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Growth Strategy for

Digital AV Business

February 6, 2008

Toshihiro Sakamoto, President


Panasonic AVC Networks Company
Matsushita Electric Industrial Co., Ltd.

1
Today’s Topics

1. PAVC’s Profile and


FY2008 Business Outlook

2. GP3 Plan Outline

3. Flat-panel TV Business Strategy

Copyright (C) 2008 Matsushita Electric Industrial Co., Ltd. All Rights Reserved.
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2
PAVC’s Business Structure
Visual Products TVs, STBs, car-mounted TVs, plasma panels, etc. Sales proportion
and Display
Devices
Business
Group Approx. 45%

DSCs, VCRs, camcorders, audio equipment, etc.


Networks
Business
Group
Approx. 25%

Optical pickups, aspherical lenses, recordable


Device media, etc.
Business
Group
Approx. 10%

Notebook PCs, broadcasting/AV systems for


professional use, projectors, in-flight entertainment
Systems systems
Business
Group
Approx. 20%

3
PAVC’s FY2008 Outlook
(yen: trillions)
With overseas sales as the driving force, sales [FY2008 outlook] Manufacturing site basis
increased by about 1.6 times since the ‹ Expected to achieve the original targets
establishment of the business domain
- Sales: 1.94 trillion yen (+6% vs. FY2007)
2 1.94
- Operating profits: 116 billion yen
1.83
(+25.1 billion yen from FY2007)
[Overview]
1.52
‹ Comparison with FY2004 when the business
1.32 domain was established
1.20 - Sales: increased by about 1.6 times (average
annual growth: 13%)
1 76%
76% - Operating profits: increased by about 4 times
(+87.3 billion yen)
Overseas sales

74% ‹ Comparison of overseas sales


74%
- Sales: increased by about 1.8 times (average
70%
70% annual growth: 16%)
- Ratio to overseas sales: 67% Æ 76%
67%
67%
67%
67% ‹ Flat-panel TV business: Expected to increase by
11% from FY2007
‹ By promoting the VIERA Link, achieved a sales
increase of link devices connected to flat-panel
FY2004 FY2005 FY2006 FY2007 FY2008 TVs

plan

Copyright (C) 2008 Matsushita Electric Industrial Co., Ltd. All Rights Reserved.
2
PAVC’s Sales Analysis by 4
Products (vs. FY2007) Manufacturing site basis

FY2007 FY2008
Apr. – Dec. + 114 billion yen (+8%) Apr. – Dec.
Flat-panel
Others
TV

AV system for
professional use

DSC

HD PC
VIERA camcorder 1,551
theater
CRT TV system
DIGA billion yen
Audio VHS VCR
1,437 Analog
camcorder
billion yen

AV systems for professional use: Broadcasting video camcorders, Avionics systems, projectors

5
PAVC’s Sales by Region
Manufacturing site basis
(yen: billions) (yen: billions)
Sales proportion North America Sales proportion
700 Japan 700 28%
25%

+3% +3%

0 0

'06 Apr-Dec '07 Apr-Dec '06 Apr-Dec '07 Apr-Dec


(yen: billions) (yen: billions)
Europe Sales proportion Sales proportion
700
25% 700 Others
22%

+20% +7%

0 0
'06 Apr-Dec '07 Apr-Dec '06 Apr-Dec '07 Apr-Dec

Copyright (C) 2008 Matsushita Electric Industrial Co., Ltd. All Rights Reserved.
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Flat-panel TV Sales
MEI consolidated basis
(yen: billions) (yen: billions)
Sales proportion Sales proportion
Japan 25% 100 North 24%
120 America
+7% +9%
+- 0%
-4% 100% -6% 100%
-14%
(yen: billions)

