Annual Report 2013 Panasonic Corporation For the year ended March 31, 2013 Panasonic Corporation Annual Report 2013 PAGE 1
Editorial Policy
This Annual Report contains wide-ranging information including details of Panasonic’s business strategies and financial position Using the Navigation Buttons that assist mainly individual and institutional investors in making Search PDF content Back one page Forward one page investment decisions. In this Report, particular emphasis was PAGE placed on the following points.
Search Contents 1 1. The Panasonic Group’s New Midterm Management Plan Explaining “Cross-Value Innovation 2015” Return to Contents Page number Kazuhiro Tsuga, who was appointed as Panasonic’s president in June 2012, explains Panasonic’s vision for the future, strategies for recovery Using Category Tabs and so forth.
Please refer to President’s Message Financial Highlights To Our Stakeholders President’s Message Overview of 4 Divisional Companies
2. Explaining the Business Strategies of 4 Divisional Companies Click to go to the first page of each category. We explain the business strategies of the 4 Divisional Companies newly established with the shift to a new management structure in April 2013. Please refer to Overview of 4 Divisional Companies
Certain References and Information In this document, “fiscal 2013” refers to the year ended March 31, 2013. All information contained in this report is as of March 31, 2013 or for fiscal 2013, unless otherwise indicated. “The Company” is used to indicate Panasonic Corporation and its subsidiaries, unless otherwise indicated. “4 Divisional Companies” or “Divisional Companies” are used to indicate the four companies newly established on April 1, 2013: the Appliances Company, Eco Solutions Company, AVC Networks Company and Automotive & Industrial Systems Company. Panasonic Corporation Annual Report 2013 PAGE 2
Contents
Financial Highlights Overview of 4 Divisional Companies Disclaimer Regarding Forward-Looking Statements This Annual Report includes forward-looking statements (within the meaning of Section 21E of the U.S. Secu- PAGE PAGE Major Financial Indicators Overview of 4 Divisional rities Exchange Act of 1934) about Panasonic and its Group companies (the Panasonic Group). To the extent 3 (Graphs) 14 Companies that statements in this Annual Report 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 PAGE Major Financial Indicators the Panasonic Group in light of the information currently available to it, and involve known and unknown risks, 4 (Tables) 15 Appliances Company uncertainties and other factors. Such risks, uncertainties and other factors may cause the Panasonic Group’s actual results, performance, achievements or financial position to be materially different from any future results, 17 Eco Solutions Company performance, achievements or financial position expressed or implied by these forward-looking statements. To Our Stakeholders 19 AVC Networks Company Panasonic undertakes no obligation to publicly update any forward-looking statements after the date of this Annual Report. Investors are advised to consult any further disclosures by Panasonic in its subsequent filings PAGE 21 Automotive & Industrial Systems under the Financial Instrument and Exchange Act of Japan (the FIEA) and other publicly disclosed documents. To Our Stakeholders Company 5 The risks, uncertainties and other factors referred to above include, but are not limited to, economic condi- tions, particularly consumer spending and corporate capital expenditures in the United States, Europe, Japan, President’s Message ESG Information 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
PAGE PAGE fluctuations, notably between the yen, the U.S. dollar, the euro, the Chinese yuan, Asian currencies and other President’s Message ESG at Panasonic currencies in which the Panasonic Group operates businesses, or in which assets and liabilities of the Pana- 6 23 sonic Group are denominated; the possibility of the Panasonic Group incurring additional costs of raising funds, because of changes in the fund raising environment; the ability of the Panasonic Group to respond to Financial and Corporate Data 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 possibility of PAGE not achieving expected results on the alliances or mergers and acquisitions including the business reorganiza- 25 Financial Review tion after the acquisition of all shares of Panasonic Electric Works Co., Ltd. and SANYO Electric Co., Ltd.; the ability of the Panasonic Group to achieve its business objectives through joint ventures and other collaborative PAGE agreements with other companies; the ability of the Panasonic Group to maintain competitive strength in Stock Information many product and geographical areas; the possibility of incurring expenses resulting from any defects in Panasonic will pursue a better life 32 and a better world for each and products or services of the Panasonic Group; the possibility that the Panasonic Group may face intellectual every customer. PAGE 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 Panasonic will execute its “Cross-Value 33 Company Information Innovation 2015” new midterm management other assets in which the Panasonic Group has holdings or changes in valuation of long-lived assets, including plan with unflagging resolve. property, plant and equipment and goodwill, deferred tax assets and uncertain tax positions; future changes PAGE Quarterly Financial Results or revisions to accounting policies or accounting rules; as well as natural disasters including earthquakes, 34 and Investor Relations Offices prevalence of infectious diseases throughout the world, disruption of supply chain and other events that may negatively impact business activities of the Panasonic Group. The factors listed above are not all-inclusive and further information is contained in the most recent English version of Panasonic’s securities reports under the FIEA and any other documents which are disclosed on its website. Note: Risk Factors Please refer to the Company’s Annual Securities Report (Yukashoken Hokokusho) for details regarding business and other risks. Panasonic Corporation Annual Report 2013 PAGE Financial Highlights 3 >> Major Financial Indicators (Graphs)
Major Financial Indicators (Graphs) Panasonic Corporation and Subsidiaries Years ended March 31 Net Sales Operating Profit and Ratio to Sales Net Income (Loss) Attributable to Panasonic R&D Expenditures and Ratio to Sales Corporation and Ratio to Sales
(Trillions of yen) (Billions of yen) (%) (Billions of yen) (%) (Billions of yen) (%) 10 400 4.0 300 4.0 800 8.0 6.9%
8 7.3 3.8 300 3.0 0 0 600 6.0 502.2 2.2% 6
200 2.0 –300 –4.0 400 4.0
4 160.9 3.5
100 1.0 –600 –8.0 200 2.0 2 –754.3 – 10.3% 0 2009 2010 2011 2012 2013 0 2009 2010 2011 2012 2013 0 –900 2009 2010 2011 2012 2013 –12.0 0 2009 2010 2011 2012 2013 0 Domestic Operating Profit [left scale] Net Income (Loss) Attributable to Panasonic Corporation [left scale] R&D Expenditures [left scale] Overseas Operating Profit/Sales Ratio [right scale] Net Income (Loss) Attributable to Panasonic Corporation/Sales R&D Expenditures/Sales Ratio [right scale] Ratio [right scale] Capital Investment and Depreciation Panasonic Corporation Shareholders’ Free Cash Flow Dividends Declared per Share (Tangibles)* Equity and ROE and Payout Ratio
(Billions of yen) (Trillions of yen) (%) (Billions of yen) (Yen) (%) 500 3 30.0 400 355.2 40 40.0
400 200 30 30.0 310.9 2 0 300 277.6 1.3 0 20 20.0 200 1 –30.0 –200 10 10.0 100 –47.2% 0 yen 0 2009 2010 2011 2012 2013 0 2009 2010 2011 2012 2013 –60.0 –400 2009 2010 2011 2012 2013 0 2009* 2010* 2011 2012* 2013* 0 Capital Investment Panasonic Corporation Shareholders’ Equity [left scale] Free Cash Flow Dividends Declared per Share [left scale] Depreciation ROE [right scale] Payout Ratio [right scale] Panasonic Corporation Annual Report 2013 PAGE Financial Highlights 4
>> Major Financial Indicators (Tables)
Major Financial Indicators (Tables) Download DATA BOOK Panasonic Corporation and Subsidiaries (10-Year Summary) Years ended March 31 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
For the year (Millions of yen) Per share data (Yen)
Net sales 7,765,507 7,417,980 8,692,672 7,846,216 7,303,045 Net income (loss) attributable to Panasonic Corporation Operating profit 72,873 190,453 305,254 43,725 160,936 per common share:
Income (loss) before Basic (182.25) (49.97) 35.75 (333.96) (326.28) income taxes (382,634) (29,315) 178,807 (812,844) (398,386) Diluted (182.25) – – – – Net income (loss) attributable to Panasonic Corporation (378,961) (103,465) 74,017 (772,172) (754,250) Dividends declared per share 30.00 10.00 10.00 10.00 0
Capital investment* 494,368 385,489 403,778 333,695 310,866 Panasonic Corporation shareholders’ equity per share 1,344.50 1,348.63 1,236.05 834.79 546.81 Depreciation* 325,835 251,839 284,244 295,808 277,582
R&D expenditures 517,913 476,903 527,798 520,217 502,223 Ratios (%) Free cash flow (352,830) 198,674 266,250 (339,893) 355,156 Operating profit/sales 0.9 2.6 3.5 0.6 2.2 * Excluding intangibles Income (loss) before income taxes/sales (4.9) (0.4) 2.1 (10.4) (5.5) At year-end (Millions of yen) Net income (loss) attributable Long-term debt 651,310 1,028,928 1,162,287 941,768 663,091 to Panasonic Corporation/sales (4.9) (1.4) 0.9 (9.8) (10.3) Total assets 6,403,316 8,358,057 7,822,870 6,601,055 5,397,812 ROE (11.8) (3.7) 2.8 (34.4) (47.2) Panasonic Corporation shareholders’ equity 2,783,980 2,792,488 2,558,992 1,929,786 1,264,032 Panasonic Corporation shareholders’ equity/total Total equity 3,212,581 3,679,773 2,946,335 1,977,566 1,304,273 assets 43.5 33.4 32.7 29.2 23.4
