Nippon Columbia Announces Revitalization Plan, Lowers FY 2001 Outlook
January 17, 2002

Since October 2001, Nippon Columbia's new management team has focused its efforts on re-establishing the legendary record manufacturer as a leading music company. The management is announcing a new initiative entitled the Nippon Columbia Revitalization Plan ("NCRP"). This initiative will be led by a global team of talented and experienced entertainment industry veterans who will work together with the employees to revitalize Nippon Columbia into a preeminent global music entertainment company. An amended forecast for FY 2001 ending March 31, 2002 (April 1, 2001- March 31, 2002) is also announced.

I. Nippon Columbia Revitalization Plan ("NCRP")

1. Vision

To restructure the Company into a creative and efficient organization, thereby:

(A) Becoming a total spectrum music entertainment company with strength centered in A&R and Marketing skills

(B) Differentiating between core/non-core businesses and utilizing all resources in the business of creating hits

(C) Aggressively seeking opportunities outside Japan, aiming to become a global company

For those purposes, specific measures will be taken with a view to:

(1) Concentration on & Reinforcement of Content Business by Restructuring
(2) Reforming Operational Organization & Building a New Cost Structure
(3) Special Program to facilitate Streamlining of Organization--"PRP"

2. Specific Measures to Accomplish the Vision of NCRP

(A) Concentration on & Reinforcement of Contents Business by Restructuring

(1) Delayer the A&R organization and make it more efficient. Restructure A&R culture-specific divisions. Each A&R department will report directly to Katsumi Matsumura, the newly-named CEO and each department will have its own distinctive creative team and culture. Nippon Columbia will develop a new and strong voice in the J-Rock and J-Pop markets while continuing to fortify its historically successful efforts in, among others, Enka Music and Education.

(2) Intensively tap the larger markets of J-Rock and J-Pop. The existing J-Rock/J-Pop division will be renewed and an entirely new A&R division comprised of a newly recruited A&R and marketing team will be formed by April 2002.

(3) Concentrate investment on the signing of new acts and creation of new hits by divesting non-core businesses into which the company had migrated during its history. This will allow the new management to focus on A&R and marketing and to commit full time to creating hits.

(4) Increase Nippon Columbia's international presence through the global leadership of Strauss Zelnick, former CEO of BMG Entertainment and former President of Twentieth Century Fox, as Chairman of the Board of Directors of Nippon Columbia. A highly established and recognized new management team in the US market will be placed under Mr. Zelnick's direct supervision and will focus on creating hits in the Jazz and Classics genres (Savoy Jazz & Denon Classics). Further business expansion is planned in Europe in the near future. These efforts for developing international markets will help propel Nippon Columbia into a global music company.

(B) Reforming Operational Organization & Building a New Cost Structure

(1) We are introducing the Preferred Retirement Program ("PRP") for 180 employees, reducing personnel costs and making Nippon Columbia a place for contemporary and vibrant music lovers. With the adoption of PRP, we will incur a one time charge of JPY 1.8 billion. This charge will be recouped within 15 months, with an end result that there will be net personnel cost savings of JPY 2.7 billion over the next three (3) year period.

(2) By introducing a real time monitoring system on the P&L of individual products and titles, both A&R and management can use the market and P&L information in their day-to-day decision-making for faster and more informed decisions on production, marketing and corporate management. This will greatly enhance the chances of hit making in a market such as music.

(3) Stage "Campaign 4-1-1" by reducing the number of titles released by 40%, increasing net revenue by 10% and controlling returns to within 10% of sales. This will allow management to focus on not only producing musical works but also the marketing and promotional efforts for creating hits. After careful review and analysis, the new management has concluded that the excessive number of releases (many of which were loss-leaders) had been the major cause of loss in the P&L, and firmly believe that reducing releases and focusing marketing efforts on major hit acts will definitely lead to increased sales and profit.

(4) Streamlining the administration and sales/distribution teams will enhance back office support to the front lines of A&R, marketing, and sales.

(a) Tadahiko Ishigaki, Senior Vice President, will head the new sales team catered to a new policy of release and new organization for distribution, etc.