400
Global
vs. FY2006 +19% +20%
312.8
+2%
0 40% 100% 0 40%
'07 Apr-Jun Jul-Sep Oct-Dec 209.6 '07 Apr-Jun Jul-Sep Oct-Dec
186.0
(yen: billions) (yen: billions)
Sales proportion Sales proportion
Europe 34% Others
200 160% Apr.-Dec. total 708.4 billion yen 150 17% 200%
* Including CIS
+48% (vs. FY2006 : +15%) +73% 180%
+31% 140% +61%
0 50% 160%
+13%
120% '07 Apr-Jun Jul-Sep Oct-Dec 140%

+6% 120%
100%
100%

0 80% 0 80%
'07 Apr-Jun Jul-Sep Oct-Dec '07 Apr-Jun Jul-Sep Oct-Dec

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VIERA Link Sales
VIERA Link products: Total sales of DVD recorders, home theater systems, DSCs, and camcorders
Global: Panasonic estimates based on the data from NPD(US),
GfK(Europe) and JEITA/CIPA (Japan) Source: JEITA/CIPA

Apr.
Apr.-Dec.
Dec. total Japan Apr.
Apr.-Dec.
Dec. total
Global
Panasonic Competitors Panasonic Competitors
100%
100%
%
+13
% -1 % +22 +
- 0%

0%
'06 '07 '06 '07 '06 '07 '06 '07
当社 他社 0%

US Apr.-
Apr.-Nov. total Europe Apr.-
Apr.-Oct. total
Panasonic Competitors Panasonic Competitors
100%

100%

+4 % +4 % % -4 %
+19

0% '06 '07 '06 '07 '06 '07 '06 '07


0%
Source: The NPD Group/Monthly Tracking Service Source: GfK Group/Retail and Technology

Copyright (C) 2008 Matsushita Electric Industrial Co., Ltd. All Rights Reserved.
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Sales Trends of 8
Major System Products
No. 1 support rating AVIONICS In- In-flight entertainment system
Notebook PCs Firmly maintains
maintains market share of
Global standard tough mobile PCs system approx. 70%
„ Let's note „ The eX2 next-generation in-flight
- Achieved the No. 1 market share (22%) in the entertainment system has been
Japanese mobile PC category for the 2nd
consecutive year installed in major airplanes (B777,
- Nikkei PC magazine: Earned No. 1 customer B747, A340, A330, etc.)
satisfaction - A380: October 2007
The first model was installed in
„ TOUGHBOOK Singapore Airlines.
- Gained market share of 50% worldwide
(No. 1 for the 5th consecutive year since 2002) - CSS will be built into B787 (early 2009)

Broadcasting P2HD expanding worldwide 2500 and higher lumen projectors


AV Systems Environmentally friendly P2 Projectors No. 1 global market share (11%)

„ P2HD which applies SD Card „ Projectors for business use


technology is expanding - Achieved a year-on-year increase
worldwide. of 38% in sales value
- Employed by a total of 610 broadcasting - 10,000 lumen projector D10000
stations earned the InfoCom's Rental &
(Average annual growth rate since release Stage Award in June 2007
in 2004: 140%)

9
Today’s Topics
1. PAVC’s Profile and FY2008 Business
Outlook

2. GP3 Plan Outline


- Promote ‘3D22 Value Chain’ Strategy
- Further Select and Concentrate Business
- Achieve Double-Digit Growth in Overseas
Sales
- Strengthen and Expand Synergy of Vertical
Integration beyond Product Categories

3. Flat-panel TV Business Strategy

Copyright (C) 2008 Matsushita Electric Industrial Co., Ltd. All Rights Reserved.
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10
Four Strategic Businesses
Four Strategic Promote PDPs for large
Businesses screen TVs
(ABCD-Quartet) Target share: 25% in 37-
37-inch
and larger flat-
flat-panel TVs

Digital AV Growth to a leading


networks camera brand
Digital AV
Business Target share: 15%
Differentiate with

3rd and 4th business pillars


Appliance Car
BB devices

Win the competition with compact


size and light weight, robustness,
solutions electronics and high picture quality with the SD
Business Providing Automotive Electronics HD Card camcorder as the driving force
Comfortable Living Business camcorder
Target share: 40%