Number of shares issued at Payout ratio – – 28.0 – – year-end (thousands) 2,453,053 2,453,053 2,453,053 2,453,053 2,453,053 Notes: 1. The Company’s consolidated financial statements are prepared in conformity with U.S. generally accepted accounting principles Number of shareholders (U.S. GAAP). (persons) 277,710 316,182 364,618 557,102 577,756 2. Dividends per share reflect those declared by the Company in each fiscal year and consist of interim dividends paid during the fiscal year and year-end dividends paid after the fiscal year-end. Number of consolidated 3. In order to be consistent with generally accepted financial reporting practices in Japan, operating profit, a non-GAAP measure, is presented as net sales less cost of sales and selling, general and administrative expenses. The Company believes that this is useful companies (including parent to investors in comparing the Company’s financial results with those of other Japanese companies. See the Consolidated Statements company) 540 680 634 579 538 of Operations and Consolidated Statements of Comprehensive Income (Loss) on page 29. 4. Diluted net income (loss) attributable to Panasonic Corporation per common share after fiscal 2010 have been omitted because the Number of associated Company did not have potential common shares that were outstanding for the period. companies under the equity 5. Effective from the fiscal year ended March 31, 2013, the Company has decided to include investments in molds in capital investment method 182 232 114 103 95 and mold depreciation expenses in depreciation. Capital investment and Depreciation figures for the year ended March 31, 2012 have been restated as a result of this change. 6. Payout ratios have not been presented for those fiscal years in which the Company incurred a net loss attributable to Panasonic Corporation. Panasonic Corporation Annual Report 2013 PAGE To Our Stakeholders 5
To Our Stakeholders
To Our Stakeholders The Panasonic Group recorded a large consolidated net loss for the second consecutive year in fiscal 2013, the year ended March 31, 2013. This was mainly the result of incurring business restructuring expenses and increasing the valuation allowances for deferred tax assets. We apologize for any concern caused.
We have acted to extricate ourselves from this situation as soon as possible. With the aim of achieving a recovery, we launched “Cross-Value Innovation 2015,” a new 3-year mid- term management plan, at the beginning of fiscal 2014. Also, in April 2013 we decided to build a customer-facing framework as one group, by positioning business divisions as the basic management unit and establishing 4 Divisional Companies as a new basic Group structure to support them.
At a Board of Directors’ meeting of the Company after the Company’s Ordinary General Meeting of Shareholders in June 2013, Shusaku Nagae was appointed as Chairman. Under the new management team, Panasonic will speed up reforms with the aim of turning around its business results at the earliest possible stage and rebuilding its business com- petitiveness for the future.
We kindly ask for the continued support and understanding of all stakeholders.
July 2013
Shusaku Nagae Kazuhiro Tsuga Chairman (Left) President (Right) Panasonic Corporation Annual Report 2013 PAGE President’s Message 6 >> President’s Message [FY2013 Performance Summary / Midterm Management Plan “Cross-Value Innovation 2015”]
President’s Message
Panasonic will pursue a better life and a better world for each and every customer.
For Panasonic, its most important theme today is to become a company that can generate products and services with true value for customers by addressing the structural issues facing the Group. Since its founding, Panasonic has engaged in wide-ranging business activities guided by its basic management philosophy, which states that the mission of an enterprise is to contribute to the progress and development of society and the well-being of people world- wide through business. Going forward, the well-being of people will continue to be our central and basic focus as we work on creating better lives. Beyond offering individual hardware products, we will provide total solutions, extending to software and services, for FY2013 Performance Summary the various spaces where our customers are active. In doing so, we will strive to contribute Midterm Management Plan to a better life and a better world for each and every customer. “Cross-Value Innovation 2015” For this, we believe it is imperative to create new, unseen value. We will create this value Group Financial Targets with what we call “Cross-Value Innovation.” Essentially, this entails combining our various Towards FY2016 Roadmap strengths cultivated in consumer electronics with the strengths of business partners well- Aims and Major Actions of “Cross-Value Innovation 2015” versed in various spaces. We believe that by repeatedly creating value with partners in this Increasing Earnings in Four Major Business Areas way we will make a strong comeback as a unique company the likes of which the world Bringing Strong Devices to a Multitude of Spaces has never seen. Panasonic Corporation Annual Report 2013 PAGE President’s Message 7 >> President’s Message [FY2013 Performance Summary / Midterm Management Plan “Cross-Value Innovation 2015”]
FY2013 Performance Summary
We recorded a large net loss due to business restructuring expenses and other factors, despite seeing a major improvement in operating profit year on year.
Fiscal 2013 was another tough year for the electronics industry, as Even so, consolidated Group sales for fiscal 2013 decreased by yen. The Company increased the valuation allowances for deferred highlighted by sluggish flat-panel TV demand, especially in Japan. 7% to 7,303.0 billion yen. Although car AV systems, automotive tax assets and incurred provision for income taxes of 412.5 billion That is despite finally seeing some brighter signs in the operating batteries and other automobile-related products sold strongly, yen in accordance with U.S. GAAP. As a result, the Company environment for Japanese companies toward the end of the fiscal Panasonic saw sales fall overall for the second year running, reflect- reported a net loss attributable to Panasonic Corporation of 754.3 year, with the excessively strong yen sliding against the U.S. dollar ing the large impact of lackluster sales of digital consumer-related billion yen, compared with a loss of 772.2 billion yen net loss in fiscal and euro. products*, such as flat-panel TVs, BD recorders and digital cameras. 2012. ROE was thus negative 47.2%, compared with negative Under this environment, the Company worked to instill a sense of In terms of earnings, operating profit was 160.9 billion yen, as it 34.4% in the previous fiscal year. On the other hand, free cash flow crisis across the Panasonic Group under a new management struc- increased by 268% from the previous fiscal year. However, the was 355.2 billion yen, compared with negative 339.9 billion yen a ture. Group-wide efforts were made to transform the Group into an Company reported a pre-tax loss of 398.4 billion yen having incurred year earlier, mainly reflecting the disposal of investments and assets, enterprise that can generate even more value for customers. These business restructuring expenses of 508.8 billion yen such as impair- and the securitization of assets. efforts included reforming Head Office functions and decision- ment losses on goodwill and intangible assets related to the solar, * Digital products for consumers as well as devices and production facilities used for making processes, providing countermeasures for underperforming consumer-use lithium-ion battery and mobile phone businesses; in these products. businesses and introducing BU (business unit) based management. fiscal 2012, the Company reported a pre-tax loss of 812.8 billion
Operating Profit and Income (Loss) Before Net Income (Loss) Attributable Net Sales Ratio to Sales Income Taxes to Panasonic Corporation ROE (Return on Equity) Free Cash Flow
(Trillions of yen) (Billions of yen) (%) (Billions of yen) (Billions of yen) (%) (Billions of yen) 355.2 10 400 4.0 0 0 0 400 7.8 7.3 8 −200 –10 300 3.0 –200 200 2.2% 6 −400 – 398.4 –20 200 2.0 –400 – 34.4% 0 4 160.9 –600 –30 100 1.0 –600 –200 2 0.6% –800 – 812.8 –40 – 47.2% – 339.9 43.7 – 772.2 – 754.3 0 2012 2013 0 2012 2013 0 –1,000 2012 2013 –800 2012 2013 –50 2012 2013 –400 2012 2013
Operating Profit [left scale] (Years ended March 31) Ratio to Sales [right scale] Panasonic Corporation Annual Report 2013 PAGE President’s Message 8 >> President’s Message [FY2013 Performance Summary / Midterm Management Plan “Cross-Value Innovation 2015”]
Midterm Management Plan “Cross-Value Innovation 2015” Please refer to the “FY2014-16 New Midterm Management Plan FY2014 Business Policy” announced on March 28, 2013
We plan to turn around unprofitable businesses and implement future-looking reforms.
