JVCKENWOOD Corporation (JVCKENWOOD) reviewed the Mid-term Business Plan through the fiscal year ending March 2013 (the “current Mid-term Business Plan”), which was formulated in May 2010. It then mapped out a new mid-term Business plan that also covers the fiscal year ending March 2014 (the “new Mid-term Business Plan”).

JVCKENWOOD will merge its subsidiaries, Victor Company of Japan, Limited (JVC), Kenwood Corporation (Kenwood) and J&K Car Electronics (J&K Car Electronics), which are operating companies of the JVCKENWOOD Group, effective October 1, 2011 (the merger). This merger was announced in the “Notice on Merger of JVCKENWOOD and Its Three Subsidiaries” released on August 1, 2011.

After the merger, JVCKENWOOD will focus on implementing a growth strategy with the JVCKENWOOD Group’s strengths of video, audio and radio technologies and music and video software at its core. At the same time, it will maximize synergy effects as an integrated company through the merger, based on a corporate foundation reorganized through the management integration, as well as the new corporate vision, the management policies and the business conduct guideline.

The current Mid-term Business Plan formulated in May 2010 is progressing smoothly. JVCKENWOOD achieved the target in the plan: “posting a surplus in terms of ordinary income” for the fiscal year ended March 2011. In addition, as a result of our efforts to attain the goal of “posting a net income&rdquol; for the current fiscal year ending March 2012, we posted a net income for the first quarter of the said fiscal year.

Taking into account the above, JVCKENWOOD reviewed the current Mid-term Business Plan and drew up a new mid-term business plan that covers the fiscal year ending 2014 as well, aiming to accelerate profitable growth, the basic policy of the current Mid-term Business Plan.

(1) Corporate vision, management policies and conduct guide

As announced in the “Notice on Merger of JVCKENWOOD and Its Three Subsidiaries” released on August 1, 2011, the JVCKENWOOD Group will evolve the initial integration vision. This was put up at the time of management integration, and is “Realize the Unconventional.” The Group will develop it into the new corporate vision as an integral company through the merger: “Creating excitement and peace of mind for the people of the world.” Also, the Group will aim to realize profitable growth by concentrating on strong business areas, and become a company widely trusted by society.

(2) Business domains

The JVCKENWOOD Group aims to become a corporate group that provides customers in the world with products and device drivers that enable communication between people through audio, video and radio communications. To this end, we will make strategic investments for growth in the business areas of car electronics, land mobile radio equipment, cameras, video equipment, audio equipment, and video and music software. In addition, we will expand business domains from simple products to complex products, solutions and devices by maximizing synergy effects as an integral company through the merger.

We will also expand our business domains into the field of “peace of mind,” which will be needed in the future, by leveraging our strength in the field of “excitement,” which we have cultivated under the brands of Victor, JVC and KENWOOD. We will shift our focus from business-to-consumer to business-to-business and professionals, and from mass markets to niche and custom markets.

As before, there are the following four business segments: (1) the Car Electronics business that manufactures and sells car audio and car navigation systems, and devices for car-mounted equipment; (2) the Professional Systems business that is engaged in manufacture and sale of land mobile radio equipment, cameras, video and audio equipments; (3) the Home & Mobile Electronics business that handles consumer cameras, video and audio equipments using visual and audio technologies that are also used in the Professional Systems business; and (4) the Entertainment business that specializes in video and music software.

(3) Growth strategy

The JVCKENWOOD Group, as announced in the “Notice on Revision of Mid-term Business Plan and Implementation of Strategic Investments” released on April 27, 2011, will accelerate its growth strategy in each business segment using funds procured in January 2011. Furthermore, in order to pursue continued growth after the Mid-term Business Plan, we will make strategic investments as well as general investments. The strategic investments will be made to develop new-category products and systems, new products and systems for emerging markets, and new businesses.

In June 2011, the Group established a growth strategy promotion committee chaired by the CEO to discuss the specific details of strategic investments. It has recently decided to make strategic investments worth about 7.0 billion yen that cover a total of 18 themes over the three-year period through the fiscal year ending March 2014.

The above strategic investments will be included in key measures of each business segment, which will be described later. By implementing their key measures, each of the four business segments will expand the above-mentioned business fields and the scale of their business. Through this, the Group will accelerate its growth strategy with an aim to fulfill the Mid-term Business Plan and then achieve continued, profitable growth.

