Financial Overview

(in millions of JPY)

	FY2009	FY2008	Rate of change (%)	Factors
Overall
Sales	7,417,980	7,765,507	(4)	-
Operating income	190,453	72,873	161	-
Net income	(103,465)	(378,961)	-	-
Digital AVC Networks Division (*)
Sales	3,409,501	3,748,957	(9)	-
Operating income	87,289	3,176	2648	-
Sanyo Electric Co., Ltd.
Sales	404,841	-	-	-
Operating income	(730)	-	-	-

* The Company changed the name of the AVC Networks business to the Digital AVC Networks business in FY2008, which ended in March 2009.

Supply Agreements

-The Company has supplied its N-55 batteries for the Mazda's i-stop idling stop systems featured on both the new Axela with a DISI 2.0-liter engine and the Biante 2WD 20S model. The N-55 batteries were developed jointly by Panasonic Storage Battery Co., Ltd., The Company's subsidiary in Kosai City, Shizuoka Prefecture, and Panasonic Energy Company in Moriguchi City, Osaka Prefecture. (From an article in the Nikkan Jidosha Shimbun on July 18, 2009)

-The Company's car navigation systems are in high demand, because they are supplied to Toyota's new Prius hybrid model for both original equipment and dealer installation as optional. The car navigation system with a high profitability is a backbone product to sustain profits at Automotive Systems Company, which is one of the Panasonic group companies engaged in the automotive sector. The Company will continue efforts to expand sales to new models such as eco-cars with a high potential for mass sales. (From an article in the Nikkan Jidosha Shimbun on Sept. 30, 2009)

Partnership Agreements

-The Company and Tesla Motors, a US-based electric vehicles manufacturer, announced that the two companies will collaborate in the development of EV batteries. The Company will provide its cells comprised of nickel-based lithium ion chemistry for Tesla's current and next-generation EV battery packs. (From a press release on January 7, 2010)

Business Plans

-The Company has rescheduled its target of generating 1 trillion yen in sales of car electronics products from original 2011 to 2015. According to an executive officer of the Company, sales at its car electronics division for fiscal year 2008 considerably decreased year-on-year in line with the economic downturn. The Company is now redrawing its road map for achieving the revised target. The Company, which has positioned in its business plan the car electronics field as one of its five key areas, develops, manufactures and sells car navigation systems and in-vehicle electric products mainly at Automotive Systems Company in Tsuzuki-Ward, Yokohama City. Its lineup includes automotive batteries, demand for which is growing, as well as various in-car electronic devices for car OEMs. (From an article in the Nikkan Jidosha Shimbun on April 24, 2009)

-Panasonic EV Energy Co., Ltd. (PEVE), a joint venture company of Toyota Motor Corp. and The Company in Kosai, Shizuoka Pref. Japan, will raise the FY 2009 production volume of nickel metal-hydride batteries for hybrid vehicles to 750,000 units, up 70% from a year earlier. As orders for the new Prius in Japan have started strong, PEVE is also considering starting the new line at the head quarters district one month ahead of the schedule. (From an article in the Nikkan Jidosha Shimbun on May 21, 2009)

-The Company is midway through a 3-year, 1 billion dollar investment in lithium-ion battery R&D and production facilities. The first of the new facilities in Suminoe, Osaka, Japan will begin production in April 2010. (From a press release on January 7, 2010)

>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)

Annual Management Policy in FY2010

-As a new member of the Panasonic Group, the Company intends to expand its automotive, lithium secondary battery business and its presence in the home-use market. The Company targets sales of over 1 trillion yen and a market share of over 40% in 2015.
-In the eco-friendly car market, the company will accelerate it business expansion activities by focusing on three major areas based on the need for innovative high technology: batteries, heat systems, and power systems.
-Its major areas of emphasis include “making batteries for electric vehicles more sophisticated but cheaper,” "making heating and cooling systems more capable of power-saving through the use of heat pump technology,“ and “making simple, safe and quick recharging possible through the use of technology that controls power loss.”

