[–]

Note 2–3,665

3. Reasons for the Revisions of Consolidated Results Forecast
During the interim period, net sales were substantially lower than forecasted results. Although
Information Equipment net sales were close to the Company’s forecast, net sales of Audio Visual
Equipment experienced a sharp decline. The main factors are discussed below.
(1) Larger than projected reduction in the CRT TV market
In the Funai Group’s key market in the United States, manufacturers are obligated toequip all televisions with built-in digital tuners from March 2007, which has resulted in higher
prices for CRT televisions. Because prices for LCD TVs continue to fall, the CRT TV market
declined at an accelerating pace.
(2) Procurement shortage of panels for LCD televisions
In February 2007, the Funai Group formed a strategic alliance with Taiwan’s Chi Mei
Group, which includes several world-class LCD panel manufacturers, with the objective ofensuring stable procurement of TFT-LCD panels. Because of price issues during actual
procurement, however, the Company decided to focus on another supplier from which it had
purchased CRTs in the past. During this year, however, the supplier has experienced
management difficulties which have hindered procurement from this company. Because ofthe resulting confusion from a procurement perspective, and efforts to procure products fromseveral suppliers, the Funai Group faced a product shortage and ultimately could not obtain
all of the panels it required. As a result, the Company was unable to respond to strong
inquiries from the market.
(3) Weak sales as a result of a decline in the DVD market
In the DVD business, the market continued to shrink rapidly in the U.S., affected by thematuration of the DVD market and buying restraint as consumers await the introduction ofnext-generation DVD players. Net sales of products that connect to VCRs in particular fell
sharply.
As a result of the above factors, operating income also declined sharply. Earnings wereaffected significantly, especially in the LCD TV business, which incurred a loss because of falling
prices for manufactured goods and higher panel prices.
One extraordinary factor was the dissolution of FUNAI ELECTRIC (MALAYSIA) SDN.BHD.,
the Funai Group’s manufacturing subsidiary for CRT TVs, which the Company decided to close
because of the shrinking market for this product. As a result, the Company booked anextraordinary loss of 900 million yen for the interim period in conjunction with the dissolution. Inaddition, the distributable amount of earned surplus was reduced markedly as a result of theCompany’s decision to dispose of the additional tax of 19.1 billion yen pertaining to application ofthe Taxation Act Concerning Tax Havens in the prior period. The Company therefore implemented
dividends totaling 23.9 billion yen to the Company from the dissolved FUNAI ELECTRIC(MALAYSIA) SDN.BHD and from FUNAI ELECTRIC (H.K.) LTD. (HONG KONG) during theinterim period. Although this dividend was a transaction within the consolidated group and theamount was offset and was not shown on the consolidated financial statements, corporate taxesof 6.3 billion yen were generated because of the difference in tax rates between Japan and thecountries where the subsidiaries are located.
Based on the factors taken into consideration for the downward revisions during the interimperiod, the Company has also revised its full-year forecast as shown above.
4. Outlook for the next consolidated fiscal year
In the LCD TV business, the Company has improved its prospects for procurement of LCD
panels as a result of rebuilding the relationship with Chi Mei Group, the world-class Taiwan LCD
panel manufacturer with which the Company formed a strategic alliance. Together with theincrease in net sales, the Company plans to restore this business to profitability.
In the DVD business, the Company expects net sales to recover with the full-scale
introduction of next-generation DVD players to the market, and the Company’s efforts to increase
sales in the European market centered on HDD-equipped recorders.
In the Information Equipment business, the Company expects to increase net sales andearnings based on cooperation with new OEM suppliers.
The Group’s efforts will not stop with these measures aimed at the recovery of its business ineach of these each businesses. In October 2007, the Company created an organization withstronger capabilities for responding to customers’ needs in the Funai Group’s key market in theUnited States, by positioning the existing service department as a subsidiary under the immediate
control of the Head Office.
In other action, to ensure fair competition the Company filed with the U.S. International TradeCommission for an injunction to stop U.S. imports by 14 manufacturers and importers of digital
televisions and other related products, on the grounds of infringement of digital TV-relatedpatents.
Based on these factors, the Company plans to increase total net sales from approximately
380 billion to 400 billion yen.
(Note)
The aforementioned estimates are forward-looking statements about the future performance ofFunai Electric Co., Ltd. and are based on management’s assumptions and beliefs in light ofinformation currently available, and involve known and unknown risks and uncertainties.
Various factors such as a change in economic conditions overseas (especially changes in the main
U.S. market and possible further revaluation of the yuan) and severe price fluctuations may cause
actual events and results to differ materially from those anticipated in these statements.

Note 1 Shows interim period (full-year) net income assuming dividend from subsidiaries was notimplemented.
Note 2 Full year net income as a result of reversing the “long-term suspense payments of incometaxes” for additional taxes based on Report No. 63 Accounting Practices, Disclosure andAudit Treatment for Various Taxes of the Auditing and Assurance Practice Committee of theJapanese Institute of Certified Public Accountants, and disposing of the amount as “priorfiscal year corporation taxes etc.” Net income would have been 15,518 million yen had theaccounting practice used in previous years been applied.