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Global
Excellenc
e
Annual Report 2007
For the year ended March 31, 2007
On the Road to

Table of contents

  • Page 1
    Annual Report 2007 For the year ended March 31, 2007 On the Road to Global Excellence

  • Page 2
    Shareholders Environment Employees Global Excellence Communities Investors Business Partners Customers Since its establishment in 1918, Matsushita Electric Industrial Co., Ltd. has been guided by its basic management philosophy, which states that the mission of an enterprise is to contribute ...

  • Page 3
    ... New Mid-term Management Plan: GP3 Generate Steady Growth with Profitability Business at a Glance Business Review and Strategies 24 AVC Networks 32 Home Appliances 38 Components and Devices 43 MEW and PanaHome 45 JVC 45 Other 46 48 55 58 59 63 118 118 R&D and Intellectual Property Corporate...

  • Page 4
    Financial Highlights Matsushita Electric Industrial Co., Ltd. and Subsidiaries Years ended March 31, 2007, 2006 and 2005 Millions of yen, except per share information Percentage of previous year Millions of U.S. dollars, except per share information 2007 2006 2005 2007/2006 2007 Net sales ...

  • Page 5
    ... 0 0 2003 2004 2005 2006 2007 0 2003 2004 2005 2006 2007 Income before Income Taxes Income before Income Taxes/Sales Ratio 0 -40 2003 2004 2005 2006 2007 Net Income (Loss) Net Income (Loss)/Sales Ratio -0.4 Stockholders' Equity and ROE Capital Investment R&D Expenditures Billions of yen...

  • Page 6
    ... markets. Another goal of the GP3 plan is to use Groupwide innovation activities to transform Matsushita into a manufacturing-oriented company- one that combines all the business activities of the Group toward the launch of products, thereby contributing to the creation of customer value. To achieve...

  • Page 7
    Kunio Nakamura, Chairman Fumio Ohtsubo, President Matsushita Electric Industrial Co., Ltd. 2007 5

  • Page 8
    ... remain? Answer... During the term of the Leap Ahead 21 plan, we applied the finishing touches to Matsushita's business reorganization and restructuring. As a result, we achieved our fiscal 2007 goals of an operating profit to sales ratio of 5% or more and a positive Capital Cost Management (CCM...

  • Page 9
    ... market support, significantly helping to boost Matsushita's profitability. Third, we promoted greater collaboration with Matsushita Electric Works, Ltd. (MEW). By integrating sales and manufacturing functions, implementing a shared brand strategy, and working together to enhance product lineups...

  • Page 10
    ... Division for Promoting "Manufacturing-oriented" Innovation on April 1, 2007, headed by myself. Matsushita defines a manufacturing-oriented company as one that combines all the business activities of the Group toward the launch of products, thereby contributing to the creation of customer value...

  • Page 11
    ... management. Question 5 ... Competition in the flat-panel TV market is increasingly intense. How then does Matsushita intend to grow its business? Also, what is your outlook for prices and how do you plan to raise profitability? Answer... In fiscal 2007, global demand for 37-inch or larger flat...

  • Page 12
    ... recorders, home theater systems, and other equipment using a single remote control, we aim to offer more distinct, high-value-added products that will stand firm against falling prices. * Full HD: 2.07 million pixels (1,920 horizontal x 1,080 vertical pixels) Question 6 ... Overseas sales growth...

  • Page 13
    ... capability to develop and produce system LSIs, which are the determining factor in the competitiveness of digital products. For example, in the semiconductor business, we are incorporating our state-of-the-art technologies in finished Matsushita products, thereby helping to create a more distinct...

  • Page 14
    ...for Enhancement of Shareholder Value. Question 9 ... Corporate social responsibility (CSR) is increasingly important. What is your basic approach to CSR? Answer... Matsushita's unwavering management philosophy of contributing to society as a public entity has guided its business activities since...

  • Page 15
    ..., ROE of 10% Mid-term growth strategies Double-digit growth in overseas sales Four strategic businesses Continuous selection and concentration Fiscal GP3 Plan 2007 Under the Leap Ahead 21 plan, the Matsushita Group set minimum targets of an operating profit to sales ratio of 5% or more and...

  • Page 16
    ... target key markets for washing machines, refrigerators and other white goods, and beauty and health-related home appliances. The Company also aims to grow its digital AV products business, which includes flatpanel TVs and digital cameras, by targeting the growing number of wealthier consumers. In...

