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7-7-1 Nakagaito, Daito, Osaka 574-0013, Japan Phone +81-72-870-4303 Fax +81-72-871-1112 http://www.funaiworld.com/

Corporate Profile

2012


A Globally Expanding Digital Consumer Electronics Market Where Funai Realizes its Full Potential

Tetsuro Funai Chairman

Tomonori Hayashi President and CEO

Funai Electric provides the market with reasonably priced, high-quality digital consumer electronics in spite of the growing demand and the intense competition that continue to drive prices downward. We feel, however, that intense price competition also presents us with an opportunity to realize our full potential. Since our founding in 1961, we have believed in being innovative and sticking to the basics, and Funai will renew its focus on improving efficiencies in all business activities. Based on market analysis, we will promptly develop products to meet market and customer needs. Furthermore, we will provide products in a timely manner that will be superior in terms of cost efficiency using our proprietary production system, the Funai Production System (FPS), and the optimization of production facilities. Looking ahead, we will continue to focus our efforts on the development of network-related products and strive to create new added value as we take the next steps toward becoming a truly “global Funai.�

Co n ten ts Main Products........................................................ 3 TOPICS 2011–2012 ................................................ 5 Design.................................................................. 7 Production............................................................. 9 Sales & Marketing ................................................ 11 Research & Development ....................................... 13 Corporate Overview............................................... 15 1

2


Display Business Net sales

49.1%

LCD TVs

Digital Media Business Net sales

25.4%

Brands developed in North America

Brands developed in Europe and India

DVD/Blu-ray Disc-related products

Brands developed in Latin America

Brands sold in Japan by subsidiary DX ANTENNA CO., LTD.

High-Quality, Reasonably Priced Products for the World

Office Solutions Business Net sales

12.2%

Printers

Through the four business segments in which we develop products—Displays, Digital Media, Office Solutions and Others — we consistently supply products globally under diverse brands but with high levels of quality and cost efficiency. Funai aims to continue improving its competitiveness amid an upheaval in the digital consumer electronics industry.

In addition to continually improving quality and cost efficiency

both domestically and overseas and we proudly maintain a top

since its founding, Funai’s strength lies in its exceptional supply

share in the North American market for LCD TVs and in Japan for

capabilities which have earned us an enormous amount of trust

Blu-ray Disc recorders.

throughout the digital consumer electronics industry. Currently, we conduct business in four areas: Displays, which handles LCD TVs; Digital Media, which handles DVD and Blu-ray Disc-related products, among others; Office Solutions, which

Also, in 2012 we launched the LED lighting business. The digital consumer electronics industry is going through

handles printers; and Others, which handles receiver-related

a period of significant upheaval. In terms of functionality, design

products and other items via subsidiary DX ANTENNA CO., LTD.

and price, South Korea, China and Taiwan are rapidly becoming

In our mainstay area, the Display Business, we provide the

3

In the Office Solutions Business, we are increasing sales and profits by maintaining strong relationships with OEM partners.

increasingly competitive. This situation, however, also presents us

market with five brands of compact to large LCD TVs sold in Japan

with an opportunity to fully realize our potential. Funai’s focus will be

and overseas. In the Digital Media Business, the Company is

to increase its brand value and share by providing the market with

enhancing its lineup of Blu-ray Disc-related products through

competitively priced products developed and produced quickly in

such means as reinforcing its OEM* business. The high quality

response to the various needs of consumers around the world.

and reasonable price of these products have been well received

* The manufacture and supply of products under the customer’s brand.

Others Business Net sales

13.3%

Receiver-Related Products

4


TOPICS

2011-2012

July 2011

Fourth Year of Co-Sponsorship of the U.S.–Japan Youth Baseball Exchange Program Continuing from 2011

The Boston Red Sox Foundation is an official charity run by the Boston Red Sox baseball team. This is the fourth consecutive year that Funai Electric has co-sponsored the U.S.–Japan Youth Baseball Exchange program, which is sponsored by the Boston Red Sox Foundation. In July 2011, 12 players from youth teams in Kyoto and Chiba visited Boston, where they participated in an international exchange and enjoyed home stays, baseball lessons, and other various activities.

