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Fiscal 2006 Results
In fiscal 2006, ended March 31, 2006, Victor Company of Japan, Limited (JVC), saw, on a consoli-
dated basis, net sales decline 4.0%, to ¥806.9 billion, and reported an operating loss of ¥6.9 billion,
compared with operating income of ¥10.4 billion in the previous fiscal year, and a net loss of ¥30.6
billion, compared with a net loss of ¥1.9 billion in the previous fiscal year. We deeply regret having to
announce these results after two rounds of downward revisions.
Although fierce competition spurred by the advent of digital AV products has led to continued
deterioration in corporate performance subsequent to the latter half of fiscal 2005, product quality
issues are mainly to blame. In response, we kicked off operational reforms in the beginning of fiscal
2006 and launched management reforms to reinforce our business structure, including employment
structure reform, Companywide organizational reform, and production site realignment, in the latter
half of the fiscal year. Nevertheless, JVC’s mainstay Consumer Electronics business segment record-
ed greater-than-projected service costs for the fiscal year under review, owing to quality issues with
DVD recorders. In addition, sales opportunities were lost due to delays in the development of LCD
TVs stemming from an unsuccessful outsourcing strategy. Largely as a result of these two events,
we were not able to put a brake on the downturn in performance within the promised time frame.
This is something that I, as president, accept responsibility for and realize is unacceptable.
Factors Contributing to Poor Performance
Why did performance decline despite the implementation of management reforms? Our first order of
business is to clearly identify the true causes of weak results.
First, management transparency was insufficient. We had to revise our performance forecasts
downward twice because we were unable to get a clear read on actual business conditions—from
“We will forge ahead with ongoing reforms to rebuild
our business and pave the way for a bright future.”
Where We Went Wrong
Message from the President
Victor Company of Japan, Limited 5
Masahiko Terada, President