  • Page 17
    ...new products to significantly boost sales. Manufacturing That Draws on Customer Feedback Sales divisions Latin North America America Europe AVC Asia China CIS ••• Manufacturing divisions Fixed-line communications Automotive electronics Home appliances Refrigeration, air conditioning and...

  • Page 18
    ... and solutions Digital AV business Focus on five strategic products, including flat-panel TVs, to drive growth Collaboration between products and solutions Appliance Solutions Businesses providing comfortable living Offer total solutions for homes and other buildings More distinct products with...

  • Page 19
    ... products, including flat-panel TVs, to drive growth Matsushita has selected five strategic product categories in its digital AV business: plasma TVs, LCD TVs, digital cameras, Blu-ray (BD) recorders and drives, and HD camcorders. Demand for flat-panel TVs is expanding worldwide. The Company plans...

  • Page 20
    ... and meticulous approach to manufacturing. Automotive multimedia By leveraging Group-wide digital AV technologies, the Company will develop comfortable, convenient and easy-to-use products such as car audio equipment, car navigation systems and rear-seat entertainment systems. Matsushita's aim is to...

  • Page 21
    ..., AVC and lighting. In security for homes and offices, an area expected to see growth, Matsushita will reinforce product and cost competitiveness. To develop this total solutions approach, the Company has set up a cross-Group project that will reinforce businesses providing comfortable living...

  • Page 22
    ... meet needs for more networked products. In addition, Matsushita will reinforce its solution capabilities to increase sales to customers outside the Matsushita Group in order to ensure growth and boost profits in the semiconductor business. In other device businesses, the Company will focus on areas...

  • Page 23
    .... Going forward, the Company intends to step up R&D activities as part of its efforts to maintain growth. Investment to save time in business development Where necessary, Matsushita plans to invest in acquiring technology and intellectual property from outside the Group, and in some cases, M&As to...

  • Page 24
    ..., mobile phones, facsimile equipment, broadcast- and business-use AV equipment, communications network-related equipment, traffic-related systems, car AVC equipment, etc. Main Products Refrigerators, room air conditioners, washing machines, clothes dryers, vacuum cleaners, electric irons, microwave...

  • Page 25
    ... Electric Works, Ltd. PanaHome Corporation Business Domain Companies and Group Companies (as of March 31, 2007) Victor Company of Japan, Ltd. Business Domain Companies and Group Companies (as of March 31, 2007) Panasonic Factory Solutions Co., Ltd. Matsushita Welding Systems Co., Ltd. Others Main...

  • Page 26
    ... and communications equipment, although sales of mobile phones remained sluggish, increased sales were recorded in automotive electronics. The Company also implemented initiatives to strengthen its home networks business and security-related systems business. For the future, Matsushita will...

  • Page 27
    ...equipment, based around flat-panel VIERA TVs, with a single remote control. With the VIERA Link, the Company offers solutions that enable people to enjoy audiovisual experiences more easily. * In the U.S., Canada and some other regions, this function is sometimes called EZ-Sync. Matsushita Electric...

  • Page 28
    A full HD plasma TV that realizes excellent picture quality and is easy to use AVC Business In the AVC business, Matsushita is currently promoting its "3D" value chain strategy, which encompasses digital TV (DTV), DVD and SD Memory Card businesses. Based on this strategy, the Company is working to ...

  • Page 29
    ... An HD LCD TV featuring IPS technology An HD BD recorder with an internal HDD The LUMIX series of digital cameras steadily increased market share. This reflected the introduction, ahead of other companies, of models featuring an Optical Image Stabilizer, and the effective use of Matsushita's in...

  • Page 30
    ...led to increased sales of SD Memory Cards in fiscal 2007, particularly for use in products such as flat-panel TVs, digital cameras and mobile phones. In fiscal 2007, Matsushita launched a new 4GB SDHC Memory Card* to meet rising consumer needs related to the recording and storage of large volumes of...

  • Page 31
    ... systems and other products; office networks, including communications equipment, digital color multifunction products (MFPs) and other office products; and optical devices such as optical disc drives. In fiscal 2007, in home networks, TV door intercom systems with wireless color monitor handsets...