Win in the BD recorder/drive


B.B. devices Blu-ray
business with advanced technology
and outstanding cost
competitiveness
Semiconductors and
Devices Business
Target share: 35%

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3D2 Value Chain Strategy
3D products 3D technologies
(SD, DVD, DTV)
X (HD, UD, Device)

Achieve "Digital Hearth" that offers "Peace of mind and safety,"
safety," "Ease of use and
convenience," and "Dreams and excitement"

Digital Hearth
DSC

Intercom

Living in HD Whole Life


Connectivity
Realize a lifestyle that enables users to easily operate AV equipment,
equipment,
security equipment, and the Internet with a single TV remote control
control by
connecting them with VIERA TV in high-
high-definition picture

Copyright (C) 2008 Matsushita Electric Industrial Co., Ltd. All Rights Reserved.
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12
Accelerate Selection and
Concentration for 3D Product Business
3D product group
SD Card, DSC, PDP, LCD,
CATV, Car-mounted TV, DVD/BD,
HD camcorder, Home theater
system
DVD/BD media,
DVD/BD-related devices,
Optical modules, P2 system, etc

[Others]
Audio products, PC
Systems business products
(excluding P2 system), etc.
3D product group

Others
Others Products withdrawn from
Audio
82% market up to FY2008
Audio products
products of PAVC’s sales
73% 81% CRT TVs (Japan, US, Europe,
CRT
CRT TVs
TVs China)
VHS VCR, Headphone stereo,
MP3 player, Portable MD player,
Portable CD Player, Technics
47% mini component stereo system,
DVD-R media, Desktop PC with
LCD monitor, Terrestrial Mobile
communication business,
Amplifier for medical use,
Microcassette recorder
FY04 FY08 FY09 FY10

13
PAVC’s Sales Targets
in the GP3 Plan
„ Global sales: 2.4 trillion yen, Average annual growth rate of 9%
„ Double-
Double-digit growth in overseas sales:
Average annual growth rate of 13%, Ratio to overseas sales of 80%
80%
„ BRICs + Vietnam: Average annual growth rate of 25%, 300 billion yen sales
(yen: trillions) Sales by Region Overseas Sales & BRICs+ Vietnam
3 overseas sales
74% 76% 80%
China BRICs+ Vietnam
China
Japan 12% 13% 18%
2
Asia
Asia
2
CIS
CIS &
& Middle
Middle
East
East

Europe
Europe
1 1
Latin
Latin America
America

North
North
America
America BRICs+ Vietnam
0
FY2007 FY2008 FY2009 FY2010 FY2007 FY2008 FY2009 FY2010

Copyright (C) 2008 Matsushita Electric Industrial Co., Ltd. All Rights Reserved.
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Develop Locally-Oriented
Locally-Oriented 14

Manufacturing & Sales Structure


Strengthen overseas production Strengthen structure in the US,
bases for flat-
flat-panel TV the most important market

PDP LCD „ The US market is changing drastically


Japan Japan (FY02) Japan (FY02)
North North America North America
America (FY05) (FY05)
Czech Republic Czech Republic „ Need prompt management decisions
Europe (FY05) (FY05) and establishment of sales structure
Latin Brazil (FY07) Brazil (FY07) for new high value-
value-added products,
products,
America including the commercialization of
Russia Russia (FY08) Russia (FY08) Internet-
Internet-ready TVs with strong
Shanghai demand and interactive cable TVs
Shandong (FY05)
(FY04)
China
Taiwan (FY06) Taiwan (FY04)

India (FY08)
„ Create a structure integrating product
Malaysia (FY08)
Asia Singapore development, manufacturing, and sales
(FY08)
Thailand (FY07)

Vietnam (FY09)
„ Start feasibility study of transforming
Double overseas production capacity domain companies in the US into sales
5.4 million units in FY07 Æ
10.8 million units in FY09 companies