Group Financial Targets Companies: Appliances (AP), Eco Solutions (ES), AVC Networks We have set CV2015 financial targets under this business Under these circumstances, we have embarked on “Cross-Value (AVC), and Automotive & Industrial Systems (AIS). Each of these division-centered new basic Group structure. For fiscal 2014, we Innovation 2015” (CV2015) a new three-year midterm management Divisional Companies will undertake measures that would be difficult aim to generate net income attributable to Panasonic Corporation of plan covering the period from fiscal 2014 to fiscal 2016. CV2015 for business divisions to handle on a stand-alone basis. These include at least 50.0 billion yen, and free cash flow (FCF) of at least 200.0 has two main targets—(1) to immediately eliminate unprofitable major business development, creating new business and strengthen- billion yen. Meanwhile, for fiscal 2016, our targets are operating businesses, and (2) to simultaneously provide a new corporate ing key devices. These companies will also support the development profit of at least 350.0 billion yen, an operating profit ratio of at least direction looking forward to the future. We are determined to achieve of business divisions. 5%, and 3-year cumulative FCF of at least 600.0 billion yen. these two targets. In April 2013, we reorganized the structure to enhance individual business. This entailed progressively dispensing with our previous 9
We will rigorously execute structural reforms with the aim of achieving Group financial targets.
Towards FY2016 Roadmap We calculated this operating profit target of at least 350.0 billion Second is improving profits in each business division to an oper- Our roadmap for the next three years under CV2015 is set forth yen for fiscal 2016, based on operating profit of 160.9 billion yen in ating profit ratio of at least 5%. This should boost overall operating below. Firstly, we aim to generate net income attributable to fiscal 2013 and factoring in the benefits we expect to derive from profit by 140.0 billion yen. Panasonic Corporation of at least 50.0 billion yen in fiscal 2014. initiatives we will execute over the next three years. Third is to streamline and implement system reforms not incorpo- Then over the course of the 2-year period through fiscal 2015, we There are three main points for increasing operating profit: rated in business division plans. These actions are expected to will complete large-scale business restructuring, including turning First is 130.0 billion yen from turning around unprofitable busi- boost operating profit by 70.0 billion yen. around unprofitable businesses. Finally, in fiscal 2016, we aim to be nesses (please refer to main action 1 outlined on page 11). We Taking business risks into account, we aim to achieve 350.0 billion a company that can generate operating profit of at least 350.0 expect to incur approximately 250.0 billion yen in restructuring yen or more of operating profit in fiscal 2016. billion yen, with each business division targeting an operating profit expenses through fiscal 2015 for turning around such unprofitable ratio of at least 5% over the next 3 years. businesses as the TV business.
Towards FY2016 Toward Achieving Operating Profit of 350.0 Billion Yen (FY2016)
(Bil. yen) FY2014 FY2015 FY2016 Streamlining / system reforms Net income* Operating Operating profit ratio improvement ≧ 5% +70.0 Business risk ≧50 bil. yen profit +140.0 (Operating profit: 250 bil. yen) 350 bil. yen ≧ Unprofitable business restructuring ≧350.0 +130.0 Turn around unprofitable Complete business and restructuring in 2 years Forex effect 160.9 +15.0 Improve profitability targeting a 5% operating profit ratio in each business division
Generate FCF ≧600 bil. yen (cumulative total in FY2014–2016) FY2013 FY2016 (Actual) (Target) * Net income attributable to Panasonic Corporation. Panasonic Corporation Annual Report 2013 PAGE President’s Message 10 >> President’s Message [FY2013 Performance Summary / Midterm Management Plan “Cross-Value Innovation 2015”]
We will create more value by combining different strengths.
Aims and Major Actions of “Cross-Value if our business division system enables autonomous yet responsible Innovation 2015” management, our 4 Divisional Companies create major business The overarching theme of our new midterm management plan is strategies and Cross-Value Innovation truly functions as intended. to create more value beyond the organization and combine the The main midterm actions we are taking to this end are out- respective and unique strengths of our employees, business lined below: divisions, the 4 Divisional Companies and Panasonic. Our approach to generating this value is encapsulated in the expression “Cross- Value Innovation.” We believe that Panasonic will be revitalized again
Main Action Turn Around Unprofitable Businesses We intend to change the structure of our businesses so that we turn around all unprofitable businesses 1 by fiscal 2016.
Main Action Expand Business and Improve Efficiency Shifting from In-house Approach We plan to inject external capital in the healthcare field, which is expected to grow, improve the efficiency of 2 logistics operations, and take other steps.
Main Action Improve Financial Position We will work to generate free cash flows by narrowing down capital expenditures, disposing of assets, reducing 3 working capital and taking other actions, in addition to improving the profitability of our business itself.
Main Action Growth Strategy from Customers’ Viewpoint 4 We will work step by step towards our ideal image of Panasonic in the future. Panasonic Corporation Annual Report 2013 PAGE President’s Message 11 >> President’s Message [FY2013 Performance Summary / Midterm Management Plan “Cross-Value Innovation 2015”]
Turn Around Unprofitable Businesses Expand Business and Improve Improve Financial Position Main Action Main Action Main Action We aim to generate operating profit of 130.0 billion Efficiency Shifting from In-house We have set a target of generating 600.0 billion yen 1 yen by turning around the profitability of our TV, 2 Approach 3 in free cash flow over the next 3 years. To achieve semiconductor, mobile phone, circuit board, and We aim to achieve growth and greater efficiency in this target we will focus on improving profitability in optical product (drive and pickup) businesses by fiscal 2016. For the areas where it is difficult for us to go it alone, by working more with our business itself, while reducing capital expenditures. In addition, measures necessary to restructure these businesses, we estimate that partners that share the same business vision. Specifically, we plan to we plan to continuously reduce working capital, including reducing it will take approximately 250.0 billion yen over the next 2 years. inject external capital to Panasonic Healthcare Co., Ltd. and form inventory, and dispose of assets in Company-wide projects. By Our TV business still recorded an operating loss of 88.5 billion alliances with partners sharing the same business vision, with the generating cash in excess of our initial 100.0 billion yen target, we yen in fiscal 2013, despite conducting structural reforms. Therefore, project directly managed by the President. should be able to generate positive net cash. we will continue promoting structural reforms in the panel business, In the distribution business, on May 24, 2013, we concluded an Through these and other actions we aim to increase our equity and efforts to improve the efficiency of distribution, as well as agreement to transfer two-thirds of the shares in Panasonic Logistics ratio to at least 25% in fiscal 2016 and continuously achieve ROE of narrow down key markets and expand non-TV businesses, as we Co., Ltd. to Nippon Express Co., Ltd. at least 10%. strive to put the TV business back into the black. With our semiconductor business, we reached a basic agreement in February 2013 with Fujitsu Limited to look into integrating our FCF: 600.0 Billion Yen (FY2014–2016) system LSI businesses. This is aimed at raising our business value by combining each company’s strengths. In other business fields, FY2013 FY2016 we intend to transform our business focus and promote an asset- FCF ≧ 600.0 (Bil. Yen) (actual) (plan) light strategy, which could include entering into alliances. These measures are aimed at returning the semiconductor business to Within +270.0 profitability. Working Dividend –220.0 In the mobile phone business, we will introduce rugged smart- Difference +100.0 capital, etc. between phones for the BtoB market, and at the same time outsource R&D CAPEX and CF management implementation project Net cash and manufacturing and take other steps to reduce fixed costs. In – 643.3 depreciation the circuit board business, we will shift focus to the base material and semiconductor packaging business due to intensifying competi- Profit tion in the smartphone circuit board market. And in the optical busi- ness, we will expand the outsourcing of manufacturing and restructure domestic sites. Panasonic Corporation Annual Report 2013 PAGE President’s Message 12 >> President’s Message [FY2013 Performance Summary / Midterm Management Plan “Cross-Value Innovation 2015”]
Growth Strategy from Customers’ Increasing Earnings in Four Major Business Areas Main Action Specific Initiative 1 Automotive Industry Viewpoint We have grouped all automotive-related business divisions under Working with our industrial partners, we will strengthen four major 4 We will pursue a “better life” for customers. In other the AIS Company. We will offer everything from systems to devices business areas or spaces: residential, non-residential, mobility and words, we aim to create “A Better Life, A Better to maximize the core value of the automotive industry, utilizing our personal. The purpose of this move is to shift our focus from the World” in various spaces and areas such as the home, society, “Tier 1” knowledge. Proposals to this effect will be offered in three digital consumer business to “space solutions,” centered on BtoB business, travel and automobiles, with consumer electronics which fields: comfort, safety and reassurance, and electrification. business. Rather than selling individual products, we will shift to are integral to people’s lives. Concentrating Company-wide resources on these fields, we aim businesses that have a continuous connection with customers. Working with industrial partners closely connected with each to create a 2-trillion yen business by 2018. space and area, we hope to deepen ties with customers and make an even greater contribution to their lives. Our four newly formed Specific Initiative 2 Residential Industry companies—Appliances (AP), Eco Solutions (ES), AVC Networks In the residential industry, we will work to offer new value leveraging our Four Major Business Areas (AVC), and Automotive & Industrial Systems (AIS)—will be pivotal broad knowledge of consumer electronics, equipment, electrical Transform from digital consumer business to establishing strong relationships with industrial partners. materials and building materials, as well as the strengths of our house building subsidiary, namely PanaHome Corporation. Our goal is to offer Cloud “the most excellent house” utilizing our Group- Residential Non-residential wide capabilities. In April 2013, PanaHome began space space Panasonic in the Future Eco & smart business selling “CASART ECO CORDIS,” a detached Home networking Offer ‘better life’ to customers, partnering with ‘industry’ solutions house offering both eco-consciousness and Offer new residential space Support customers with comfort. This house is expected to be a major with residence, electronics services and and equipment engineering model in Fujisawa Sustainable Smart Town, Customers Logistics Public which is under construction at present in Mobility Personal Retail Fujisawa, Kanagawa Prefecture. Indeed, we see ES AVC Mobility systems and services Connected and personal this as a growth field. Our goal here too is to Expand core value in Continuously connect with Residence Aviation Industry grow the housing business, excluding the con- automotive and application / services, aviation industries accessories sumer electronics business, into a 2-trillion yen AP AIS business by 2018.