  • Page 32
    ...communications infrastructure equipment. In fiscal 2007, mobile number portability (MNP) was introduced in Japan in October 2006, triggering more intense competition among mobile phone handset manufacturers. In this environment, Matsushita resumed shipments of handsets to SOFTBANK MOBILE Corporation...

  • Page 33
    ...in Japan, Matsushita maintained its high market share in digital set-top boxes for cable TV. It also continued to win strong support for its HD cameras from TV broadcasters. Furthermore, the Company recorded higher sales of IC card verification and settlement systems, payment terminals for logistics...

  • Page 34
    ... and a built-in automatic air filter cleaning system. Moreover, with the spread of all-electric homes, sales of induction heating (IH) cooking equipment and natural-refrigerant water heating systems grew, helping to drive an overall increase in sales in home appliances. Going forward, by working to...

  • Page 35
    ... annual usage time in compliance with the JIS C9612-2005 standard. The new deodorizing filters have been certified as effective for a period equivalent to more than 10 years in a room where 10 cigarettes are smoked every day (Matsushita estimates). Matsushita Electric Industrial Co., Ltd. 2007 33

  • Page 36
    ... for one year. Household Appliances/ Refrigeration, Air Conditioning and Heating In household appliances, Matsushita's main business areas include washing machines, dishwasher/dryers, vacuum cleaners, IH cooking equipment, microwave ovens, rice cookers and other products related to housework...

  • Page 37
    ... high-value-added products underpinned by environmental technologies and universal design that customers can use easily and with confidence. In 2005, Matsushita established the China Lifestyle Research Center at Panasonic Corporation of China to identify the needs of Chinese consumers related...

  • Page 38
    ..., high-quality healthcare services at reasonable cost. The lighting business consists of general lighting products including fluorescent and incandescent lamps, industrialuse light sources such as LCD backlights, electronic flash units for cameras and related equipment. In the year under review...

  • Page 39
    ... for mobile phone base station cooling units, the Company completed construction of a new factory in Beijing, China, in January 2007. Going forward, to enhance cost-competitiveness in global markets, Matsushita intends to actively utilize its overseas operating sites. Matsushita Electric Industrial...

  • Page 40
    ... is helping the Company to rapidly launch high-value-added products that meet customer needs. In fiscal 2007, Matsushita accelerated efforts to use its Integrated Platform system LSIs in products in the semiconductor business. In the electronic devices and electric motors businesses, the Company...

  • Page 41
    Today, digital home appliances need vast amounts of software due to rising performance and increasingly integrated functions. Matsushita's Integrated Platform system LSIs dramatically improve the efficiency of software development, reduce development lead times and cost, and ensure higher levels of ...

  • Page 42
    ... on cutting-edge technologies to finished product divisions across the Group, and actively works to tap demand from external clients. In fiscal 2007, sales of semiconductor devices for digital AV equipment such as plasma TVs and digital cameras were strong. However, products for mobile phones and PC...

  • Page 43
    ... cameras. Furthermore, sales of electronic devices for mobile phones designed for "one-segment" terrestrial digital TV broadcast function were strong during the year under review. Examples of products that recorded higher sales included high-frequency components, high-density printed circuit boards...

  • Page 44
    ..., including home appliances, AV equipment and industrial equipment. In the year under review, sales of FA servo motors, motors for vacuum cleaners and compact brushless motors used in game consoles were strong. The electric motors business also enhanced cooperation with finished product divisions...

  • Page 45
    ..., security and health as it works to provide total solutions that realize comfortable living for its customers. Centered on electronic and plastic materials, automation controls, and lighting devices, MEW will reinforce its overseas strategy with a particular emphasis on China and other countries in...

  • Page 46
    ... and property management, and home remodeling. In all these businesses, to provide living spaces that are friendly to both people and the environment, the company's product strategies are guided by the basic "Eco-life Home" concept, which emphasizes safety, security, health, comfort and high energy...

  • Page 47
    ...products as audio equipment in Japan, as well as CRT TVs overseas. Looking ahead, JVC will strive to increase sales by supplying products incorporating its renowned technologies that deliver high-quality picture and sound. OTHER Factory Automation In the factory automation (FA) business, Matsushita...

  • Page 48
    ... technologies such as fuel cell cogeneration systems; and various manufacturing technologies. By coordinating business, technology and intellectual property strategies, the Company works to develop distinct technologies-the source of Matsushita's competitiveness-and secure intellectual property...

