Financial Overview

(in million JPY)

-	FY2008	FY2007	Rate of change	Main factors
Overall
Sales	558,837	774,477	(27.8)	Overall sales decreased year-on-year, mainly due to falling demand for car audio systems, plasma display systems, and DVD drives, as the economy slowed down.
Net income	(130,529)	(19,040)	-	-
Car Electronics Division
Sales	291,704	375,885	(22.0)	Hit by lower vehicle demand worldwide, sales of both car navigation devices and audio systems decreased. Car navigation devices: Sales of aftermarket products decreased from a year ago due to falling demand in North America, Japan, and Europe. OEM sales to car makers, on the other hand, increased year-on-year, thanks to greater sales in Japan and China, which more than offset a fall in North America. Car audio systems: Sales of aftermarket products decreased year-on-year due to a fall in demand outside Japan. OEM sales to car makers also declined year-on-year, because of declining demand especially in Japan and North America.
Operating income	(12,337)	26,154	-	-

Business alignment

In Aug. 2008, Honda Motor Co., Ltd. announced its new partnerships with the Company and Yahoo Japan Corp. It will share data from probe cars on traffic situation with Pioneer, and driving-related information with Yahoo. Pioneer started providing probe-car information through marketed car-navigation systems in the spring of 2007 and has expanded its services as in the case of its "Air Navi" portable car navigation system launched in June 2008. Sharing data with Honda, which also uses probe-car information, is aimed to increase route guidance accuracy and enhance services. Honda and Yahoo will share spot and route information of internavi Premium Club members' homepage and "Yahoo! Drive" drive information site. Mutual data exploitation will start by the end of this year with Pioneer and from mid-October with Yahoo. (From an article in the Nikkan Jidosha Shimbun on Aug. 29, 2008)

The Company announced that Honda Motor Co., Ltd. and it will start mutual exploitation of its "Real-time Probe Data" and Honda's "Internavi floating car data" on Jan. 19, 2009. The operation start-up had been delayed up to this timing from its original plan, that is, by the end of 2008, because of construction of the data-linkage system was behind the schedule. While the two companies have established their own probe systems, they have decided to share fundamental information for probe data construction including vehicle locations in order to improve data accuracy and added value for users. (From an article in the Nikkan Jidosha Shimbun on Jan. 20, 2009)

Establishing a new company

In Nov. 2008, the Company announced that it will establish Pioneer India Electronics Private Ltd., its sales base in India, to make a full-scale entry into the Indian market. Pioneer India will be located in Gurgaon, near Delhi, and market car audio (CD and DVD) systems, car amplifiers as well as speakers in India, which is expected to have a potential for growth to become a huge consumer market. Capital investment will be 160 million rupees (approx. 300 million yen), funded 99% by Pioneer Electronics Asiacentre Pte. Ltd. that manages the company's Asian operations, and 1% by Pioneer Electronics (Singapore) Pte. Ltd., a sales company in Singapore. Pioneer India is scheduled to start operations in January 2009 with 20 employees. (From an article in the Nikkan Jidosha Shimbun on Nov. 22, 2008)


Medium-term business plan
- The Company is projecting an operating loss and a net loss in FY2009 ending in March 2010. It plans to complete its structural reorganization plan by March 2010, aiming to achieve a turnaround in FY2010. Specifically, it aims to generate an operating profit at its Car Electronics and Home Electronics Business, and a net profit in its consolidated financial statement.


Car electronics business
The Company will expand its car electronics business to the levels of 400 million yen in the next two to three years. In the year ending March 2009, its sales of car electronics products are projected to drop by 77.9 billion yen from the previous year's result to 296 billion yen, dipping below the 300 billion yen mark. The company, which has decided to scale back its falling home electronics business, will concentrate its management resources on car electronics business, targeting more than a 100 billion yen increase in earnings. Special focus will be set on communication devices and services through collaboration with its partners. By making its car navigation systems more competitive, the company aims to become a leader of the next-generation in-vehicle communication products. Pioneer aims to move into the black by fiscal year 2011 based on the new business structure focused on the car electronics business. It will accelerate its efforts to expand sales of its SmartLoop technology, which enables communication among car navigation system users. Naviportal Corporation (Minato Ward, Tokyo), a joint-venture company created by Softbank Telecom Corporation, Pioneer, and other corporations last year, will strengthen activities to develop technology making full use of communication infrastructure and to offer more convenient and valuable services. (From an article in the Nikkan Jidosha Shimbun on Feb. 16, 2009)