Electronics Beauty Healthcare Auto Panasonic Corporation Annual Report 2013 PAGE President’s Message 13 >> President’s Message [FY2013 Performance Summary / Midterm Management Plan “Cross-Value Innovation 2015”]
Bringing Strong Devices to a Multitude of Spaces We will also apply displays in many different settings beyond TVs, Together with our strategy originating in the concept of “spaces,” we such as in-wall and in-desk displays, automotive head-up displays will also promote a strategy designed to compete on the strengths and public signage. of our proprietary devices. The main focus of this strategy will be to When the foregoing is combined with air conditioning devices, the dramatically transform our approach to the device business. Going device business takes on an immensely significant role within cus- forward, we will customize our strong core devices according to tomer spaces. By bringing LEDs, air conditioners and displays to all customer needs, rather than pursuing a vertically integrated busi- manner of spaces, we intend to generate even more value for ness model rooted in BtoC business. Our basic strategy will be to customers. develop an expansive range of solutions for a multitude of spaces. Specific Initiative 2 Solar Panels, Storage Batteries and Specific Initiative 1 LEDs, Air Conditioners and Displays Energy Saving Devices LED lighting offers a diverse spectrum of applications, such as the Solar panels have started to be installed on top of automobiles, in use of LED lights in combination with automotive headlights and addition to the rooftops of homes and buildings. Storage batteries visible light communications, in addition to a variety of room lighting. are also being used as energy creating and storage systems in
Mr. Tsuga explained how Panasonic is working to create real value for its customers during his opening keynote speech at 2013 International CES. (January 2013) Device Business Device Business LED, air conditioners, displays – Everywhere! Solar panels, storage batteries, energy saving devices – Everywhere! conjunction with solar panels, and in automotive battery applica- tions. We are also seeing strong demand for this business in
Stores Commercial Unelectrified unelectrified areas. buildings areas Offices and Furthermore, we will reduce the power consumption of various Mobility stores electronic devices by harnessing our diverse lineup of energy- Public Residences areas efficient devices, including our GaN power semiconductor. Through our solar panels, storage batteries and energy-efficient devices, we will provide energy solutions for every space. Towns At Panasonic, management and employees are now working as Customization Residences one to drive reforms designed to achieve a turnaround. We ask for your continued support and understanding as we endeavor to reach this goal. Core devices Automobiles Panasonic Corporation Annual Report 2013 PAGE Overview of 4 Divisional Companies 14 >> Overview of 4 Divisional Companies
Overview of 4 Divisional Companies
Supporting Business Division Evolution Midterm Management Plan (FY2016) with 4 Divisional Companies In April 2013, Panasonic introduced a 4 Divisional Automotive & Industrial Appliances Company Eco Solutions Company AVC Networks Company Company system. Each company will allocate the Systems Company resources necessary for promoting the evolution of Net sales 1,650 billion yen* 1,770 billion yen 1,980 billion yen* 2,700 billion yen business divisions and combine the wisdom of Operating profit ratio Over 5.5%* 4.9% Over 5.0%* 5.0% employees. Each of these companies will undertake measures that would be difficult for business divi- Cumulative free cash flows 108 billion yen 120 billion yen Over 50 billion yen 265 billion yen sions to handle on a stand-alone basis. These Please refer to the presentation materials for Panasonic IR Day 2013 held on May 30, 2013. * Production and sales consolidated Production and sales consolidated includes sales and operating profit of consumer include major business development, creating new products sales divisions included in “Corporate and Eliminations” in segment information. business and strengthening key devices.
Appliances Company Eco Solutions Company
President Kazunori Takami President Tamio Yoshioka PROFILE PROFILE Apr. 1978 Joined the Company Apr. 1977 Joined Matsushita Electric Works, Ltd. (MEW) Jun. 2002 Director, Matsushita Refrigeration Company Apr. 2006 Executive Officer, MEW Apr. 2005 In charge of Corporate Marketing Division for National Brand Home Appliances and Jun. 2011 Director, Panasonic Electric Works Co., Ltd. (formerly MEW) Corporate Marketing Division for National Brand Wellness Products / Director, Corpo- Apr. 2013 Senior Managing Officer, Eco Solutions Company rate Marketing Division for National Brand Home Appliances Jun. 2013 Director of the Company (incumbent) Apr. 2006 Executive Officer of the Company President, Eco Solutions Company (incumbent) Apr. 2008 Managing Executive Officer of the Company Apr. 2009 President, Home Appliances Company (currently Appliances Company) (incumbent) / In charge of Lighting Company Jun. 2009 Managing Director of the Company Apr. 2012 Senior Managing Director of the Company (incumbent)
AVC Networks Company Automotive & Industrial Systems Company
President Yoshiyuki Miyabe President Yoshihiko Yamada PROFILE PROFILE Apr. 1983 Joined the Company Apr. 1974 Joined the Company Jan. 2003 Manager, R&D Planning Office Apr. 2003 Vice President, Panasonic AVC Networks Company / Director, Systems Solutions Apr. 2008 Executive Officer of the Company / In charge of Digital Network & Software Technology Business Group Apr. 2011 Managing Executive Officer of the Company / In charge of Technology Jun. 2004 Executive Officer of the Company / Director, Corporate Management Division for North Jun. 2011 Managing Director of the Company (incumbent) America / Chairman, Matsushita Electric Corporation of America Oct. 2012 In charge of Intellectual Property Apr. 2007 Managing Executive Officer of the Company Apr. 2013 President, AVC Networks Company (incumbent) Apr. 2010 In charge of Industrial Sales Jun. 2010 Managing Director of the Company Apr. 2011 Senior Managing Director of the Company (incumbent) Jan. 2012 In charge of Industrial Devices Business Apr. 2013 President, Automotive & Industrial Systems Company (incumbent) Panasonic Corporation Annual Report 2013 PAGE Overview of 4 Divisional Companies 15
>> Appliances Company
Appliances Company
Toward Global No. 1 Appliances Company
The Appliances (AP) Company engages in the integrated operations of developing, manufacturing and selling a broad range of Panasonic Group products in the appliances field, such as BtoC products, including air conditioners, refrig- erators and washing machines; BtoB facilities, including cold chain equipment and large-sized air-conditioning sys- tems; and BtoB devices, including compressors and motors. The AP Company provides customers around the world with products and services leveraging advanced core environmental technologies. Aiming to become the No. 1 global company in the appliances industry, the AP Company will help create enriched lives around the world and a low-carbon society.