R&D Expenditure

(in millions of JPY)

	FY2009	FY2008	FY2007
Overall	476,903	517,913	554,538
Digital AVC Network	247,069	274,708	295,542
Sanyo Electric Co., Ltd.	16,779	-	-

R&D Structure (Automotive Systems Company)

Company	Location
Japan
-Automotive Electronics Development Center -Automotive Systems Development OfficePanasonic Corporation	-
-Business Development Center -Technology Management CenterAutomotive Systems Company	Yokohama
Panasonic ITS Co., Ltd.	Yokohama
Overseas
Panasonic Automotive Systems Company of America	Georgia, USA
Automotive Systems Europe Panasonic GmbH	Langen, Germany
Panasonic Automotive Systems Development Tianjin Co., Ltd.	Tianjin, China
Panasonic Automotive Systems Asia Pacific Co., Ltd.	Samutprakarn, Thailand

R&D Activities

-A cooperative R & D project on batteries by twelve private firms including Toyota Motor Corp. and Hitachi Ltd., Kyoto University and the government has started in Japan. The project will research the yet-to-be defined lithium-ion behavior by using the state of the art analysis facilities to achieve longer life and higher performance of the battery. It also aims to see by FY 2015 a clear vision of development of a high-capacity lithium-ion battery with which a vehicle will run 300 km on a single charge. In increasingly fierce competition on development of a high-capacity secondary battery, the All-Japan development team has been established to forge Japan as a storage battery nation. The project, formally named as "advanced scientific basic research project on innovative storage batteries," has participants of seven universities including Kyoto Univ. and twelve private corporations including Toyota, Nissan, Honda, Mitsubishi Motors, GS Yuasa, Panasonic, Hitachi, Shin-Kobe Electric Machinery and Mitsubishi Heavy Industries. In the beginning, about 50 researchers will work on the development task. (From an article in the Nikkan Jidosha Shimbun on June 13, 2009)

-The Company is accelerating development of peripheral components of rechargeable batteries used in hybrid and electric vehicles by applying technologies used by consumer products like household appliances to in-vehicle products. The Company is developing converters, inverters and motors, which are peripheral products of on-board batteries. The Company is willing to a make contribution to efficient use of electricity by offering such products combined with batteries in a package. (From an article in the Nikkan Jidosha Shimbun on Oct. 7, 2009)

Capital Expenditure

(in millions of JPY)

	FY2009	FY2008	FY2007
Overall	385,489	494,368	449,348
Digital AVC Network	199,956	243,074	209,663
Sanyo Electric Co., Ltd.	31,174	-	-

Investments in Japan

-Panasonic EV Energy Co., Ltd. (PEVE) based in Kosai City, Shizuoka Prefecture held a ceremony to celebrate the completion of its Miyagi Plant (Daiwa Cho, Miyagi Prefecture), which already started production this month. The new facility is producing nickel-metal-hydride batteries for hybrid electric vehicles. Its production capacity is initially set at a level equivalent to 100,000 vehicles annually, based on a plan to increase it to 300,000 vehicles by September 2010. The Miyagi Plant is PEVE's third nickel-metal-hydride battery plant, following the existing Sakaijuku Plant and Omori Plant located in Kosai City. When the production capacity at Miyagi facility reaches 300,000 units around September, the Company will be able to produce 1.1 million battery packs per year including the 400,000 units made at the Sakaijuku Plant and the another 400,000 units produced at the Omori Plant. The majority of these battery packs will be supplied to Toyota Motor Corporation. (From an article in the Nikkan Jidosha Shimbun on Jan. 23, 2010)

-The Company will start mass production of lithium-ion battery cells this April at its new Suminoe Factory, Osaka, Japan, which started operations last October as its flagship lithium-ion battery plant. The factory's completion ceremony was held on the premises on March 25. Its initial monthly capacity will be 10 million cells during the first year of operations and more production lines will be gradually installed. The Suminoe Factory began manufacturing electrodes last October. Panasonic plans to increase the production capacity up to 25 million cells per month (300 million cells per year) during the first phase. It will take into account market conditions in making a decision on the second phase construction. (From an article in the Nikkan Jidosha Shimbun on March 26, 2010)

Investments Outside Japan

-Jie Xi Si (Nanjing) Automotive Climate Control Co., Ltd.(JCS Nanjing), a subsidiary of Japan Climate Systems (JCS), opened a new manufacturing facility in Nanjing City, Jiangsu Province, China. With an initial investment of 68 million RMB, JCS Nanjing will manufacture heat exchanger components in order to support the growing needs of Mazda China programs and Chinese automakers. Having the capacity to produce 800,000 evaporators, 300,000 condensers and 300,000 heater cores the new facility will provide these components with the Chinese domestic market and for export markets such as Japan and ASEAN countries. JCS is a joint venture of Visteon, Mazda and Panasonic. (From a press release on June 19, 2009)

New Equipment Installation (FY2010)

(in millions of JPY)

	Planned investment amount	Main purpose
Overall	480,000	-
Digital AVC Network	190,000	Expand production of PDPs (plasma display panels) and liquid crystal panels
Sanyo Electric Co., Ltd.	126,500	Launching or streamlining production of new products such as solar batteries, secondary batteries, and electronic devices