Strengthening Production in Thailand Funai is augmenting its production capacity in Thailand to avoid overconcentration of its production capabilities in China. In 2013, we plan to construct a new building adjacent to our current plant. When completed, the new plant will double our production capacity. Going forward, with this increased capacity we plan to take advantage of free trade agreements* and export products from Thailand to ASEAN countries and India.

January 2012

Funai Acquires Portfolio of 360 Patents from IPG

*FTA: A free trade agreement is a treaty under which designated countries or regions seek to stimulate economic activity through such measures as eliminating customs duties and relaxing other regulations.

To strengthen our patent portfolio and enable us to respond to competitors’ patent claims, we acquired a portfolio of patents related to TVs, decoders and display devices from IPG Electronics 503 Ltd. The 360 patents purchased include 180 U.S. patents and 180 from other countries. These patents can be used for products such as TVs, set-top boxes and DVRs*.

December 2011

*Digital video recorder (DVR): A generic term for such products as hard disk recorders

Ranking for LCD TVs in the North American Market

January 2012

Exhibiting at the 2012 International Consumer Electronics Show The 2012 International Consumer Electronics Show (CES) was held in Las Vegas, Nevada, for four days from January 10 to January 13, 2012. This show has a 44-year history and is one of the industry’s largest, with the current exhibition attracting 3,100 companies and more than 153,000 visitors. The Funai booth was located in a hotel near the main venue, along with the PHILIPS and MAGNAVOX booths. Our booth highlighted Funai technology, which showcased our extensive lineup, technological expertise and demonstrated our overall capabilities.

As in 2010, Funai ranked third in the number of LCD TVs shipped into the North American market in 2011. We ranked first among Japanese companies. (Based on a survey by DisplaySearch)

May—June 2012

Launching of Industrial LED Lighting Business, With the Establishment of Joint Venture Companies in China Funai has decided to enter the LED lightning market, which is slated for future expansion due to its products’ long life and power efficiency. This type of lighting is also expected to contribute to the preservation of the environmental. To jump start its participation in this business, Funai established joint venture companies with CMET to manufacture and sell LED lighting. In doing so, Funai is establishing networks to manufacture and sell industrial LED lighting in China.

January 2012

Extending Our Brand Licensing Agreements with Philips for Consumer TVs and Video Products in the North American Market

LED tunnel light

5

Funai has extended its brand licensing agreements with Royal Philips Electronics through December 2015. In addition to bolstering sales of PHILIPS branded products, we aim to increase profitability on LCD TVs by optimizing inventories and expanding sales in North America through SKU* increases. LED MR16 Spotlight

*SKU: Abbreviation for stock-keeping unit, which indicates a classic, standard unit.

6


D

esign

World-Class Price Competitiveness We are pursuing thorough cost efficiency at the design stage by various means, including in-house production of core items, reducing part numbers and performing design at overseas facilities. We are working to cut costs by promoting in-house production

products to consider environmental factors through such

of core items, reducing the number of parts and reviewing

methods as the use of lead-free solder.

materials used. As a result of these efforts, in 2011 we

32

such locations as Malaysia, China (Shenzhen) and Singapore. These facilities will help us counter intense cost competition in order to offer the world’s most reasonable prices. * Comparison between 2010 CCFL models and 2011 LED models.