  • Page 49
    Matsushita Develops 103-inch Full HD Plasma TV- the World's Largest* Shinji Masuda Leader, Development Team for 103-inch VIERA Plasma TV Panels less electricity; network-compatible digital TVs and other networkable products; next-generation mobile phones; fuel cell cogeneration systems that ...

  • Page 50
    ... swift and strategic decisionmaking, as well as the optimum monitoring of Groupwide matters. Specifically, the Board of Directors concentrates on corporate strategies and the supervision of business domain companies, while Executive Officers handle responsibilities relating to day-to-day operations...

  • Page 51
    ... in June 2006. * Capital Cost Management: an indicator created by Matsushita to evaluate return on capital. Internal Control Systems Compliance The Company has formulated the Matsushita Group Code of Conduct to clearly explain in easy-to-understand terms how its management philosophy should be...

  • Page 52
    ... trust in the Company by achieving the same level of information security for each business site and employee worldwide, and by managing customer and business partner information in an appropriate manner. 2. Boost management efficiency and enhance corporate value by ensuring trade secrets, personal...

  • Page 53
    ... actively pursuing manufacturing of more competitive products based on its unique technologies. Moreover, in order to reinforce management structures, the Company will reduce costs and curb total assets by reducing inventories. Matsushita also strives to maximize its corporate value by utilizing...

  • Page 54
    ...Company's Web site: http://panasonic.co.jp/corp/news/official.data/data.dir/ en070427-9/en070427-9.html Evaluation of measures by the Board of Directors and rationale for evaluation Matsushita's current mid-term management plan was formulated as a specific measure to increase the Company's corporate...

  • Page 55
    ... to establish a board of corporate auditors, comprising all the company's corporate auditors. As of June 27, 2007, Matsushita had five (5) corporate auditors, of which three (3) were outside corporate auditors. Each Corporate Auditor of Matsushita has a four-year term. In contrast, the term of each...

  • Page 56
    ... companies Corporate Governance Practices Followed by Matsushita A corporate auditor also has a statutory duty to examine the financial statements of Matsushita, and receives auditors' reports from an accounting auditor (a certified public accountant or an accounting firm). The board of corporate...

  • Page 57
    ...activities Promote environmental management Enforce compliance Clearer accountability Strengthen information security Corporate governance/Internal control/Risk management "A company is a public entity of society" Open communication with society Matsushita Electric Industrial Co., Ltd. 2007 55

  • Page 58
    ...with remaining issues through the Corporate FF Customer Support & Management Division. Matsushita employees involved in activities to locate remaining FF-type kerosene fan heaters in cold regions of Japan Protecting the Environment Basic Environmental Policy Coexistence with the global environment...

  • Page 59
    ...the Panasonic Center Tokyo Use of the Astro Vision screen was donated to Gallaudet University to air a public service announcement â- Dreams Come to School ACADEMIC: Matsushita participated in this program run by Japan's Ministry of Economy, Trade and Industry designed to help children plan their...

  • Page 60
    ... Products/Director, Corporate Marketing Division for National Brand Home Appliances Takashi Toyama President, Panasonic System Solutions Company/Director, Corporate Construction Business Promotion Division â- Executive Officers Yoshitaka Hayashi Director, Corporate Management Division for China...

  • Page 61
    ...may have greater financial, technological, and marketing resources than Matsushita in the respective businesses in which they compete. Rapid declines in product prices may adversely affect Matsushita's financial condition Matsushita's business is subject to intense price competition worldwide, which...

  • Page 62
    ... number of suppliers, which also may adversely affect Matsushita's business, operating results and financial condition. Matsushita is exposed to the risk that its customers may encounter financial difficulties Many of Matsushita's customers purchase products and services from Matsushita on payment...

  • Page 63
    Risks Related to Matsushita's Management Plans Matsushita is implementing its new mid-term management plan, called the "GP3 plan" (announced on January 10, 2007) for the three-year term ending March 2010. In line with its twin corporate visions of "contributing to realizing a ubiquitous networking ...

  • Page 64
    ... effect on its business operations Matsushita's headquarters and major facilities including manufacturing plants, sales offices and research and development centers are located in Japan. Matsushita also operates procurement, manufacturing, logistics, sales and research and development facilities...