Promote Market-Oriented Marketing 15


(example: North America)
„ Build VIERA Dealer Networks: 373 stores of 19 accounts
(as of January 2008)
Sales values of VIERA Dealer in FY2008 3Q: +87% (vs. FY2007 3Q)
3Q)

„ Living in HD Truck Tour (launched on September 1)

300 locations nationwide


35,612 visitors
400,000 hits on website

„ Living in HD Program
Expand from 21 families as of January 2008 to 100 families by
the end of January 2009

Copyright (C) 2008 Matsushita Electric Industrial Co., Ltd. All Rights Reserved.
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Strengthen the Synergy of 16

Vertical Integration
„ Maximize product performance and quality level by further
promoting the in-
in-house production of key devices
underpinned by black-
black-box technology
„ Improve capabilities to respond to changes in the market
„ Strengthen black-
black-box technologies to achieve the world's
best manufacturing that combines the company's collective
strengths

PDP TV (42-
(42-inch full HD) DSC BD recorder
Panel Aspherical lens Optical pick-up
CCD BD drive
LSI LSI LSI

In-
In-house production ratio: In-
In-house production ratio: In-
In-house production ratio:
Approx. 60% Over 50% Approx. 70%

17
Expand Synergy of Vertical Integration
beyond Product Categories
Drastic reform of development efficiency by sharing
HD Platform Uniphier®
Uniphier®
Car-
Car-mounted TV supporting
VIERA DIGA terrestrial digital broadcasts HD camcorder
HD platform (UniPhier)

VIERA Link VIERA Link VIERA Link VIERA Link


SD Card SD Card SD Card SD Card
MPEG2 MPEG2 MPEG2
reproduction reproduction reproduction
Terrestrial digital Terrestrial digital Terrestrial digital
broadcast reception broadcast reception broadcast reception
H.264 H.264 H.264
H.264 reproduction
reproduction reproduction reproduction
H.264 recording H.264 recording
1-seg broadcast
reception
Software Software Software
sharing rate: sharing rate: sharing rate:
79% 90% 53%

„ Example of synergetic effects <DIGA 2007 autumn model>


Set development lead- (16* months Æ 5 months)
lead-time shortened to 1/3 (16*
* When developed individually

Copyright (C) 2008 Matsushita Electric Industrial Co., Ltd. All Rights Reserved.
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18
Today’s Topics

1. PAVC’s Profile and


FY2008 Business Outlook
2. GP3 Plan Outline
3. Flat-panel TV Business Strategy
• Further Evolve PDP TVs
• Strengthen LCD TV Business
• Propose a New Lifestyle by Strengthening
Alliances

19
Demand for Flat-Panel TVs
Demand for large-
large-screen models continues to grow more than original forecasts.
Demand for 50-
50-inch and larger models would continue to grow rapidly.
Demand for 37-
37-inch and larger-
larger-screen models is expected to account for over 50%
of total demand for flat-
flat-panel TVs.
million FY2007-2011
units <Demand for 37-inch and Larger Flat-Panel TVs> Average
80 growth rate
73
: Previous year's forecast 50-inch and larger
70
62 +59%
60
50 50
50
36 40
40
37- 49 inches
30 28 +35%
20
20
10
0
2007 2008 2009 2010 2011 FY

Copyright (C) 2008 Matsushita Electric Industrial Co., Ltd. All Rights Reserved.
10
Basic Policy for Flat-Panel 20

TV Business
Aim for a market share of 25% in the 37-inch and
larger models
Increase cost and product competitiveness,
competitiveness, and strengthen
the product line-
line-up with PDPs as the core

„
„Lead
Lead the
the large
large screen
screen TV
TV market
market with
with PDPs
PDPs
„
„Stimulate
Stimulate market
market demand
demand byby enlarging
enlarging screen
screen size,
size, improving
improving
PDP image
image quality,
quality, making
making thinner
thinner products,
products, reducing
reducing power
power
consumption
consumption andand costs
costs