Part Number Reduction Case Study 1st

%

Generation

2nd

Generation

3rd

Generation

4th

Generation

Tighter multilayer board densification

Smaller single-layer board, parts moved to multilayer board

Japan China

7

TVs by 40%* compared to previous models. We introduced production, substantially improving productivity, and designed

Malaysia

Singapore

design responsibilities from Japan to our R&D facilities in

designs that decreased the number of processes and simplified

Overseas Employment Ratio for Design Staff (As of April 2012)

We are also achieving cost reductions as a result of shifting

succeeded in reducing the number of parts in 32-inch LCD

Overseas 9%

As of April 2010

Overseas

17%

As of April 2011

Overseas 32%

As of April 2012

8


P

roduction

Endless Pursuit of Production Efficiencies The Funai Production System (FPS) — our unique system of ongoing improvement where problems are identified through stresses applied to production line— continually pursues improved productivity. Funai Electric concentrates its production facilities in the most

Global Production System

5 9 Countries,

Poland Mexico *

We employ the Funai Production System (FPS) at all of

appropriate locations and enhances cost competitiveness

our plants. This system creates stresses on the production line,

by purchasing parts in bulk. In particular, our production

such as by reducing the number of operators or increasing

facilities are concentrated in the Asian region, where we

the speed of the conveyor belt, until conditions are created

have the ability to competitively procure raw materials and

resulting in the stoppage of the production line. The FPS

parts as well as secure a low-cost, high-quality labor force.

creates these conditions in order to analyze what causes the

Due to the recent labor shortages and wage increases in

line to stop, then improves on those conditions that caused

China, we have augmented our Thai plant and are considering

the failure. By repeating this cycle, Funai expects to recognize

establishing new plants in other locations.

continuous improvements in productivity.

Ongoing Productivity Improvements With the Funai Production System (FPS)

Facilities

Apply stresses to production line

Resolve problem

China * Thailand

(Funai Production System)

Identify problem

Japan Introduce improvement

* Consignment production plants

(China accounts for 2 of 5 locations)

9

10


S

ales & Marketing

Understanding Market Needs All over the World Funai Electric endeavors to maintain strong relationships with sales channels such as mass retailers, around the globe and is proud to claim a top share in North America, the world’s largest market. In 2012, we established a sales company in India. Going forward, we are also planning to enter high-growth emerging markets in ASEAN countries and in the Near and Middle East.

Share of LCD TV Shipments in 2011

Third

The key to obtaining a top share in the North American market, the largest market in the world, is creating close relationships with the major mass retailers. In addition, we have extended our brand licensing agreements in North America with Royal Philips Electronics through December 2015. Accordingly, we will step up our sales of PHILIPS-branded products. In Europe, we established sales offices in Hamburg, Paris and Warsaw, and are working to strengthen relationships with the major mass retailers in each country.

* Source: DisplaySearch

Brand and Product Development by Region

in North America

In Japan, we aggressively develop sales activities through our subsidiary, DX ANTENNA CO., LTD. Furthermore, in 2012 we established a local subsidiary in Mumbai, India, and initiated sales there. Going forward, we expect to increase sales in Latin America, including Mexico. We also plan to enter emerging markets which are rapidly growing, such as the ASEAN countries and the Near and Middle East regions.

Japan

North America

The DX BROADTEC brand sells LCD TVs and DVD and Blu-ray Disc-related products. The DX ANTENNA brand sells receiver-related products.

We are developing the market through sales of LCD TVs and DVD and Blu-ray Disc-related products under three brands: PHILIPS, MAGNAVOX and Emerson. We sell our products through major mass retailers, such as Walmart, Target, Kmart and Sears.

Company A (South Korea) 19.6%

2011

Company C (South Korea) 7.5% Company D (Japan) 10.3%

11

Company B (United States) 13.8%

12.7%

Europe

India

Latin America

The FUNAI brand sells LCD TVs and DVD and Blu-ray Disc-related products.

We sell LCD TVs under the FUNAI brand.

We sell LCD TVs and DVD and Blu-ray Disc-related products under the PHILIPS brand.