The Company announced on Feb. 12, 2009 new restructuring measures to improve profitability. It will streamline its home electronics business and establish itself as a new firm centered on the car electronics business. Although the car electronics business, both in consumer and OEM areas, is severely affected by drastic decline in auto demand, Pioneer anticipates seeing signs of recovery in the fiscal year ending March 2011, expecting growing demand for environment-responsive products and energy efficient products. Therefore, in the home electronics business, it will completely withdraw from displays by March 2010 and shift resources into car electronics. Pioneer will especially strengthen the telematics business including network-ready products in an aim to develop it into a key growth engine for its car electronics business. (From an article in the Nikkan Jidosha Shimbun on Feb. 13, 2009)



In FY2011 ending in March 2012, the Division targets generating sales of 311 billion yen and a operating income of 15 billion yen from the car electronic business. In addition, it aims to increase the ratio of OEM sales to car manufacturers to 45 percent of its overall sales.


Major initiatives for strengthening OEM sales to car manufacturers include the following:

1. To enhance collaboration with Toyota and Honda, its long-time major customers.

2. To expand the sales volume of both OEM factory-installed equipment as well as dealer-installed optional equipment, especially in the area of car navigation systems. The Company intends to do so by leveraging its technical solutions business accumulated in its OEM automotive sales b usiness.

3. To actively expand business in China by supporting its major Japanese customers operating there, and conducting joint business operations with the SAIC Group.

4. In the area of new businesses, the Company will work on developing products that are energy-saving, smaller, and lighter so as to become more environmentally responsive; and providing products that support new media such as Blu-ray discs and various digital content and networks.

Financial forecast (consolidated)

(in million JPY)

-	FY2008	FY2009	FY2010	FY2011
Overall
Sales	558,000	420,000	410,000	460,000
Operating income	(55,000)	(33,000)	15,000	22,000
Net income	(129,000)	(83,000)	8,000	16,000
Car electronics business
Sales	291,000	250,000	280,000	311,000
Operating income	(12,500)	(9,000)	12,000	15,000

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)

-	FY2008	FY2007	FY2006
Overall	54,790	59,395	59,222
Car electronics business	25,642	22,705	21,388

R&D activities (FY2008)

-Car electronics business

The Company developed a new technology in the area of mobile network playback capability, which enables customers to use digital contents, which they have saved in devices located in their homes, in the car cabin without interruption. Based on its new buffer control technology, smooth reproduction of digital contents is possible even in an unstable communications environment. The Company's technology will support the new broad-band, high-speed communications service to be launched in Japan in the summer of 2009. This new mobile network playback function will enable users to not only enjoy visual and audio data, which is stored at home, via their car navigation systems and other in-vehicle electronics but also to easily relay the contents from home and play them in the car in one, seamless step. (so called "relay play" capability).


The Company is developing technology that automatically analyzes sound waves found in melodies, chords, rhythms, and other characteristics of music. It is also working on studying applications for this technology such as in search and replay functions, leveraging the potential. The technology is already featured on Pioneer's Cyber navigation systems.

Capital Expenditure

(in million JPY)

-	FY2008	FY2007	FY2006
Overall	49,795	38,527	47,851
Car electronics business	29,774	18,515	14,576

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, Sales of software	12,738	Dec. 2008	Mar. 2010
Tohoku Pioneer Corp.	Yamagata, Japan	Production facilities for car electronics products and organic EL	791	Apr. 2009	Mar. 2010
Increment P Corp.	Tokyo, Japan	Map soft etc.	2,371	Apr. 2009	Mar. 2010
Pioneer Manufacturing (Thailand)Co., Ltd.	Ayutthaya, Thailand	Production facilities for car electronics products	1,945	Apr. 2009	Mar. 2010
Pioneer Technology (Shanghai) Co., Ltd.	Shanghai, China	Production facilities for car electronics products	937	Apr. 2009	Mar. 2010
Pioneer Electronics (Shanghai Export Zone) Co., Ltd.	Shanghai, China	Production facilities for car electronics products	1,154	Apr. 2009	Mar. 2010