(4) Brand strategy

The JVCKENWOOD Group will make more efforts than before to increase and maintain the attractiveness of the JVC and KENWOOD brands as the global brands, while disseminating the JVC brand in Japan, where the Victor brand has been used instead.

By business field, we will basically use the KENWOOD and JVC brands for car electronics and audio equipment, the brands of KENWOOD and Zetron (the name of a U.S. subsidiary) for land mobile radio equipment, the JVC brand for cameras and video equipments, and the brands of Victor Entertainment, Inc. and Teichiku Entertainment, Inc., both JVCKENWOOD’s domestic subsidiaries, and their labels for music and video software.

Furthermore, we will consider creating new brands for new-category products, if the currently used brands are inappropriate for them.

(5) Management targets

The JVCKENWOOD Group on May 28, 2010 formulated the current three-year Mid-term Business Plan that runs from the fiscal year ended March 2011 through the fiscal year ending March 2013. It then mapped out specific measures for the plan on October 28, 2010.

In the fiscal year ended in March 2011, the initial year of the current Mid-term Business Plan, profits expanded well above projections due to the benefits of structural reform and strong performance of the core businesses. Given this, and also factoring in the effects of strategic investments that were newly decided, the Group revised the numerical goals of the plan on April 28, 2011.

Despite the yen’s further appreciation and other negative factors that are weighing on sales, the performance of the four business segments continues to be steady, with all of them posting an operating profit in the first quarter of the current fiscal year. Also, favorable results are expected from strategic investments. Against this backdrop, we set management targets of the new Mid-term Business Plan for the fiscal year ending March 2014, as shown below.

Mid-term targets (consolidated)

• Net sales: 430.0 billion yen; operating profit: 20.0 billion yen; ordinary income: 14.0 billion yen; net income: 11.0 billion yen
• Shareholders’ equity ratio: 26%; net D/E ratio: 0.5 or less
• Net income per share: 79 yen; net assets per share: 490 yen

(Reference) Earnings trends (consolidated)

(Billions of yen)

	FYE3/’11 (For reference)	FYE3/’12 Forecast	FYE3/’13		FYE3/’14 Target
			Initial target	Revised target
Net sales	352.7	360.0	410.0	390.0	430.0
Operating profit	13.0	13.5	17.0	18.0	20.0
Ordinary income	7.6	8.0	12.0	13.0	14.0
Net income (loss)	(4.0)	4.0	9.0	10.0	11.0

* Forecast figures for the fiscal year ending March 2012 are those announced on April 27, 2011, and will be revised as necessary through close examination by the time of announcing the accounting report for the second quarter of the said fiscal year.

(Note 1) Making Shinwa International Holdings Limited into a subsidiary

The conversion of Shinwa International Holdings Limited (Shinwa) into a subsidiary was announced in the “Notice on Acquisition of In-car Device Manufacturing Company (Conversion to Subsidiary)” released on June 10, 2011. The above management targets do not reflect the effects of this conversion on the earnings of JVCKENWOOD.

With regard to the above acquisition, JVCKENWOOD and Shinwa are having discussions about finalizing a contract. When finalized, we will announce the details including the effect of the acquisition on JVCKENWOOD’s earnings.

(Note 2) Stock acquisition rights

The above management targets were set on the assumption that stock acquisition rights issued by JVCKENWOOD on August 25, 2011 will not be exercised.

Even if the stock acquisition rights are exercised, we will do our utmost to achieve the above management targets by realizing profitable growth and repurchasing our own shares by using the amount to be paid by holders of stock acquisition rights.

(Note 3) Loans payable

The above management targets reflect the contents of the current loan agreements.

In the merger, JVCKENWOOD will take over the current loans of JVC and Kenwood. JVCKENWOOD is now having discussions with its main bank about signing a new loan agreement as an integral company when the said current loan agreements expire.

(6) Dividend policy

JVCKENWOOD considers it one of the most important managerial issues to provide shareholders with stable returns, and decides the distribution and other appropriation of retained earnings by comprehensively taking into account profitability and financial conditions.

Under the new Mid-term Business Plan, we aim to begin distributing dividends as soon as possible.

We will determine dividends for the fiscal year ending March 2012 through close examination by the time of announcing accounting report for the second quarter of the said fiscal year, together with earnings forecast for the full fiscal year that is expected to be revised as necessary.