Funai Electric (Japan)

12


R

esearch & Development

Expanding into New Growth Markets As consumer electronics become commodities, we are augmenting the competitiveness of our existing product groups. In addition, we are pursuing technological developments to create new business. As the amount of digital technology used in consumer electronics increases, protecting our proprietary technology and creating new technology with appeal to other companies has become significantly more important. As a result, we are conducting strategic patent filings based on a policy of protecting Funai products with our own patents, which results in more effective and efficient patent creation and acquisition. The R&D Division promotes technical development

Current Core Businesses

involving the services and software that will be required during the era of cloud services and full-fledged broadband environments. We are also working on “ultra AV home electronics,� which feature superior human interfaces. The division is concentrating on the development of devices and software that will help realize interfaces with a human touch. These are expected to be core technologies supporting future products.

Looking Toward the Future

AV Equipment-Related Development

The Human Interfaces Field

We develop products with high value added Internet and home networking applications. We also develop new features corresponding to diverse brand strategies and cutting-edge technology to strengthen our ability to meet OEM needs, as well as energy-efficient products with low environmental impact. Meanwhile, to meet expanding market needs, we are also concentrating on more regionally tailored development and more targeted applications.

The full-fledged entry into the networking era is blurring the distinctions between AV consumer electronics, communications and broadcasting. However, taking full advantage of the benefits this era offers will require improved compatibility between people and machines, which is currently the source of major discussion. There is still room for development here. We believe that more complex functionality and improvements in devices, software and cloud systems will lead to simpler operability. Accordingly, we are concentrating on the development of human interfaces that people will find more enjoyable and intuitive.

Network-Related Technology The Group pursues development activities over a wide range, spanning fundamental technologies to products. We were an early provider of products compatible with VOD services and SNS in various countries in the early stages of Blu-ray Disc-related devices and LCD TVs, and take the lead in the development of technologies that will allow customers to easily enjoy the Internet, thereby contributing to the adoption of the Internet and the development of a more Internet-based society. In addition, we have introduced products that take advantage of cloud based services and are also pursuing wireless networking products. Our next step will be to develop and launch mobile devices, products, and services for telecommunications carriers, through which we will strive to help advance the telecommunications field.

The Eco/Energy Field For many years, Funai has pursued the development of power-saving, environmentally conscious products. LED lighting equipment marks our first step into the eco/energy field, through which we will strive to make contributions to the future, an area in which we are continuing to conduct basic technological research and striving to make contributions to in the future.

FUNAI ELECTRIC ADVANCED APPLIED TECHNOLOGY RESEARCH INSTITUTE INC.: A Group Company Responsible for the Development of Advanced Technology The Funai Group manages the FUNAI ELECTRIC ADVANCED APPLIED TECHNOLOGY RESEARCH INSTITUTE INC., our core institution for the research of nanotechnologies. In addition to strengthening our mainstay AV equipment-related business and pursuing developments to enhance our intellectual property, we will proactively develop basic devices for new markets such as the eco/energy field.

13

14


C

orporate Data

Profile

History Aug. 1961 FUNAI ELECTRIC CO., LTD. was established in Ikuno-ku, Osaka capitalized at 짜20 million.

Members of the Board and Corporate Auditors and Officers

FUNAI ELECTRIC CO., LTD.

Name

Members of the Board Chairman Tetsuro Funai Tomonori Hayashi President and Chief Executive Officer Director and Toshio Otaku Senior Executive Officer Yoshikazu Uemura Director and Officer Director and Officer Jyoji Okada Hideaki Funakoshi Director and Officer Director and Officer Shigeki Saji Mitsuo Yonemoto Outside Director Outside Director Yoshiaki Bannai

Established August 1961 Head office 7-7-1 Nakagaito, Daito, Osaka 574-0013, Japan Phone

+81-72-870-4303

Fax

+81-72-871-1112

URL

http://www.funaiworld.com/

Capital

짜31,307 million (March 31, 2012)

Net Sales

짜246,147 million ( Year ended March 31, 2012)