(b) The sales branches will be reduced from 7 to 4, and sales volume orientation will be changed to focus on sales quality and profit. Since October 2001, the new management has extensively reviewed the existing sales organization and concluded that profitability will be improved by a significantly wide margin by controlling the returns as well as the releases. The reduced number of releases and effective control of returns will create synergy to accelerate improvement of the company's profitability.

(c) Special products will be moved from A&R to sales in order to strengthen the planning for customers and improve the efficiency of distribution by integrating product planning and distribution under the sales organization.

(d) Administration will be streamlined and the current organization with 7 divisions will be reduced with a view to effective and efficient back up for A&R, Marketing and Sales.

(e) A new CFO will be named who reports directly to CEO.

(f) Management has also retained professional consultants in IS&T and corporate communication in order to provide a more timely and effective disclosure.

5) Downsizing the organization, space and inventory for the Kawasaki CD pressing operation will retain its competitive edge in the declining packaged media market with more competitive pricing, lower fixed costs, higher quality, and shorter delivery time.

6) Financially, Nippon Columbia has identified divestiture opportunities in most non-core areas. Divesting those non-core businesses and subsidiaries will reduce the loss made by those non-core operations so far and generate resources to make focused investments in the core areas of Frontline, Catalog and Music Publishing --- especially creating hits. The immediate target is to bring the company to break even in FY 2002. Nippon Columbia has a strong, respected financial backer in Ripplewood Holdings, Inc., a private equity firm with over US $ 1.2 billion devoted to the Japanese market.

(C) Special Program to facilitate Streamlining of Organization - "PRP"

(1) Preferred Retirement Program ("PRP")

(a) Qualification for PRP : The regular employees of age 30 and above as of the date of retirement (including the seconded employees).

(b) Application Period : February 21, 2002 - March 20, 2002

(c) Number of Employees for PRP : 180 (including the seconded employees)

(d) Details of the Program : Preferred allowance will be paid in addition to regular retirement pension as follows:

1. Employees at age of 50 and above on the day of retirement: Special Allowance equivalent to 20 months of monthly regular salary will be paid. (Note: Those with less than 20 months of tenure left before regular retirement will be reduced to that period. Those with less than 10 years of service with the company will be given 10 month equivalent.)

2. Employees at age less than 50: Additional Allowance equivalent to the monthly regular salary will be paid as follows:

Married: 30 - 12 months
Unmarried: 24 - 6 months

3. Supportive assistance will be given to those who applied to PRP and wish to have help for recruitment opportunities. Those between 40 and 57 will be subsidized also for the recruitment agency fee.

(2) Necessary Funds for PRP (including seconded employees)

Total Necessary Funding : JPY 1.8 billion

Reduced personnel savings: JPY 1.5 billion per year

(3) Labor Union Negotiation Formal negotiations with the Labor Union will commence forthwith.

Nippon Columbia under the new ownership and management is confident that despite the near-term financial impact, its restructuring plan will result in a dramatic business turnaround. The NCRP Strategy is a medicine by which Nippon Columbia will regain its leadership position in the music entertainment industry of Japan and facilitate expansion in the U.S. and European markets. We will carry out the NCRP aggressively yet with sensitivity to the needs of our employees. In this connection, management is grateful to the Labor Union for their cooperation and support. Together, we are united and committed to the revitalization of Nippon Columbia by carrying through the plans laid out in Nippon Columbia Revitalization Plan for the benefit of all our shareholders, our customers, artists, employees, young and old music fans and the music industry.

II. Amended Business Forecast

Nippon Columbia's new management has determined that its utmost objective is to recover profitability by eliminating the company's loss-making structure as soonest possible. Therefore, we will incur the majority, if not all, of the restructuring costs in FY 2001, so that we can achieve break even in FY 2002.

Management recognizes the fact that the turning around of a content business inevitably requires time before showing positively in its financial results. We are taking the view that both the sales forecast and the business plan should be highly realistic, without wishful assumptions or hopes for immediate recovery.

Accordingly, we have further reviewed the previous forecast announced at the time of Middle Term Settlement of Accounts and have amended the forecast downward.