„
„Strengthen
Strengthen the the product
product line-up
line-up in
in the
the volume
volume zone
zone
„
„Establish
Establish stable
stable panel
panel procurement
procurement system
system inin mid-
mid- and
and long-
long-
LCD term,, strengthen
term strengthen cost
integration,
cost competitiveness
competitiveness through
through vertical
vertical
integration, andand prepare
prepare for
for the
the future
future development
development of of OLED
OLED
(invest
(invest in
in IPS
IPS Alpha Technology's 22nd
Alpha Technology's nd plant)
plant)

„
„Accelerate
Accelerate R&D
R&D activities
activities of
of OLED
OLED which
which will
will be
be the
the leader
leader of
of
OLED flat-panel
flat-panel TVs
TVs in
in the
the next
next generation
generation

21
Today’s Topics

1. PAVC’s Profile and


FY2008 Business Outlook
2. GP3 Plan Outline
3. Flat-panel TV Business Strategy
• Further Evolve PDP TVs
• Strengthen LCD TV Business
• Propose a New Lifestyle by Strengthening
Alliances

Copyright (C) 2008 Matsushita Electric Industrial Co., Ltd. All Rights Reserved.
11
The 5th Plant to Produce 22

Next-generation PDPs
Fifth PDP
plant in Japan
Commencing
Commencing production
production
in
in May
May 2009
2009 (planned)
(planned)

Computer
Computer generated
generated picture
picture

23
Evolution of PDP Device Factory
1 panel 3 panels 6 panels 8 panels 16 panels
Number
Number of
of
42-inch
42-inch panels
panels
per
per sheet
sheet

Production
Production
lead-time
lead-time vs.
vs. 1st
1st plant
plant
68%
68% vs.
vs. 1st
1st plant
plant
vs.
vs. 1st
1st plant
plant
62%
62% 53%
53%
Number
Number of
of
processes
processes vs.
vs. 1st
1st plant
plant
vs.
vs. 1st
1st plant
plant vs.
80%
80% vs. 1st
1st plant
plant
77%
77% 67%
67%

1st plant 2nd plant 3rd plant 4th plant 5th plant
(Ibaraki) (Ibaraki) (Amagasaki) (Amagasaki) (Amagasaki)

Copyright (C) 2008 Matsushita Electric Industrial Co., Ltd. All Rights Reserved.
12
Neo PDP Technology Achieving 24

High Luminance Efficiency


NEW NEW NEW

New materials New cell


New processes New drive
design

New phosphors Improved discharge Reduced power


efficiency loss
Double luminance efficiency! le
doubss
rox.
App brightne
the
Conventional
Full HD PDPs

Higher Ultra
Ultra Thin Lower
Energy image Large
Large profile costs
saving quality screen
screen

Neo PDP Realizing Lower Power 25


Less
Less Power
Power
Consumption
Consumption Consumption & Higher Efficiency
Retaining brightness Further expanding
and saving energy
through high light
high-quality with increased
emission efficiency! peak brightness
Halving
power
Annual power consumption indicator (%)

consumption

More vivid
Traditional panel
(Full-HD model
High light emission
efficiency
images!
FY2008) technology

Copyright (C) 2008 Matsushita Electric Industrial Co., Ltd. All Rights Reserved.
13
Neo PDP
Realizing High Quality 26
Higher
Higher picture
picture
quality
quality Images
„ Reproducing cinema quality colors „ High contrast of
Displays yellow, gold and crimson 30,000:1
vividly
0.9 Digital cinema (Questionnaire) Black
Black reproducibility
reproducibility
overwhelming
overwhelming HD
HD CRT
CRT
0.8
Important colors in movies

0.7
G New real black drive method
Dark place contrast Dark place contrast
0.6
Important colors in movies Max. 10,000:1 Max. 30,000:1
(Yellow)