Employees

1,102 (March 31, 2012 / Non-Consolidated)

Category

Electrical Equipment

Officers Hideo Nakai Susumu Nojii Hisao Tatsumi Kazuo Uga Takeshi Ito Sei Kono Hirofumi Nagaoka

Senior Officer Senior Officer Senior Officer Officer Officer Officer Officer

Corporate Auditors Full-time Corporate Auditor Hiromu Ishizaki Outside Corporate Auditor Shinichi Komeda Masahide Morimoto Outside Corporate Auditor

Major Business Operations Display Business LCD TVs Digital Media Business DVD Players / Recorders Blu-ray Disc Players / Recorders Office Solutions Business Printers, LED Lighting Others Business Receiver-Related Products

Main Office

Technology Hall

Product Development Trends

1961 1959~1970

Transistor Radios

15

Mar. 1964

CHUGOKU FUNAI ELECTRIC CO., LTD. was established as a production subsidiary in Fukayasu-gun (now Fukuyama), Hiroshima.

Apr. 2004

FUNAI ELECTRIC ADVANCED APPLIED TECHNOLOGY RESEARCH INSTITUTE INC. was established.

Sep. 1976

The head office was relocated to Daito, Osaka.

Oct. 2006

FUNAI ELECTRIC (POLSKA) Sp. z o.o. (now FUNAI ELECTRIC EUROPE Sp. z o.o.) was established as a production subsidiary in the city of Nowa Sol, Poland.

Oct. 2007

FUNAI SERVICE CORPORATION was established as a service subsidiary in Ohio, U.S.

Jun. 2008

P&F USA, Inc. was established as a sales subsidiary in Georgia, U.S., for PHILIPS brand consumer TVs.

May 19 91 FUNAI CORPORATION, INC. was established as a sales subsidiary in New Jersey, U.S. Mar. 1992

HIGHSONIC INDUSTRIAL LTD. (now FUNAI ELECTRIC (H.K.), LTD.) was established in Hong Kong, China.

Apr. 1992

DONG GUAN PLANT in Dongguan City, Guangdong Province started operations as a consignment production plant in China.

Aug. 1994

ZHONG SHAN PLANT in Zhong Shan City, Guangdong Province started operations as a consignment production plant in China.

Apr. 2009

Jan. 1996

FUNAI SERVICE CO., LTD. was established as a service subsidiary in Higashi-Osaka, Osaka.

P&F MEXICANA, S.A. DE C.V. was established as a sales subsidiary in Mexico.

J u l . 2010

May 1996

HIGHSONIC INDUSTRIAL LTD. (now FUNAI ELECTRIC (H.K.), LTD.) established H.F.T. INDUSTRIAL LTD. by joint investment with a Japan company.

Zhong Yue Funai Electron Co. was established as a production subsidiary in Guangdong Province, China.

Feb. 2012 Funai India Private Limited was established as a production subsidiary in Mumbai, India.

Feb. 1999

FUNAI ELECTRIC CO., LTD. was listed on the Second Section of Osaka Securities Exchange.

May 2012 CMET FUNAI Optical Electronics Co., Ltd. was established as a sales subsidiary in Shanghai, China.

Mar. 2000

FUNAI ELECTRIC CO., LTD. was listed on the First Section of Tokyo Stock Exchange and the First Section of Osaka Securities Exchange.

Jun. 2012 FUNAI CMET Optical Electronics Co., Ltd. was established as a production subsidiary in Guangdong Province, China.

Nov. 2001

Acquired the majority stocks of DX ANTENNA CO., LTD. in Japan.

J u l . 2003

FUNAI (THAILAND) CO., LTD. was established as a production subsidiary in Nakornratchasima, Kingdom of Thailand.

