Matsushita Revises Previous Earnings Forecast for Full Fiscal Year 2003; To Reflect Aggravated Stock Market and Taxation Changes

Business Wire, April 7, 2003

Business Editors

OSAKA, Japan--(BUSINESS WIRE)--April 7, 2003

Matsushita Electric Industrial Co., Ltd. (NYSE: MC) today announced a downward revision of its forecast made on February 20, 2003 for pre-tax and net income for the full fiscal year ended March 31, 2003 (fiscal 2003), without changing its forecasts for sales and operating profit.(a)

Consolidated forecast

In today's announcement, Matsushita said that full year sales and operating profit, currently in the compilation process, would have been in line with the forecast made in February, citing the positive effects of various management initiatives over the past year, such as the aggressive introduction of competitive "V-products," business and organizational restructuring and inventory and other asset reduction efforts. In the February forecast, the company announced that annual consolidated sales were expected to increase 6% to about 7,300.0 billion yen, with consolidated operating profit achieving a turnaround from the year-earlier operating loss.

At the pre-tax and net income levels, however, the company has revised its full-year forecast. At the pre-tax level, the revision reflects losses of approximately 37.0 billion yen incurred at the end of fiscal 2003 on valuation of investment securities, mainly bank stocks, due to aggravated stock market conditions in Japan. As a factor affecting the net income forecast, in late March, the Japanese legislature passed a proposed revision of tax laws to lower local enterprise income taxes in light of a new pro-forma standard taxation system. The revised net income forecast reflects additional losses of approximately 27.0 billion yen, mainly including adjustments of net deferred tax assets that have been necessitated by the revision of the local tax law.

The revised forecast for annual consolidated income before income taxes is now approximately 59.5 billion yen, down from the previous forecast of 96.0 billion yen, but still a substantial improvement from the pre-tax loss of 548.0 billion yen in the previous fiscal year. Consolidated net income for the fiscal year is now expected to turn to a loss of about 23.5 billion yen, in place of the previous forecast of a net income of 25.0 billion yen, improving from a net loss of 431.0 billion yen a year ago. The company stated that the revised earnings forecasts will have no material effect on the company's cash flows.

Non-consolidated parent-alone forecast

On a non-consolidated, parent company-alone basis, forecasts for sales and recurring profit remain unchanged at 4,160.0 billion yen (up 7% from the previous year) and 78.0 billion yen (a turnaround from the recurring loss a year ago), respectively. However, for primarily the same reasons as those given for the revision of the consolidated forecasts, parent-alone net income for fiscal 2003 is now expected to be approximately 27.0 billion yen (also a turnaround from a net loss a year ago), compared with the February forecast of 55.0 billion yen.

Matsushita also reaffirmed its intention to distribute a year-end cash dividend of 6.25 yen per common share, payable to shareholders of record as of March 31, 2003.

Matsushita Electric Industrial Co., Ltd. is one of the world's leading producers of electronic and electric products for consumer, business and industrial use, which it markets around the world under the "Panasonic," "National," "Technics" and "Quasar" brand names. Matsushita's shares are listed on the Tokyo, Osaka, Nagoya, Fukuoka, Sapporo, New York, Pacific, Euronext Amsterdam, Euronext Paris, Frankfurt and Dusseldorf stock exchanges. For more information, visit the Matsushita web site at the following URL: http://www.panasonic.co.jp/global/

Disclaimer Regarding Forward-Looking Statements

This press release includes forward-looking statements (within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934) about Matsushita and its group companies (the Matsushita Group). To the extent that statements in this press release do not relate to historical or current facts, they constitute forward-looking statements. These forward-looking statements are based on the current assumptions and beliefs of the Matsushita Group in light of the information currently available to them, and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause the Matsushita Group's actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. Matsushita undertakes no obligation to publicly update any forward-looking statements after the date of this press release. Investors are advised to consult any further disclosures by Matsushita in its subsequent filings with the U.S. Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934.

The risks, uncertainties and other factors referred to above include, but are not limited to, economic conditions, particularly consumer spending and corporate capital expenditures in the United States, Europe, Japan and other Asian countries; volatility in demand for electronic equipment and components from business and industrial customers, as well as consumers in many product and geographical markets; currency rate fluctuations, notably between the yen, the U.S. dollar, the euro, Asian currencies and other currencies in which the Matsushita Group operates businesses, or in which assets and liabilities of the Matsushita Group are denominated; the ability of the Matsushita Group to respond to rapid technological changes and changing consumer preferences with timely and cost-effective introductions of new products in markets that are highly competitive in terms of both price and technology; the ability of the Matsushita Group to realize expected benefits of various restructuring activities in its business and organization currently in progress; the ability of the Matsushita Group to achieve its business objectives through joint ventures and other collaborative agreements with other companies; the ability of the Matsushita Group to maintain competitive strength in many product and geographical areas; any changes in the Matsushita Group's financial and operational position or business environment due to its business restructuring; current and potential, direct and indirect trade restrictions imposed by other countries; and fluctuations in market prices of securities and other assets in which the Matsushita Group has holdings; as well as future changes or revisions to accounting policies or accounting rules.