  • Page 65
    ... ...Consolidated Statements of Cash Flows ...Notes to Consolidated Financial Statements ...Management's Report on Internal Control Over Financial Reporting ...Report of Independent Registered Public Accounting Firm ...64 65 72 74 75 76 77 115 116 Matsushita Electric Industrial Co., Ltd. 2007 63

  • Page 66
    ... the Tokyo Foreign Exchange Market on March 31, 2007. 4. In order to be consistent with financial reporting practices generally accepted in Japan, operating profit is presented as net sales less cost of sales and selling, general and administrative expenses. Under U.S. generally accepted accounting...

  • Page 67
    ... net sales for fiscal 2007 ended March 31, 2007 increased 2% to ¥9,108.2 billion ($77,188 million), from ¥8,894.3 billion in the previous fiscal year. The electronics industry in the fiscal year under review faced severe business conditions in Japan and overseas, due mainly to rising prices for...

  • Page 68
    ... single system LSI, thereby realizing over 50 hours of music playback and over 5 hours viewing of "One Segment" broadcasting on a mobile phone. 300 200 100 0 2003 2004 2005 2006 2007 * In order to be consistent with financial reporting practices generally accepted in Japan, operating profit is...

  • Page 69
    ... sales of video and audio equipment increased, due mainly to strong sales of digital AV products, such as flat-panel TVs and digital cameras. Sales of information and communications equipment decreased as a result of sluggish sales in mobile phones, although sales of automotive electronics equipment...

  • Page 70
    ... increased sales overall. Information by Business Segment Millions of yen Thousands of U.S. dollars 2007 2006 2005 2004 2003 2007 Sales: AVC Networks ...Home Appliances ...Components and Devices ...MEW and PanaHome ...JVC ...Other ...Eliminations ...Consolidation total ...Segment profit: AVC...

  • Page 71
    ... as the previous year. Sales in Europe increased 9% to ¥1,218.0 billion ($10,322 million), from the previous year's ¥1,113.6 billion. Despite decreased sales of audio equipment and mobile phones, sales gains were recorded in flat-panel TVs, digital cameras, as well as microwave ovens, resulting in...

  • Page 72
    ... 2007 totaled ¥418.3 billion ($3,545 million), up 21% from the previous fiscal year's total of ¥345.8 billion. The Company implemented capital investment primarily to increase production capacity in strategic business areas such as semiconductors and digital AV equipment, particularly plasma TVs...

  • Page 73
    ... The Company defines capital investment as purchases of property, plant and equipment on an accrual basis which reflects the effects of timing differences between acquisition dates and payment dates. The Company has included the information concerning capital investment because its management uses...

  • Page 74
    ... Balance Sheets Matsushita Electric Industrial Co., Ltd. and Subsidiaries March 31, 2007 and 2006 Millions of yen Thousands of U.S. dollars (Note 2) Assets 2007 2006 2007 Current assets: Cash and cash equivalents (Note 10) ...Â¥1,236,639 Time deposits (Note 10) ...225,458 Short-term investments...

  • Page 75
    ... of long-term debt (Notes 7, 10 and 19) ...Â¥ 223,190 Trade payables (Note 5): 51,602 Notes ...Accounts ...883,375 Total trade payables ...Accrued income taxes (Note 12) ...Accrued payroll ...Other accrued expenses (Note 20) ...Deposits and advances from customers ...Employees' deposits ...Other...

  • Page 76
    ... Statements of Income Matsushita Electric Industrial Co., Ltd. and Subsidiaries Years ended March 31, 2007, 2006 and 2005 Millions of yen Thousands of U.S. dollars (Note 2) 2007 2006 2005 2007 Revenues, costs and expenses: Net sales (Note 5) ...¥9,108,170 ¥8,894,329 ¥8,713,636 Cost of sales...

  • Page 77
    ...Statements of Stockholders' Equity Matsushita Electric Industrial Co., Ltd. and Subsidiaries Years ended March 31, 2007, 2006 and 2005 Millions of yen Thousands of U.S. dollars (Note 2) 2007 2006 2005 2007 Common stock (Note 13): Balance at beginning of year ...Balance at end of year ...Capital...

