Notice on Capital and Business Alliance and Management Integration for Further Study, Between JVC and Kenwood As Well As Third Party Allotment of New Shares of JVC

Business Wire, July 24, 2007

The financing is determined in the manner of the third party allotment, for the reason that JVC believes it possible to draw a growth strategy by this third party allotment to, and the capital alliance with, KENWOOD, in addition to the reason to procure the funds for structural reform thereof. JVC believes that this third party allotment is the most appropriate manner of financing in the interest of its existing shareholders from the point of view of the increase in corporate value of JVC.

2. Amount of capital procured and the use of proceeds

(1) Approximate mount of capital procured (net of expenses)

34,866,000,000 yen

(2) Details of the use of proceeds

It is expected to utilize the proceeds from the third party allotment towards the structural reform and realignment of fundamental basis, more specifically 20 billion yen for the structural reform and 15 billion yen for the realignment of fundamental basis.

(3) Scheduled timing of use of proceeds

It is expected to utilize the proceeds during the current fiscal year.

(4) Thoughts on the rationale of use of proceeds procured

By reinforcing the own capital which have been damaged by the net losses for the last three consecutive fiscal years, JVC believes it possible to further implement the management reform. This management reform will in turn contribute to the enhancement of shareholder value by increase in its profitability.

3. Results of operation and equity finances in the most recent three fiscal years

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(4) Equity finance implemented during the past three years, etc.

Not applicable.

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4. Major shareholders and the shareholding ratio after the offering

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5. Effect of the capital and business alliance on the results of operation of JVC

The effect of the structural reform by use of the financing has been reflected to the amended profit forecast of JVC announced today.

6. Rationale of terms of issue

(1) Basis for calculation of issue price

Issue price of 325 yen per share is calculated by 361 yen per share, which is the closing price (regular way) of shares on the Tokyo Stock Exchange as of the most recent trading date immediately prior to the date of resolution of board of directors of JVC with regard to the new share issue, time 90%. Having regard to the substantial amount of new capital injection in the amount of 35 billion yen, it is considered that the level of discount is in the reasonable level.

(2) Reason to believe the number of new share issue and the size of dilution to be reasonable

The planned new share issue by way of the third party allotment will give rise to 42.4% of dilution to the current number of outstanding shares. While the amount of the new share issue by this third party allotment is in the amount of 35 billion yen, the average amount of trading of the shares per day is 1.4 billion yen during the last one (1) year. However, JVC believes it inevitable to implement the management reform by taking further steps in order to ensure the management reform in the given fierce market competition environment and regain the trust from in the market.