Black level light emission


0.5
y

(Gold )
0.4

(Crimson) Predischarge Predischarge


HDTV
0.3
standards Å1 field (1/60 sec.)Æ Å1 field (1/60 sec.)Æ

0.2 R Further reducing light


emission from pre-discharge
0.1 (Purple) by developing new panel
0
B materials
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8
x DCI: Digital Cinema Initiative

Neo PDP Ultra Large-Screen 27


Ultra
Ultra Large
Large Screen
Screen
Super-Fine TV
Super-fine
Equivalent to nine 4K2K-compliant
50-inch screens (4096×2160)

Full HD (1920×1080)

Displays high-quality images on a dynamic ultra large


screen capable of showing a life-size human!

Copyright (C) 2008 Matsushita Electric Industrial Co., Ltd. All Rights Reserved.
14
Neo PDP 28
Thin
Thin profile
profile "Super" Thin Full-flat PDP
Examples of 50-inch type
22 kg
Approx. 1/2
of the previous
model*2
*2

Full-flat
24.7 mm *1

Approx 1/4
of the previous
model*2

Realizing wall-mounting and many


other innovative viewing styles!
*1 23.7 mm from the glass surface at the thickest section
*2 Compared with our conventional model (TH-50PZ750SK)

Neo PDP
Reducing Full-HD Panel 29
Lower
Lower costs
costs
Costs
Full-HD single scan technology
Reduced number of parts in
42 FHD model FY08
data drive circuit by 65%

Reduction
Item
rate
t
cos
n g the rcuit
Shift to
single scan
i
Halv drive c
e
i Single scan - 50%
of t h
42 FHD model FY09 Multiple outputs
of data driver - 8%
Wave form
optimization - 5%
Others - 2%

Copyright (C) 2008 Matsushita Electric Industrial Co., Ltd. All Rights Reserved.
15
30
Today’s Topics

1. PAVC's Profile and


FY2008 Business Outlook
2. GP3 Plan Outline
3. Flat-panel TV Business Strategy
• Further Evolve PDP TVs
• Strengthen LCD TV Business
• Propose a New Lifestyle by Strengthening
Alliances

Strengthen Foundation 31

of LCD TV Business
Form an Alliance with Hitachi and Canon for
Liquid Crystal Panels

IPS Alpha Technology becomes our subsidiary


„ Realization
Realization of Vertical
Vertical Integration and stable
procurement
Construction of a new panel plant
(Target: commence production in FY2010)
„ Development of OLED Business
Business for the Future

Copyright (C) 2008 Matsushita Electric Industrial Co., Ltd. All Rights Reserved.
16
32
Advantages of IPS-Pro Panel
Compared with VA panel,
Higher viewing angle features

No pixel division

Fewer data drivers Higher transmission

Bright
Bright and
and
Efficient
Efficient circuit
circuit cost
cost comfortable
comfortable display
display
(Reduced driver IC and backlight costs) (1.4 times at single-
single-speed,
1.7 times at double-
double-speed)

33
Today’s Topics

1. PAVC’s Profile and


FY2008 Business Outlook
2. GP3 Plan Outline
3. Flat-panel TV Business Strategy
• Further Evolve PDP TVs
• Strengthen LCD TV Business
• Propose a New Lifestyle by Strengthening
Alliances

Copyright (C) 2008 Matsushita Electric Industrial Co., Ltd. All Rights Reserved.
17
34
HD Wireless Transmission Changes
Scenes in the Living Room
„ Renewing scenes of the living room in combination with
a flat-panel wall-mounted TV
„ Providing a system for simple connection, free layout, and
single remote operation
Uncompressed
wireless
transmission
Beam steering of full-HD
TV tuner, STB, technology eliminating images
Blu-ray Disc recorder, the influence of
and Theater system people crossing
installed anywhere

Compliant to
VIERA Link

35
Enjoy Video Clips on Internet TV
„ Enjoy rich contents of YouTube and Picasa on a large-screen TV with "VIERA CAST"
„ Single-click access to the Internet on a remote controller