2008~

Projectors

Blu-ray Disc Players

1994~2002

8 Track Car Stereos

Auto Bakeries

Air Conditioners

1977~1985

1986~2009

Open Reel-to-reel Tape Recorders

Stereo Audio Components

CRT TVs

1980

1971~1985

1980~1982

Cassette Tape Recorders

CVC VCRs

Zhong Shan Funai Electron Co. was established as a production subsidiary in Guangdong Province, China.

2002~2007

1987~1995

1975

Tetsuro Funai, President and CEO, assumed the post of Chairman. Tomonori Hayashi, Senior Executive Officer, assumed the post of President and CEO.

1985~2007

1968~1979

1970

HUANG JIANG PLANT in Dongguan City, Guangdong Province started operations as a consignment production plant in China.

TV/VCR Combos

1963~1966

1965

Dec. 2003

1985

1990

1999~

2004~

DVD Players

DVD Recorders

1995

2000

2004~2008

2009~

Digital Still Cameras

Blu-ray Disc Recorders

2005

1983~

2000~

VHS VCP, VCRs

Laser Beam Printers

2010

1983~1995

1988~2003

1997~

2002~

2011~

Cordless Phones

Faxes

Inkjet Printers

LCD TVs

Tablet PCs

16


C

orporate Overview

Funai Group Code of Conduct

Quality & ISO

All members of the Funai Group (hereinafter “We”) pledge to make a sincere effort to observe the following code of conduct. Senior management recognizes that it is their role to embody this code of conduct, and that they must take the initiative and set an example for others in the company to follow. In the event their conduct is in opposition to this code, it will be their responsibility to correct themselves publicly and ensure such conduct is never repeated.

Funai and its Group companies is proactive in acquiring third-party certifications related to quality, occupational health and safety, the environment and information security.

1

2

3

4

We shall develop and provide products and services useful to society with sufficient consideration for the safety and privacy of personal and customer information, and strive to earn the trust and satisfy the needs of consumers and customers while ensuring the healthy development of society. We shall engage in fair, transparent and free competition and transactions while maintaining a healthy and proper relationship with politicians and political administrations.

HQ / FUNAI (THAILAND) CO., LTD. / FUNAI ELECTRIC EUROPE Sp. z o.o. / CHUGOKU FUNAI ELECTRIC CO., LTD. / Zhong Yue Funai Electron Co./ Zhong Shan Funai Electron Co./ FUNAI SERVICE CO., LTD. / DX ANTENNA CO., LTD.*1 / DONG GUAN PLANT*2 / HUANG JIANG PLANT*2

Environment Management System (ISO 14001)

We shall ensure management transparency and health through the timely, proactive and fair disclosure of Company information aimed at widening the communication channel with shareholders and greater society.

HQ / FUNAI (THAILAND) CO., LTD. / FUNAI ELECTRIC EUROPE Sp. z o.o. / CHUGOKU FUNAI ELECTRIC CO., LTD. / Zhong Yue Funai Electron Co./ Zhong Shan Funai Electron Co./ FUNAI SERVICE CO., LTD. / DX ANTENNA CO., LTD.*1 / DONG GUAN PLANT*2 / HUANG JIANG PLANT*2

We shall maintain a safe and comfortable work environment where employee diversity, character and individuality are respected.

Information Security Management System

5

We shall respect fundamental human rights and do not engage in discriminatory actions or human rights violations. We do not sanction child labor or forced labor.

6

We shall voluntarily engage in initiatives aimed at mitigating environmental problems, which we see as common challenge facing all humanity, and recognize as a necessary activity of all corporations.

7

We shall aggressively promote social contribution activities as a good corporate citizen.

8

We shall firmly oppose anti-social forces or groups.