FY2013 Sales Composition Overview of the Appliances Company Midterm Management Plan The AP Company had 56 sites (9 in Japan and 47 overseas) and Converting Market Trends into Growth Opportunities BtoB Devices: 23% BtoC: 58% approximately 42,000 employees, as of March 31, 2013. Sales for The AP Company’s global share is shown in the diagram on the next fiscal 2013 amounted to 1,468.1 billion yen (production and sales page. In both BtoC and BtoB businesses, there is considerable room Air-conditioners 17% Compressors for Air- consolidated basis*). Consisting of 9 business divisions, including the to expand market share. We see growing overseas business as being conditioners 9% Air-conditioner Business Division (BD), and the Cold Chain BD, the particularly important. Furthermore, we expect markets globally to
Motors 7% Washing AP Company is thus developing business across a wide range of steadily grow in size going forward. Demand for high-value-added machines 10% categories from BtoC to BtoB. products especially is projected to expand along with economic devel- Others in BtoB devices 7% opment in emerging countries. Capturing this expanding demand will * Production and sales consolidated includes sales and operating profit of consumer products sales divisions included in “Corporate and Eliminations” in segment information. accelerate growth of the AP Company. Cold chains 8% Refrigerators 10% Aiming to Become the Global No. 1 Appliances Company Global sites The AP Company aims to become the No. 1 global company in the Europe China/North East Asia appliances industry by 2018. To this end, we will work to transform its Large-scale 1 site 23 sites Air-conditioners 5% Beauty/ profit structure. Firstly, we will work to establish a foundation for expand- Others in Healthcare North America ing business fields, so as to gradually expand its BtoB business. The AP BtoB facilities 6% Japan 2 sites 6% 9 sites Company aims to grow its BtoB business sales and operating profit to Others in BtoC 15% account for 50% and just under 60% of the company’s overall sales and Asia Latin America BtoB Facilities: 19% * Sum of sales by product, based on 18 sites 3 sites operating profit, respectively, in fiscal 2019. In fiscal 2013, they company shipment accounted for about 40% each. Panasonic Corporation Annual Report 2013 PAGE Overview of 4 Divisional Companies 16
>> Appliances Company
We have set some midterm management targets for fiscal 2016: functions, including globally expanding ECO NAVI products, which conscious models and strengthen business in Asia. Moreover, in sales (production and sales consolidated) of 1,650.0 billion yen and automatically save electricity depending on the mode of use. We will build-in and commercial appliances and fuel cells, we intend to accel- operating profit of 90.0 billion yen. On a company shipment basis, endeavor to strengthen products based on customer needs and erate the pace of business development overseas. the AP Company is targeting sales of 1,230.0 billion yen, assuming develop global product lineups in beauty and small cooking appli- BtoB devices business: Improve profitability by business 4% annual growth, mainly in BtoB businesses. ances, centered on value-added products. Moreover, in order to strategy transformation steadily expand global sales, we will push ahead with a strategy The AP Company will look to raise the proportion of sales to other Positioning of Each Business and Key Initiatives matched to each region, having defined our key markets as China, companies outside the Panasonic Group by leveraging its core In order to achieve the midterm management targets, we have for- Asia, Europe and Brazil. technologies. For example, in the nano-e devices business, we will mulated key initiatives for three businesses: BtoC, BtoB facilities, and BtoB facilities business: Establish foundation of highly expand sales to the automotive and facility markets. In the business BtoB devices. profitable businesses for the medium and long terms of compressors for air conditioners, we will make package proposals BtoC business: Establish stable profitability as The AP Company aims to strengthen model lineups and the sales- and reduce the size of products. In compressors for refrigerators, we a pillar business service structure. In large-sized air-conditioning systems, we will intro- plan to reinforce businesses in high-profit fields by increasing the The AP Company aims to steadily capture market needs by con- duce low-cost products to China and elsewhere in Asia. At the same proportion of sales generated by inverters and in other ways. More- ducting marketing targeted at upper-middle and high-income earn- time, we will strengthen sales and the support structure. In cold chain over, in vacuum insulation panels (VIPs), where we are looking to ers in emerging countries, in addition to strengthening product equipment, we plan to strengthen our lineup of environmentally expand business overseas, we aim to dramatically raise the share of sales of panels manufactured in Thailand, while in gas meter devices Global Market Share (FY2013) Appliance Company which Creates Customer Value we will expand sales in Europe.
Panasonic Panasonic FY2011–FY2013 FY2014–FY2016 FY2017–FY2019 6.6 million units 4.9 million units Creating New Businesses for the Future Establish Expand Completion towards Share 9.3% Share 6.0% foundation business Global No. 1 company Over the medium to long terms, we will work to establish new Air-conditioners Washing machines 71.0 million units 82.0 million units business models by utilizing smart home appliances, including B TO <2018> offering healthy recipes and menu suggestions. Furthermore, we B Panasonic Panasonic Expand BtoB Toward Global 3.5 million units 0.18 million units aim to create new businesses beyond the existing appliances business No. 1 Appliances Share 3.6% Share 4.1% B Company to area. Examples include utilizing sensor technologies to visualize Refrigerators Large-scale B 97.0 million units Air-conditioners Contribute to “Comfort Living” the soil environment. 4.5 million units and “Comfort Society” Panasonic Panasonic B by wider business area 0.4 million units 14.0 million units to world wide Share 14.5% Share 11.1% C Expand business Cold Chains Compressors for in emerging 2.7 million units Air-conditioners 129.0 million units <2013> countries
Note: Air-conditioners refer to room air-conditioners. Drying machines are excluded from New Appliances washing machines. Company Regional Company Global Company Source: Statistics and reports from Gfk, Euromonitor, JEMA, CMM, Bsria, and the Japan Refrigera- established tion and The Air Conditioners Industry Association. Estimated by the AP Company. Panasonic Corporation Annual Report 2013 PAGE Overview of 4 Divisional Companies 17
>> Eco Solutions Company
Eco Solutions Company
Providing a residential/non-residential environment where people around the world can live comfortably while reducing the environ- mental impact.
The Eco Solutions (ES) Company will make untiring efforts to offer solutions for creating comfortable environments for homes, office buildings, factories, and communities, while reducing environmental burden, by using our accu- mulated technology for creating comfortable environments and energy management technology. Furthermore, by providing optimized solutions based on full utilization of the Panasonic Group’s product lineup and various services transcending product boundaries, the ES Company will create new value and contribute to the development of a sustainable society.
FY2013 Sales Composition Overview of the Eco Solutions Company high-profit business structure in fiscal 2016. The basic strategy in the The ES Company had approximately 55,000 employees as of March midterm plan is to generate solid profits from core businesses and n Sales Composition by Segment Lighting : 18% 31, 2013, and generated net sales of 1,673.2 billion yen in fiscal shift resources to growing business fields. The ES Company will Others 14% 2013. grow core businesses in growing areas and markets, and at the Other Domain Companies 16% The ES Company is made up of four business divisions—Lighting same time accelerate the launch of new businesses in the energy- Panasonic Business Division, Energy Systems Business Division, Housing related field. Ecology Systems Systems Business Division and Panasonic Ecology Systems Co., Through these initiatives, the ES Company aims to generate Co., Ltd. : 8% Ltd.—and 12 subordinate business units, as well as the Marketing sales of 1,770.0 billion yen and achieve an operating profit ratio of Division (Japan) and Global Marketing Division. With the strong sales 4.9% in fiscal 2016, as well as generate cumulative free cash flows Energy Systems : 22% network of the Marketing Division, the ES Company will sell the of 120.0 billion yen over the three-year period covering fiscal 2014 products of other Companies (AP, AVC and AIS) in addition to the to fiscal 2016. Housing products and services of the ES Company. In these and other ways, Systems : 22% it will be a driving force for growth of the Panasonic Group. Basic Strategy
n Sales Composition by Region Strengthen core businesses to support growth
Asia/Oceania 2% Europe 2% Midterm Management Targets In Japan, the ES Company will turn mainstay products into clear, China/North East Asia 3% North America 2% The ES Company’s efforts are directed at building a high-profit busi- No. 1 flagship products and integrate them into the company. This ness structure by fiscal 2019. To that end, its plans call for it to will entail creating housing space networks as well as eco-conscious Japan 89% prepare for growth in new businesses in fiscal 2014 and then to and smart business solutions in non-residential spaces. Furthermore, India/Middle East 2% expand new businesses in fiscal 2015, followed by building up a we will make full use of distribution channels and contact points with Panasonic Corporation Annual Report 2013 PAGE Overview of 4 Divisional Companies 18
>> Eco Solutions Company