  • Page 78
    Consolidated Statements of Cash Flows Matsushita Electric Industrial Co., Ltd. and Subsidiaries Years ended March 31, 2007, 2006 and 2005 Millions of yen Thousands of U.S. dollars (Note 2) 2007 2006 2005 2007 Cash flows from operating activities (Note 17): Net income ...Â¥ 217,185 Adjustments ...

  • Page 79
    ...and equipment, and housing business. Most of the Company's products are marketed under "Panasonic" and several other trade names, including "National," "Technics," "Quasar," "Victor," "JVC" and "PanaHome." Sales by product category in fiscal 2007 were as follows: AVC Networks-41%, Home Appliances-14...

  • Page 80
    ...on the following estimated useful lives: Buildings ...5 to 50 years Machinery and equipment ...2 to 10 years ( i ) Goodwill and Other Intangible Assets (See Note 9) Goodwill represents the excess of costs over the fair value of net assets of businesses acquired. The Company adopted the provisions of...

  • Page 81
    ...its risk-management objective and strategy for undertaking various hedge transactions. The Company also formally assesses, both at the hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or...

  • Page 82
    ... employee service using a fair-value-based method of accounting for stock-based employee compensation plans. The Company had continuously applied the intrinsicbased-method of accounting prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related...

  • Page 83
    ..., building products and related materials based in Osaka, Japan. As a result of the acquisition, the Company is expected to provide a comprehensive range of home electric and household equipment and systems in Japan. It also expects to reduce costs through economies of scale and sharing of research...

  • Page 84
    ...statements of income. Of the ¥25,533 million of acquired intangible assets, ¥20,005 million was assigned to assets subject to amortization, which have a weighted-average useful life of approximately seven years and include technologies of ¥9,592 million with a 10-year weighted-average useful life...

  • Page 85
    ...30, 2007, the Company acquired 35.5% equity of MTPD from Toshiba Corporation and as a result, has a 100% equity in MTPD. MTPD is engaged in manufacturing and distributing cathode ray tubes. The impact of consolidating MTPD is not material to the Company's consolidated financial statements. Financial...

  • Page 86
    ...2007: Millions of yen 2007 2006 2005 Thousands of U.S. dollars 2007 Purchases from ...¥301,859 Sales to ...250,863 ¥261,458 204,740 ¥260,745 192,489 $2,558,127 2,125,958 Dividends received from associated companies for the three years ended March 31, 2007 are as follows: Millions of yen 2007...

  • Page 87
    6. Investments in Securities The Company classifies its existing marketable equity securities other than investments in associated companies and all debt securities as available-for-sale. The cost, fair value, gross unrealized holding gains Millions of yen Gross unrealized holding gains Gross ...

  • Page 88
    Maturities of investments in available-for-sale securities at March 31, 2007 and 2006 are as follows: Millions of yen 2007 Cost Fair value Cost 2006 Fair value Cost Thousands of U.S. dollars 2007 Fair value Due within one year ...¥ 93,089 ¥ 93,179 ¥ 56,769 ¥ 56,753 $ 788,890 $ 789,653 Due after...

  • Page 89
    ... During the years ended March 31, 2007, 2006 and 2005, the Company sold and leased back certain machinery and equipment for ¥73,578 million ($623,542 thousand), ¥115,326 million and ¥49,574 million, respectively. The base lease term is 2 to 5 years. The resulting leases are being accounted for as...

  • Page 90
    ... segment profit. The Company recognized impairment losses in the aggregate of ¥18,324 million ($155,288 thousand) of property, plant and equipment during fiscal 2007. The Company closed a domestic factory that manufactured air conditioner devices and recorded an impairment loss related to buildings...

  • Page 91
    ...fair value of buildings was determined based on the discounted estimated future cash flows expected to result from the use of the buildings and their eventual disposition. Impairment losses of ¥13,393 million, ¥8,555 million and ¥6,317 million were related to "AVC Networks," "Home Appliances" and...

  • Page 92
    ... loss of ¥50,050 million during fiscal 2006 related to goodwill of a mobile communication subsidiary. This impairment is due to a decrease in the estimated fair value of the reporting unit caused by decreased profit expectation and the closure of certain businesses in Europe and Asia. The fair...

  • Page 93
    ... loans from banks. At March 31, 2006, property, plant and equipment with a book value of ¥6,645 million was pledged as collateral by subsidiaries for secured yen loans mainly from Development Bank of Japan. At March 31, 2007 and 2006, short-term loans subject to such general agreements amounted to...