9

We shall observe international law and local ordinances in terms of our international business activities, always respecting local cultures and customs to develop business efficiently. June 22, 2012 Tomonori Hayashi President and CEO

Net Sales

Sales Composition by Area

Sales Composition by Item

(¥ millions)

(¥ millions)

(¥ millions)

350,000 300,000

350,000

302,777

314,911

300,000

277,167 246,147

250,000

350,000 3.4%

2.1%

295,923

250,000

200,000

200,000

150,000

150,000

100,000

100,000

50,000

50,000

1.1% 2.2%

16.5%

2.8% 12.0% 2.3% 9.7%

4.6%

300,000

8.1% 2.9% 3.6% 3.8% 5.1%

250,000

71.4%

65.3%

150,000

54.5%

2008

2009

2010

2011

2012

0

Occupational Health and Safety Management System

OHSAS18001 HQ / FUNAI ELECTRIC EUROPE Sp. z o.o. / Zhong Yue Funai Electron Co. / Zhong Shan Funai Electron Co. (*1) DX ANTENNA CO., LTD. was certified by the JQA. (*2) The plants that undertake processing for Funai on consignment in China are acquiring certifications.

22.2%

12.2% 22.2%

14.9%

12.2%

15.4%

2008

2009

2010

31.8%

33.0%

2011

2012

48.1%

52.0%

2009

2010

0

2008

(Years ended March 31) North America

Europe

Asia

49.1%

2011

2012

(Years ended March 31)

Others

LCD TVs (Display Business) DVD and Blu-ray Disc-related products (Digital Media Business) Printers (Office Solutions Business) Receiver-Related Products (Other Business)

Offices and Subsidiaries Places of business, research center

Production subsidiaries

Development subsidiaries

1 TOKYO BRANCH OFFICE

1 CHUGOKU FUNAI ELECTRIC CO., LTD.

2 R&D ENGINEERING DEPARTMENT/

2 FUNAI ELECTRIC (H.K.), LTD.

OHGIMACHI BRANCH

TECHNOLOGY RESEARCH INSTITUTE INC.

2 Funai Electric R&D (Shenzhen) Co., Ltd.

3 H.F.T. INDUSTRIAL LTD.

3 FUNAI MALAYSIA R&D SDN. BHD.

4 DONG GUAN PLANT *

Sales subsidiaries

1 FUNAI ELECTRIC ADVANCED APPLIED

1 DX ANTENNA CO., LTD.

5 HUANG JIANG PLANT *

2 CMET FUNAI Optical Electronics Co., Ltd.

6 Zhong Yue Funai Electron Co.

Basic Ideas

Basic Policy

In keeping with our corporate commitment “to adopt continual product improvements, to continually promote ever deeper trust, and to seek further harmony and mutual prosperity,” all employees of Funai pledge to remain aware of the need to protect the environment and to operate our business in an environment-friendly manner. We shall provide our customers with simple, high-quality products and shall make an effort to use resources effectively, minimize waste, and reduce our environmental impacts. In short, we remain committed to contributing to a society that remains in harmony with nature. We shall respect employee diversity, personality and individuality, and provide an environment that is safe and conducive to work.

The Funai Group is responding to heightened societal demand for corporate social responsibility (CSR) by performing its daily business activities on the basis of the Funai Group Code of Conduct. We have established the basic policies described below with regard to our parts and materials procurement activities. •Conform with laws, regulations and social norms, and pay attention to environmental preservation. •Conduct fair and equitable transactions. •Strive for mutual cooperation with business partners and build trust-based relationships.

3 FUNAI CORPORATION, INC.

7 Zhong Shan Funai Electron Co.

1 FUNAI SERVICE CO., LTD.

4 P&F USA, Inc.

8 FUNAI CMET Optical Electronics Co., Ltd.

2 FGS Co., Ltd.

5 P&F MEXICANA, S.A. DE C.V.

9 FUNAI ELECTRIC EUROPE Sp. z o.o.

3 FUNAI SERVICE CORPORATION

6 Funai India Private Limited

10 FUNAI (THAILAND) CO., LTD.

1 2 3 4 5 6

We shall practice ethical management and comply with all laws and regulations. We shall take the initiative in voluntarily eliminating the use of hazardous substances and shall offer environment-friendly products. We shall establish goals for environmentally conscious design and shall offer environment-friendly products. We shall implement initiatives to attain zero emissions. We shall establish environmental goals, conduct periodic reviews, and implement continual improvements. We shall provide all employees with environmental education and shall strive to adopt environmental improvements.