customers in showrooms and elsewhere, to develop sales activities In the energy management system business, we plan to develop Private Limited, which Panasonic acquired in May 2012. that satisfy distributors and customers. Implementation of these “eco-conscious & smart solutions” and thereby increase added With the home remodeling business, our approach to targeting strategies should strengthen core businesses in Japan. value. For this, we will combine active products (products and equip- this market is to increase the value we provide, such as pursuing Overseas, we plan to accelerate the growth of strong businesses ment for creating, storing and saving energy) and passive products space value and expanding products especially for home remodel- in the growing markets of “AC&I” (China, India and other Asian coun- (interior and exterior materials and structures that achieve comfort ing, using all knowhow of the Panasonic Group in fields ranging from tries), with the aim of expanding business. We will pursue the cre- and harmony with nature). lighting and air quality to visual and audio. This includes providing ation of oligopolies in Asia, localization in China, and concentrate In the engineering & service business, the ES Company’s focus is spatial value and expanding the product lineup exclusively for remod- resources in India. The ES Company will also expand in Middle on establishing business models that best suit the market environ- eling. In addition, we will strengthen contact points with customers Eastern markets, with an eye on the markets of Africa and the CIS ment of each region. In China, for instance, we will concentrate on via cooperative arrangements inside and outside the Company. And (Commonwealth of Independent States). the housing interior solutions business, while in India, we aim to by also offering after-sales services tailored to each customer, we expand the engineering business further in the field of energy-saving aim to establish lifetime relationships with customers in all markets. New growth in the engineering business solutions for non-residential buildings, such as offices, buildings and Steadily implementing these measures, we will provide products The ES Company will shift focus from selling individual products to commercial facilities, through cooperation with Firepro Systems and services globally centered on energy solutions, as we aim to providing added value, including in design, construction, mainte- create a robust profit structure befitting an excellent company. nance, monitoring and services. Enhance Added Value in the Energy Management Strengthen Remodeling Business Midterm Management Vision System Business (Consulting Services on Living Space & After-sales Services)
Basic Policy of Midterm Plan n Develop “Eco-conscious & Smart Solutions” n Capture Remodeling Business by Strengthening Contact with — Abundant Energy Creation/Storage/Saving Management System Customers and Expanding Provided Values 1. Strengthen core business in growing areas & markets Equipment and Structures + Engineering — — Establish Lifetime Relationship with Customers in All Markets — 2. Accelerate launching new business in environmental energy ESCO* Strengthen Contact with Customers Expand Provided Values field toward FY2019 Remote Demand High *Energy Service Ancillary Monitoring Response Services Company Strengthen Contact to All Markets with FY2019 Internal and External Collaboration Provide Spatial Values
Build up High- Added Value Full-scale Maintenance/ Strengthen Engineering Function & Develop and Wagaya Minaoshitai FY2016 Establish Profitable Business Structure Renovation “ ” After-sales Services using
profit Business Historical Management Lighting Construction Strengthen Service Business (My home Air •Establish environmental energy-related Structure reexamination unit) Energy Quality business base Energy Creation Ventilation Remodeling “Refine Shop” Storage Visual and Energy “AiSEG”TM Monitor FY2015 Expand New Business Overcoming Sales Energy Storage System Expand New Management Linkage System “Reborn 21” Security Audio Decrease due to Hike in Consumption Tax Business System (Collaboration with Energy-saving “Century 21”) PV Power Passive & Active Refreshment Generation Equipment Energy Management (Non- “AGE-FREE” Enjoy Special Demand before Consumption Tax System residential) FY2014 Individual System (Elderly Care) Expand Product Line-up Hike and Prepare for Growth in New Business Prepare for Product Exclusively for Internally Electric Energy-saving “Resmplus” Remodeling •Make a profit in strong business amid tailwinds of Growth in New Equipment/ Installed/Exterior Power Vehicle Home Repair (Consultation Service special demand Business Structure Thermal Insulation Inverter Charging Appliances for Remodeling) Materials Outlet (Residential) (Example for After-sales Support Service) •Set up business models and implementation 6 Trillion Yen Strengthen Delivery systems for new growth Market Panasonic Corporation Annual Report 2013 PAGE Overview of 4 Divisional Companies 19
>> AVC Networks Company
AVC Networks Company
Creating Cross-Value with AV and ICT* Technologies
The AVC Networks (AVC) Company was newly formed by combining the strong BtoC and BtoB businesses of the former AVC Networks Company, which was centered on broadcasting and package media, and the former Sys- tems & Communications Company, which was centered on communications. Fusing AV and ICT technologies, the AVC Company will create cross-value. And by utilizing cloud computing it will provide customers around the world with new value and solutions. * ICT: Information and Communication Technology
New AVC Networks Company’s Overview Overview of the AVC Networks Company Midterm Management Targets The AVC Networks (AVC) Company had approximately 47,000 The AVC Company plans to rigorously restructure underperforming n Covering both BtoC × BtoB areas, and AV × ICT areas employees as of March 31, 2013, and in fiscal 2013 generated sales BtoC businesses. With BtoB businesses, the aim is to strengthen Former Systems & of 1,835.7 billion yen (on a production and sales consolidated business bases and create new businesses by providing products Former AVC Networks Communications basis*). It covers a wide range of business areas from BtoC busi- and solutions to customers. Furthermore, aiming to strengthen solu- (AV related) (ICT related) nesses such as TVs, video, telephones, and smartphones, to BtoB tions businesses globally, particularly in Japan, the U.S. and Asia, we businesses such as in-flight entertainment systems, business-use will promote greater cooperation with IT companies to develop cloud- BtoC BtoC PCs, surveillance cameras and infrastructure systems. The AVC connected products. Our midterm management targets for fiscal TVs Fixed phones • • Company was launched with the structures to create cross-value 2016 are to generate sales of 1,980.0 billion yen on a production and •Videos •Fax machines •DSCs •Smartphones with technological capabilities backed by patents in each of these sales consolidated basis and an operating profit ratio of at least 5%. •Audio equipment, •Feature phones, areas. Furthermore, we aim to generate cumulative free cash flows of at etc. etc. Cross-Value * Production and sales consolidated includes sales and operating profit of consumer least 50.0 billion yen over the 3-year period covering fiscal 2014 to Innovation products sales divisions included in “Corporate and Eliminations” in segment information. fiscal 2016. No. of Patents Owned (Including Patent Applications) •Broadcasting AV •Visual security •In-flight entertainment •Infra-systems AV Technologies ICT Technologies Projectors Office equipment Image compression Wireless communications • • Approx. 1,500 Approx. 1,700 •PCs, etc. •Terminals, etc. technologies*1 technologies*3 Hard device Image management Approx. 920 Approx. 3,000 technologies*2 technologies*4
*1 Patents covering the HEVC (H.265) standard, etc. BtoB BtoB *2 Patents related to structures for protecting hard disks from shocks, etc. *3 Patents for transmission and circuit technologies, including police wireless, etc. *4 Patents for image recognition technologies, including facial, person, matching and tracking, etc. Panasonic Corporation Annual Report 2013 PAGE Overview of 4 Divisional Companies 20
>> AVC Networks Company
Restructuring Underperforming Businesses and systems integration for specific industries. development of cloud-connected products. For instance, in BD (Blu- Reforming earnings structures is intended to improve marginal profit For example, up to now we have delivered single products such ray Disc) archives*, drawing on media and drive technologies, high- and reduce fixed costs, so that underperforming businesses can as TOUGHBOOKs by customizing general-use PCs and in-car cam- density recording and playback technologies and other technologies once again generate operating profits. eras for police cars. Leveraging this TOUGHBOOK sales channel, we amassed from developing BD recorders, we can offer storage advan- now plan to widen our business to win orders for police station office tages such as longer life, lower maintenance, higher reliability and TV/panel business: rigorous profit improvement surveillance systems. And taking this drive to add more layers to our increased energy savings. In this way, we will support the long-term The AVC Company plans to improve profits on a production and business a step further, by adding value as an image analysis storage needs of BtoB operations handling enormous volumes of data. sales consolidated basis mainly by reforming the cost of sales of system, we could even widen the scope of our business areas to For creating these cloud-connected products, we will integrate manufacturing* and increasing the profitability of the sales section. In include public safety such as event surveillance and town security. our R&D platform with that of the AIS Company, which is working to the LCD panel business, we will shift the focus to non-TV panels Accelerating alliances and M&As with partners in regions and introduce information technologies into the automotive field, in Japan such as for tablets and medical-use monitors, and strive to win more business areas is also part of our approach to strengthening our as part of moves to strengthen the development structure. In another BtoB orders. solutions businesses. move, we will establish a North American satellite office to accelerate * Refers to a management technique for promoting rationalization from the product design stage cooperation with global IT companies for the creation of new value Digital still camera (DSC) business: concentrate on mirror- Creating New Businesses for the Future for customers. less cameras and high value-added compact cameras Enhancing the R&D organization to create cloud-connected products * BD archives: a storage media that uses BD disks instead of hard disks for storing large volumes of data. We intend to concentrate resources on mirror-less cameras and high The AVC Company will partner with IT companies to promote value-added compact cameras, and at the same time work to reduce the number of entry-level compact camera models and total fixed costs. BtoB Business: Example of Leveling Up in Solution Business BD Archiver: Example of Cloud-connected Products Mobile phone business: reduce fixed costs and shift focus to the BtoB area n Target: Security Business sales CAGR=15% n Building partnership with IT companies, contribute to cloud business n Applying BtoC technology to BtoB business, create a new business By outsourcing development and production, we will shorten devel- Starting from TOUGHBOOK sales channel, challenge to expand the business to monitoring systems and to security business with video analysis opment timeframes and more efficiently use resources. Furthermore, The vast volume of digital data can be stored for a long period with optical Solution-level up Event Town storage technology with a long life, low-maintenance, and high reliability we will shift focus to the BtoB business. One strategy is to promote Monitoring Monitoring Alliance with Video rugged smartphones as part of the TOUGHBOOK lineup overseas. Video Analysis Management System (Collaboration company, etc. with VMS) Establish promotion BD Recorder BD Archiver organization for Growth Strategy Monitoring Monitoring System (Start business in FY2014) System each industry (LTE/WiMAX)