  • Page 94
    ... a "point-based benefits system," under which benefits are calculated based on accumulated points allocated to employees each year according to their job classification and years of service. The contributory, funded benefit pension plans included those under Employees Pension Funds (EPF) as is...

  • Page 95
    ... of SFAS No. 158 had no effect on the consolidated statement of income for the year ended March 31, 2007, or for any prior period presented, and it will not affect the Company's operating results in future periods. Millions of yen Before Application of SFAS No. 158 Adjustments After Application...

  • Page 96
    ...sum payment plans, and the cash balance pension plans, and the fair value of the plan assets at March 31, 2007 and 2006 are as follows: Millions of yen 2007 2006 Thousands of U.S. dollars 2007 Change in benefit obligations: Benefit obligations at beginning of year ...¥1,930,073 ¥1,885,228 Service...

  • Page 97
    ..., funded benefit pension plans, the unfunded lump-sum payment plans, and the cash balance pension plans of the Company for the three years ended March 31, 2007 consisted of the following components: Millions of yen 2007 2006 2005 Thousands of U.S. dollars 2007 Service cost-benefits earned...

  • Page 98
    ... 2007 2006 Asset category: Equity securities ...Debt securities ...Life insurance company general accounts ...Other ...Total ...Each plan of the Company has a different investment policy, which is designed to ensure sufficient plan assets are available to provide future payments of pension benefits...

  • Page 99
    ... Total For the year ended March 31, 2007 Income before income taxes ...$2,686,500 Income taxes: Current ...711,966 Deferred ...576,135 Total income taxes ...$1,288,101 $1,035,059 300,449 37,407 $ 337,856 $3,721,559 1,012,415 613,542 $1,625,957 Matsushita Electric Industrial Co., Ltd. 2007...

  • Page 100
    ...: Millions of yen 2007 2006 Thousands of U.S. dollars 2007 Deferred tax assets: Inventory valuation ...Â¥ 94,489 Expenses accrued for financial statement purposes but not currently included in taxable income ...251,194 Property, plant and equipment ...167,089 Retirement and severance benefits ...76...

  • Page 101
    ... at March 31, 2007. The net change in total valuation allowance for the years ended March 31, 2007, 2006 and 2005 was a decrease of ¥25,263 million ($214,093 thousand), an increase of ¥152,947 million and an increase of ¥65,127 million, respectively. At March 31, 2007, the Company had, for income...

  • Page 102
    ... of ¥496,568 million ($4,208,203 thousand) at March 31, 2007 were restricted as to the payment of cash dividends. The Company's directors and certain senior executives were granted options to purchase the Company's common stock. All stock options become fully exercisable two years from the date of...

  • Page 103
    ... amount For the year ended March 31, 2007 Translation adjustments: Translation adjustments arising during the period ...Less: Reclassification adjustment for losses included in net income ...Net translation adjustments ...Unrealized holding gains of available-for-sale securities: Unrealized holding...

  • Page 104
    ...ended March 31, 2007 is as follows: Millions of yen 2007 2006 2005 Thousands of U.S. dollars 2007 Net income ... ¥217,185 ¥154,410 Number of shares ¥58,481 $1,840,551 Average common shares outstanding ...2,182,791,138 Dilutive effect: Stock options ...13,858 Diluted common shares outstanding...

  • Page 105
    ... manufacturing plants and sales offices. An analysis of the accrued restructuring charges for the year ended March 31, 2007, 2006 and 2005 is as follows: Millions of yen 2007 2006 2005 Thousands of U.S. dollars 2007 Balance at beginning of the year ...Â¥ 1,335 New charges ...19,574 Cash payments...

  • Page 106
    ... million ($1,906 thousand) mainly in domestic sales companies. The following represent significant restructuring activities for the year ended March 31, 2006 by business segment: AVC Networks AVC Networks segment restructured mainly to address price declines in digital AV products. The restructuring...

  • Page 107
    ... sales offices in Japan for information and communications equipment business. Total restructuring charges amounted to ¥57,742 million, including expenses associated with the implementation of early retirement programs of ¥52,666 million. Home Appliances Home Appliances segment restructured mainly...