Occupational Health and Safety Policies We shall practice ethical management and comply with all laws and regulations with respect to occupational health and safety. 2 We shall look into occupational health and safety risks in the workplace to prevent injury and illness to employees and visitors. 3 We shall make ongoing improvements to occupational health and safety management, while making an effort to improve occupational health and safety performance. June 22, 2010 Tomonori Hayashi President and CEO 1

2 3 4 5 6

Conformance with laws, regulations and social norms Respect for human rights, occupational health and safety Environmental consideration Construction of systems to ensure excellent product quality Provision of parts, materials and services that are priced appropriately and competitively Construction of systems to ensure certain delivery dates and stable supply

1 2 3 4 5 6 7 8

Conformance with laws, regulations and social norms Respect for human rights, occupational health and safety Environmental consideration Optimal product quality and cost assurance Construction of systems to ensure certain delivery dates and stable supply Technological improvement Confidential information management Cooperation in reporting and auditing

Affiliated subsidiaries

7 Zhong Shan Funai Electron Co. 8 FUNAI CMET Optical Electronics Co., Ltd. 6 Zhong Yue Funai Electron Co. 2 Funai Electric R&D (Shenzhen) Co., Ltd.

4 DONG GUAN PLANT * 5 HUANG JIANG PLANT * 9 FUNAI ELECTRIC EUROPE Sp. z o.o.

2 FUNAI ELECTRIC (H.K.), LTD. 3 H.F.T. INDUSTRIAL LTD.

5 P&F MEXICANA,

3 FUNAI SERVICE

CORPORATION

3 FUNAI CORPORATION, INC.

S.A. DE C.V.

2 CMET FUNAI Optical Electronics Co., Ltd.

2 R&D ENGINEERING 6 Funai India Private Limited

CSR Procurement From a CSR perspective, we ask our business partners to perform the following. We also ask our customers’ business partners to understand the Funai Group Procurement Policy and to make requests that will promote these items.

4 FUNAI SINGAPORE PTE. LTD.

* Consignment Production Plants

In accordance with the above-mentioned basic policy, when selecting companies as procurement partners the Funai Group gives priority to those that satisfy the following conditions when commencing transactions. 1

25.4%

44.9%

50,000

Funai Group Procurement Policy

Procurement Partner Selection Standards

13.3%

100,000

(Years ended March 31) Japan

13.8%

21.2%

45.3%

0

8.5% 17.3%

19.1% 28.0%

52.6% 68.7%

14.9%

23.4% 200,000

(ISO/IEC 27001:2005 JIS Q 27001:2006) Information System Department in HQ / Personnel and Administration Department in HQ / Business Administrative Department in HQ / Investor and Public Relations Department in HQ

9.0% 10.1%

Environmental and Occupational Health and Safety Charter

Environmental Policies

17

Quality Management System (ISO 9001)

Key Financial Information (Consolidated)

DEPARTMENT/ OHGIMACHI BRANCH 1 FUNAI SERVICE CO., LTD. 2 FGS Co., Ltd.

4 P&F USA, Inc.

1 FUNAI ELECTRIC ADVANCED 10 FUNAI (THAILAND)

CO., LTD.

3 FUNAI MALAYSIA R&D

SDN. BHD.

4 FUNAI SINGAPORE

PTE. LTD.

APPLIED TECHNOLOGY RESEARCH INSTITUTE INC.

1 TOKYO BRANCH

OFFICE

1 DX ANTENNA CO., LTD. 1 CHUGOKU FUNAI

ELECTRIC CO., LTD.

18


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