Driving growth by developing our BtoB businesses globally (Utilize TOUGHBOOK •Media & drive tech Advantages & Benefits •Longer life & higher reliability than HDD & sales channel) Feature Tech •High density record magnetic tape and strengthening solutions businesses TOUGHBOOK & playback tech → Substantially reduce data transmission + Sweatbox/Police •HDD: Must always turn on Utilizing knowhow accumulated in Japan in traffic management ICV station/Jail, etc. Business area •Digital signal processing tech •Magnetic tape: Cost required for Current Position (Public safety) systems, mobile phone base stations and other areas, we will •Ability to propose tech air conditioning Can reduce power consumption Police Car Police Detention Town Security for high capacity → develop our businesses to BtoB customers globally. And besides considerably (compared to HDD: by 98%*) Station Center Prison selling general-purpose products, we will offer customized products * While saving 100TB data for 10 years (Panasonic analysis) Panasonic Corporation Annual Report 2013 PAGE Overview of 4 Divisional Companies 21
>> Automotive & Industrial Systems Company
Automotive & Industrial Systems Company
We aim to create a better world together with customers by contributing to the automotive, industry and ICT* fields The Automotive & Industrial Systems (AIS) Company is responsible for a wide range of products, including car-use- multimedia-related equipment, eco-car-related equipment, electrical components, electronic components, electronic materials, semiconductors, optical devices, batteries, storage battery modules, mounting-related machines for electronic components, welding equipment-related systems, and bicycle-related products. The AIS Company aims to increase value for customers centered on three fields: automotive, industry and ICT. The AIS Company will help realize ecological and smart lifestyles that are also safe and secure based on our proprietary core technologies. We will conduct marketing activities that anticipate latent customer needs and create “Cross-Value Innovation” by proposing package systems solutions. * ICT: Information and Communication Technology
FY2013 Sales Composition Overview of the Automotive & Industrial Midterm Management Targets Systems Company The AIS Company aims to grow and expand profits with a focus Others : 24% Automotive field : 40% The AIS Company had 152 group companies in Japan and over- mainly on the three fields of automotive, industry and ICT. seas, and approximately 111,000 employees at March 31, 2013, In terms of midterm management targets for fiscal 2016, the AIS and sales of 2,518.0 billion yen in fiscal 2013. Company aims to increase sales to 2,700.0 billion yen and elevate The AIS Company conducts development, manufacturing, sales the operating profit ratio to 5.0%. Furthermore, it aims to generate and service activities related to the automotive, industrial and manu- cumulative free cash flows of 265.0 billion yen in the 3-year period facturing businesses. It is made up of four divisions (Business Devel- from fiscal 2014 through fiscal 2016. opment Division, Engineering Division, Automotive Marketing & Sales As a profit improvement plan, the AIS Company aims to return all Division, and Industrial Marketing & Sales Division) and 18 business business divisions to profitability in fiscal 2015, and then for 13 divisions, including operating companies. Among the newly estab- business divisions to achieve an operating profit ratio of over 5% in lished 4 Companies, the AIS Company accounts for the largest fiscal 2016. This should improve operating profit by 106.5 billion yen, share of sales. With the ability to provide BtoB solutions leveraging a including moving unprofitable businesses back into the black. broad range of businesses from materials to devices and systems, the AIS Company is positioned as a new growth engine for the Measures for Unprofitable Businesses Panasonic Group. The AIS Company has formulated profit improvement plans for four unprofitable businesses—portable rechargeable battery, optical, printed circuit board and semiconductor. Measures center on reduc- : 22% : 14% ICT field Industrial field ing fixed costs, streamlining, and shifting to new business areas. Panasonic Corporation Annual Report 2013 PAGE Overview of 4 Divisional Companies 22
>> Automotive & Industrial Systems Company
Reducing fixed costs and shifting resources to fields where Growth Strategy ICT field we can leverage our strengths Automotive field We plan to work to expand sales of high-share, high-profit products, In order to reduce fixed costs, we plan to reorganize production sites Strengthening collaboration within the Panasonic Group and giving full strengthen our hand in the communications infrastructure field, and in Japan and overseas. Streamlining entails increasing the overseas play to our broad technological resources, we intend to expand existing expand our share in the mobile terminal market. These efforts should production ratio and the local procurement ratio of materials overseas. business areas. Guided by the key themes of being less Japan-oriented, further strengthen our underlying profit base in the ICT field. Indeed, In the portable rechargeable battery business, we will also strive to maximizing collaboration with Panasonic Group companies, and proac- we aim to lift the proportion of sales of high-share, high-profit prod- expand in power and industrial fields where we can leverage our tively utilizing external resources, we aim to create new businesses ucts from 36% in fiscal 2013 to 46% in fiscal 2016. strengths in terms of high capacitance, high reliability and control centered on comfort, sense of security and safety, and electrically pow- Creation of new businesses that generate 10% of technologies. In the optical business, we plan to downsize the optical ered. As a numerical target, we aim to generate sales of 2 trillion yen in AIS Company sales in fiscal 2016 pickup and optical disk drive businesses for personal computers and fiscal 2019; we recorded sales of 1 trillion yen in fiscal 2013. In April 2013, we established the Business Development Division, instead focus on products utilizing optical and precision processing Industrial field which is staffed by employees from different professional back- technologies. Meanwhile, in printed circuit boards, we will work to In the industrial field, we will contribute to customers worldwide grounds, namely business planning, marketing and engineering. The expand high-value-added products such as core materials and semi- through manufacturing solutions in various manufacturing processes Business Development Division has a workforce of 400 people in 6 conductor packaging. In the semiconductor business, we will shift based on an understanding of their needs for factory automation and zones around the world (Japan, North America, Europe, China, India resources away from AV equipment to automotive and industrial fields. manpower saving. In addition, by implementing measures in social and Taiwan). With this global setup, it aims to create new businesses Taking full advantage of our strengths in low power consumption, infrastructure and other areas, we will push ahead with efforts to that transcend business division boundaries. imaging and compound technologies, we aim to increase profits. build a long-term earnings base.
Midterm Management Vision Midterm Management Targets Profit Improvement Plan
n Become a growth engine for Panasonic Group as a vanguard in n Sales and Operating Profit Ratio n Free Cash Flow n Sales Composition by n Operating Profit BtoB business Business Profitability (FY2013-FY2016) Bil. yen Bil. yen Bil. yen Bil. yen n Establish a foundation for mid-to long-term growth and profit 4.0% 110.0 *2 3.0% 5.0% OP ratio: Loss 0–5% 5% or more setting automotive and industry as core businesses 136.0 1.2% 90.0 Automotive field Industrial field 31% ⑦ 31%⑥ *2 *3 2,700.0 +32.4 2,518.0 2,540.0 2,610.0 *1 +106.5 Boldly accumulate Contribute to improving values 82% ○13 65.0 76.0 resources and grow as of factories and social Others 37% ⑤ +53.6 an electronic system supplier infrastructure by creating a 55%⑧ foundation for long-term profit ICT Industrial 32% ⑥ 29.5 14%④ 18% ⑤ Automotive Establish a foundation for short-term 2013 2014 2016 2013 2014 2016 profits by setting package solutions and 8.1 (actual) (FY) (actual) (FY) * The numbers in circles above show the *1 Unprofitable business divisions improve others as a core business number of business divisions. profitability 2016201520142013 2016201520142013 * Unprofitable business divisions in FY2013: *2 Other business divisions improve their (actual) (FY) (actual) (FY) Semiconductor, Portable Rechargeable Battery, profitability ICT field Automotive Battery, Panasonic Precision *3 Investment in new business, etc. Devices, Optical Pickup, Printed Circuit Board. Panasonic Corporation Annual Report 2013 PAGE ESG Information 23
ESG at Panasonic
Disclosure in this Annual Report is coordinated with disclosure on Panasonic’s corporate website. For ESG information such as corporate governance, environmental activities, and CSR activities, please refer to the relevant websites.