  • Page 108
    ..., "Accounting for Transfer and Servicing of Financial Assets and Extinguishments of Liabilities." Interest expenses and income taxes paid, and noncash investing and financing activities for the three years ended March 31, 2007 are as follows: Millions of yen 2007 2006 2005 Thousands of U.S. dollars...

  • Page 109
    ...present value of future cash flows using appropriate current discount rates. Derivative financial instruments The fair value of derivative financial instruments, all of which are used for hedging purposes, are estimated by obtaining quotes from brokers. Matsushita Electric Industrial Co., Ltd. 2007...

  • Page 110
    ...held or issued for purposes other than trading, at March 31, 2007 and 2006 are as follows: Millions of yen 2007 Carrying amount Fair value Carrying amount 2006 Fair value Carrying amount Thousands of U.S. dollars 2007 Fair value Non-derivatives: Assets: Short-term investments ...¥ 93,179 ¥ 93,179...

  • Page 111
    ... product warranties under which it generally guarantees the performance of products delivered and services rendered for a certain period or term. The change in accrued warranty costs for the years ended March 31, 2007 and 2006 are summarized as follows: Thousands of U.S. dollars 2006 2007 Millions...

  • Page 112
    ... electronic-parts-mounting machines, industrial robots and industrial equipment. Information by segment for the three years ended March 31, 2007 is shown in the tables below: Sales: AVC Networks: Customers ...¥3,948,720 ¥ 3,894,274 ¥ 3,745,339 Intersegment ...98,451 91,814 113,442 Total ...Home...

  • Page 113
    Millions of yen 2007 2006 2005 Thousands of U.S. dollars 2007 Segment profit: AVC Networks ...¥ 219,654 ¥ 190,885 Home Appliances ...83,510 77,135 Components and Devices ...99,884 81,111 MEW and PanaHome ...78,889 72,694 JVC ...(5,659) (5,782) Other ...60,500 62,225 Corporate and eliminations ...

  • Page 114
    ... mainly represent patents and software. Sales attributed to countries based upon the customer's location and property, plant and equipment are as follows: Millions of yen 2007 2006 2005 Thousands of U.S. dollars 2007 Sales: Japan ...Â¥4,616,520 North and South America ...1,381,104 Europe...

  • Page 115
    ... Securities and Exchange Law, which a Japanese public company is subject to: Millions of yen 2007 2006 2005 Thousands of U.S. dollars 2007 Sales: Japan: Customers ...¥4,941,413 ¥ 4,945,802 ¥ 5,033,645 Intersegment ...2,029,589 1,944,537 1,586,407 Total ...North and South America: Customers...

  • Page 116
    114 Matsushita Electric Industrial Co., Ltd. 2007

  • Page 117
    ...Company's independent registered public accounting firm, KPMG AZSA & Co. has issued an audit report on our evaluation of internal control over financial reporting as of March 31, 2007. June 27, 2007 Fumio Ohtsubo President Makoto Uenoyama Director (In charge of Accounting and Finance) Matsushita...

  • Page 118
    ... Independent Registered Public Accounting Firm The Board of Directors and Stockholders of Matsushita Electric Industrial Co., Ltd. We have audited the accompanying consolidated balance sheets of Matsushita Electric Industrial Co., Ltd. and subsidiaries as of March 31, 2007 and 2006, and the related...

  • Page 119
    ... the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Matsushita Electric Industrial Co., Ltd. and subsidiaries as of March 31, 2007 and 2006, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the years in...

  • Page 120
    ...Ltd. Panasonic AVC Networks Singapore Pte. Ltd. Panasonic Communications Philippines Corporation Panasonic Taiwan Co., Ltd. Panasonic Corporation of China Panasonic Home Appliances Air-Conditioning (Guangzhou) Co., Ltd. Corporate Headquarters Investor Relations Office Matsushita Electric Industrial...

  • Page 121
    ... Sumitomo Life Insurance Co...35,382 ...1.44 Mitsui Sumitomo Insurance Co., Ltd...35,106 ...1.43 â- Other Corporations Matsushita Electric Employee Shareholding Association .. 33,827 ...1.37 6.3% Japan Trustee Services Bank, Ltd. (trust account No. 4) ...32,780 ...1.33 Notes 1. Percentage of total...

  • Page 122
    http://panasonic.net/ Matsushita Electric Industrial Co., Ltd. This entire report is printed with soy ink on paper which is 50% recycled. Printed in Japan