VIERA CAST
home screen

• Easy access to YouTube clips


YouTube and Picasa photo sharing
video service, weather forecasts and
stock prices
• Convenient and dramatic
experience on a large-screen
TV unlike PC

Copyright (C) 2008 Matsushita Electric Industrial Co., Ltd. All Rights Reserved.
18
36
New TVs to Enhance
CATV Programs
„ tru2way-ready TV „ AnyPlay
• TV incorporating OpenCable- • "AnyPlay," the first portable set-top box
compliant digital cable • Favorite recorded contents can be
• No need for a set-top box exported to cars and outdoor activities
• Provides latest Comcast services • Capable of playing DVDs
such as HD video on demand with
a single remote controller

"AnyPlay" is a
trademark of Comcast,
a U.S. company

Achieve Digital Hearth

Copyright (C) 2008 Matsushita Electric Industrial Co., Ltd. All Rights Reserved.
19
Disclaimer Regarding Forward-Looking Statements
This presentation includes forward-looking statements (within the meaning of Section 27A of the U.S. Securities Act of 1933 and
Section 21E of the U.S. Securities Exchange Act of 1934) about Matsushita and its Group companies (the Matsushita Group).
To the extent that statements in this presentation do not relate to historical or current facts, they constitute forward-looking
statements. These forward-looking statements are based on the current assumptions and beliefs of the Matsushita Group in light
of the information currently available to it, and involve known and unknown risks, uncertainties and other factors. Such risks,
uncertainties and other factors may cause the Matsushita Group's actual results, performance, achievements or financial
position to be materially different from any future results, performance, achievements or financial position expressed or implied
by these forward-looking statements. Matsushita undertakes no obligation to publicly update any forward-looking statements
after the date of this presentation. Investors are advised to consult any further disclosures by Matsushita in its subsequent filings
with the U.S. Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934.

The risks, uncertainties and other factors referred to above include, but are not limited to, economic conditions, particularly
consumer spending and corporate capital expenditures in the United States, Europe, Japan, China and other Asian countries;
volatility in demand for electronic equipment and components from business and industrial customers, as well as consumers in
many product and geographical markets; currency rate fluctuations, notably between the yen, the U.S. dollar, the euro, the
Chinese yuan, Asian currencies and other currencies in which the Matsushita Group operates businesses, or in which assets
and liabilities of the Matsushita Group are denominated; the ability of the Matsushita Group to respond to rapid technological
changes and changing consumer preferences with timely and cost-effective introductions of new products in markets that are
highly competitive in terms of both price and technology; the ability of the Matsushita Group to achieve its business objectives
through joint ventures and other collaborative agreements with other companies; the ability of the Matsushita Group to maintain
competitive strength in many product and geographical areas; the possibility of incurring expenses resulting from any defects in
products or services of the Matsushita Group; the possibility that the Matsushita Group may face intellectual property
infringement claims by third parties; current and potential, direct and indirect restrictions imposed by other countries over trade,
manufacturing, labor and operations; fluctuations in market prices of securities and other assets in which the Matsushita Group
has holdings or changes in valuation of long-lived assets, including property, plant and equipment and goodwill, and deferred tax
assets; future changes or revisions to accounting policies or accounting rules; as well as natural disasters including earthquakes
and other events that may negatively impact business activities of the Matsushita Group. The factors listed above are not all-
inclusive and further information is contained in Matsushita’s latest annual report on Form 20-F, which is on file with the U.S.
Securities and Exchange Commission.

In order to be consistent with generally accepted financial reporting practices in Japan, operating profit (loss) is presented in
accordance with generally accepted accounting principles in Japan. The company believes that this is useful to investors in
comparing the company's financial results with those of other Japanese companies. Under United States generally accepted
accounting principles, expenses associated with the implementation of early retirement programs at certain domestic and
overseas companies are usually included as part of operating profit (loss) in the statement of income.

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