Financial Overview

(in million JPY)	FY2007	FY2006	Rate of change	Main factors
Overall
Sales	774,477	797,102	(2.8)	-
Net income	(17,992)	(6,761)	-	-
Car Electronics Division
Sales	375,885	359,802	4.5	Sales increased due to greater sales of car navigation systems and car audio products. OEM sales of car navigation systems increased mainly in North America. OEM sales of car audio products increased in Japan, China and North America. OEM sales account for about 39% of total sales for the car electronics business.
Operating income	26,154	22,116	18.3

Business alignment

-In September 2007, the Company and Sharp Corporation agreed to form a business and capital tie-up. By utilizing the resources of both companies and collaborating with one another, the Company intends to create new businesses as well as improve its corporate value in areas such as next generation DVDs, networks, car electronics, and images.

-In December 2007, the Company issued new shares through third-party allocation to Sharp Corporation. As a result, Sharp Corporation held 14.28% of the shares of the Company and became the top shareholder.

-Joint development plan in the car electronics segment.

>>> See R&D for more details

Restructuring business

The Company wholly owned Tohoku Pioneer Corp. as of October 1, 2007. The Company will integrate the speaker business in which both companies are currently engaged. The Company will assume charge of planning and sales, and Tohoku Pioneer will manage technology and production. (From press release dated July 31, 2007)

Establishing a new company

In July 2007, the Company established Q Pro Corp. in a joint venture with SoftBank Telecom Corp. and Increment P Corp. They planned to build a telematics service utilizing the newly developed mobile navigation system. The new company was capitalized at 250 million yen, 40% of which was invested by the Company. (From press release dated March 5, 2008)

>>> See R&D for more details

Business plan

-The Company aims to achieve consolidated sales of 900 billion yen and consolidated operating income of 37 billion yen in FY2010, ending march 2011, under its mid-term business plan.
-In the car electronics business, the Company aims to achieve consolidated sales of 450 billion yen and consolidated operating income of 26 billion yen, as well as to maintain an operating income rate of 6%.

R&D Structure

Facility	Location	Activities
Corporate Research & Development Laboratories	Saitama, Japan	Mid- and long-term R&D of organic electronics, next generation storage, high-function devices, human interfaces, and broadcast communication technologies
Technology Development Center	Saitama, Japan	Development of audio, optical disks, delivery, home network related technologies, next generation car navigation systems, and next generation in-vehicle digital broadcasting reception technologies

R&D Expense

(in million JPY)	FY2007	FY2006	FY2005
Overall	59,395	59,222	63,442
Car electronics business	22,705	21,388	23,217

R&D activities (FY2007)

-Car electronics business

The Company works on researching and developing new car navigation systems which combine navigation functions and image analysis technology using cameras. By applying the image analysis technology, the Company developed an "Image Recognition Car Navigation" system. This navigation system improved convenience and safety by utilizing the following three functions.

(1) Real view navigation	:	The navigation system recognizes traffic lights, traffic lanes, signs, etc. from images in front of the vehicle which are captured using a camera, and gives navigations using real time images.
(2) Peripheral monitoring navigation	:	The navigation system analyzes movements of own vehicle and surrounding vehicles, and provides warnings about potential danger.
(3) Road scape navigation	:	The navigation system analyzes landscape seen on the road, and provides guidance for althernative routes when similar landscape continues.

Based on these technologies, the Company aims to commercialize in-vehicle devices with image processing functions as soon as possible.

Technological tie-up

In September 2007, the Company and Sharp Corporation agreed to form a business tie-up in the car electronics area. The Company aims to create new businesses in the in-vehicle electronics segment by combining Sharp's small- and mid-size display technologies, communication technology and sensor technology, as well as the Company's car navigation technology and know-how for vehicle device installation.

SoftBank Telecom Corp., Increment P Corp. and the Company announced that they have agreed to jointly develop a system for the telematics service scheduled for full launch in the summer of 2008. Q Pro Corp., Minato-ku, Tokyo, jointly established by the three companies, has planned and studied the telematics service utilizing the mobile communications system. Since the infrastructure is being developed as seen in the wide-spreading car navigation systems, efforts will be accelerated to provide a full-scale telematics services. (From an article in the Nikkan Jidosha Shimbun on Mar. 7, 2008)

Capital Expenditure

(in million JPY)	FY2007	FY2006	FY2005
Overall	38,527	47,851	39,026
Car electronics business	18,515	14,576	12,214

New facilities (Related to the Car Electronics Business)

Name	Location	Type of facility	Planned total investment amount (in million JPY)	Starting month	Planned completion
Kawagoe Plant	Saitama, Japan	Production facilities for car electronics products	5,302	Mar. 2008	Mar. 2009
Tohoku Pioneer Corp.	Yamagata, Japan	Production facilities for car electronics products and organic EL	871	Apr. 2008	Mar. 2009
Increment P Corp.	Tokyo, Japan	Map soft etc.	2,993	Apr. 2008	Mar. 2009
Pioneer Manufacturing (Thailand)Co., Ltd.	Ayutthaya, Thailand	Production facilities for car electronics products	2,837	Apr. 2008	Mar. 2009
Tohoku Pioneer (Vietnam) Co., Ltd.	Hai Phong, Vietnam	Production facilities for cell-phone speakers and car speakers	683	Apr. 2008	Mar. 2009
Pioneer Technology (Shanghai) Co., Ltd.	Shanghai, China	Production facilities for car electronics products	2,111	Apr. 2008	Mar. 2009
Pioneer Electronics (Shanghai Export Zone) Co., Ltd.	Shanghai, China	Production facilities for car electronics products	1,866	Apr. 2008	Mar. 2009
Shanghai Pioneer Speakers, Co., Ltd.	Shanghai, China	Production facilities for car electronics products	1,829	Apr. 2008	Mar. 2009