Corporate Governance Sustainability Please refer to the Company’s Annual Securities Report http://panasonic.net/sustainability/en/ (Yukashoken Hokokusho) for details regarding IV 6 Corporate Governance, etc.
Policy on Control of Panasonic Corporation Please refer to the Company’s Annual Securities Report (Yukashoken Hokokusho) for details regarding II 3 (2) Policy on Control of Panasonic Corporation.
Directors, Corporate Auditors and Executive Officers Please refer to the Company’s Annual Securities Report (Yukashoken Hokokusho) for details regarding IV 5 Member of the Board of Directors and Corporate Auditors. Panasonic Corporation Annual Report 2013 PAGE Financial and Corporate Data 24
Financial and Corporate Data
PAGE PAGE 25 Financial Review 32 Stock Information
25 Consolidated Sales and Earnings Results PAGE 27 Financial Position and Liquidity 33 Company Information
PAGE PAGE 28 Consolidated Financial Statements 34 Quarterly Financial Results and Investor Relations Offices
28 Consolidated Balance Sheets 29 Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income (Loss) 30 Consolidated Statements of Equity 31 Consolidated Statements of Cash Flows
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Note: Panasonic’s financial review and consolidated financial statements are presented in accordance with the Company’s Annual Securities Report (Yukashoken Hokokusho). Panasonic Corporation Annual Report 2013 PAGE Financial and Corporate Data 25 >> Financial Review
Financial Review (Please refer to the Company’s Annual Securities Report for further details.)
Consolidated Sales and ‘reforming Head Office functions and Interest Income, Dividends Received Provision for Income Taxes Earnings Results decision-making processes,’ ‘providing and Other Income Provision for income taxes for fiscal 2013 countermeasures for underperforming busi- In fiscal 2013, interest income amounted to increased to 384.7 billion yen, compared Operating results for fiscal 2013 ended ness’ and ‘introducing BU (business unit) 9.3 billion yen, down from 13.4 billion yen. with 9.8 billion yen in fiscal 2012. March 31, 2013 compared with fiscal 2012 based management.’ In reforming the struc- Dividends received amounted to 3.7 billion Taking into consideration significant sales were as follows: ture of the Panasonic Group and providing a yen, down from 6.1 billion yen. Other income decreases in Japan and other factors, in During the fiscal 2013 under review, the new direction, the Company has developed amounted to 91.8 billion yen, increased from accordance with U.S. GAAP, the Company business environment for Japanese compa- its corporate structure to create new cus- 44.1 billion yen in the fiscal 2012. increased the valuation allowances to nies improved as a result of factors including tomer value and a foundation for its recov- deferred tax assets in Panasonic Corpora- the depreciating yen against U.S. dollar and ery. These initiatives, however, have not yet Interest Expense, Goodwill Impairment tion and Panasonic Mobile Communications Euro after a period of extreme yen apprecia- to achieve any result and the fiscal 2013 and Other Deductions Co., Ltd., and incurred provision for income tion, and the recovering U.S. stock market, annual results ended with poor outcomes. In fiscal 2013, interest expense amounted taxes of 412.5 billion yen, in the second towards the end of the fiscal 2013. However, to 25.6 billion yen, down from 28.4 billion quarter of fiscal 2013. the electronics industry continued to be in a Sales yen in fiscal 2012. The Company incurred severe business situation including sluggish Consolidated group sales for the fiscal 2013 250.6 billion yen of goodwill impairment and Equity in Earnings of Associated demand in flat-panel TVs mainly in Japan. decreased by 7% to 7,303.0 billion yen from 138.1 billion yen as expenses associated Companies Under such business circumstances, the 7,846.2 billion yen in the year ended March with impairment losses of fixed assets, In fiscal 2013, equity in earnings of associ- three-year midterm management plan 31, 2012 (fiscal 2012). which were primarily related to solar, ated companies amounted to 7.9 billion yen, “Green Transformation 2012 (GT12),” which consumer-use lithium-ion batteries and compared with 6.5 billion yen in fiscal 2012. ended in the fiscal 2013, achieved results far Cost of Sales and Selling, General and mobile phone businesses. below target. Administrative Expenses Net Income (Loss) In addition to the severe business envi- In fiscal 2013, cost of sales amounted to Income (Loss) before Income Taxes Net income (loss) amounted to a loss of ronment, the Company recognized its dete- 5,419.9 billion yen, down from 5,864.5 bil- As a result of the above-mentioned factors, 775.2 billion yen for fiscal 2013, compared riorating profitability following Lehman’s fall lion yen in the fiscal 2012. Selling, general income (loss) before income taxes for fiscal with a loss of 816.1 billion yen in fiscal 2012. was substantially due to structural issues. and administrative expenses amounted to 2013 amounted a loss of 398.4 billion yen, During the fiscal 2013 under the new man- 1,722.2 billion yen, down from 1,938.0 bil- compared with a loss of 812.8 billion yen in agement structure, the Company, therefore, lion yen in the fiscal 2012. These results are fiscal 2012, due mainly to incurring goodwill implemented the following initiatives with a due mainly to the effects of sales decrease. impairment and expenses associated with deep sense of crises among employees: impairment losses of fixed assets. Panasonic Corporation Annual Report 2013 PAGE Financial and Corporate Data 26 >> Financial Review
Net Income (Loss) Attributable to Segment profit significantly improved to 19.9 weak sales in Europe, sales increased due billion yen a year ago due mainly to fixed Noncontrolling Interests billion yen compared with the loss of 67.8 mainly to sales growth in LED lighting and cost reductions. Net income (loss) attributable to noncontrol- billion yen a year ago due mainly to fixed energy management system products with ling interests amounted to a loss of 20.9 cost reduction and restructuring benefit. backing from power conservation demand. • Energy billion yen for fiscal 2013, compared with a Despite a drop in product prices, segment Sales decreased by 4% to 592.3 billion yen loss of 43.9 billion yen in fiscal 2012. • Appliances profit slightly increased to 59.1 billion yen from 614.9 billion yen a year ago due mainly Sales increased by 1% to 1,554.4 billion from 58.9 billion yen a year ago due mainly to sales decrease in lithium-ion batteries Net Income (Loss) Attributable to yen from 1,534.2 billion yen a year ago. to streamlining material costs. affected by stagnant demand for notebook Panasonic Corporation Despite flat global demand particularly for PCs, and in solar photovoltaic systems As a result of all the factors stated in the air conditioners in China, which is one of its • Automotive Systems affected by the shrinkage in the European preceding paragraphs, the Company main products, sales increased due mainly Sales increased by 20% to 782.9 billion yen market. Segment profit significantly recorded a net loss attributable to Panasonic to favorable sales in refrigerators and rice from 653.2 billion yen a year ago. Despite improved to 8.3 billion yen compared with a Corporation of 754.3 billion yen for fiscal cookers. Segment profit decreased to 66.5 sales decreases due mainly to demand loss of 20.9 billion yen a year ago due 2013, compared with a loss of 772.2 billion billion yen compared with 81.5 billion yen a slowdown in the Chinese market, market mainly to fixed cost reduction and streamlin- yen in fiscal 2012. Net income (loss) attribut- year ago due mainly to sales decrease in recovery in North America and South Asia ing material cost. able to Panasonic Corporation per share, air conditioners. as well as Japanese vehicle sales volume basic amounted to a loss of 326.28 yen in increases with backing from eco-car subsi- • Other fiscal 2013, compared with a loss of 333.96 • Systems & Communications dies contributed to overall sales increase. Sales decreased by 23% to 1,442.8 billion yen in fiscal 2012. Sales decreased by 12% to 740.9 billion yen Segment profit significantly improved to 16.6 yen from 1,880.9 billion yen a year ago due from 840.8 billion yen a year ago due mainly billion yen from 4.9 billion yen a year ago mainly to sales decrease owing to the Results of Operations by Segment to sales decrease in mobile phones and due mainly to sales increases. SANYO-related business transfers imple- • AVC Networks office equipment, although sales in security mented in the fiscal 2012. Segment profit Sales decreased by 20% to 1,373.9 billion business including surveillance cameras • Industrial Devices increased to 25.0 billion yen from 23.6 yen from 1,713.5 billion yen a year ago. were strong. Segment profit decreased to Sales decreased by 3% to 1,361.4 billion billion yen a year ago due mainly to restruc- Despite steady sales in the solutions busi- 12.4 billion yen due mainly to sales decrease yen from 1,404.6 billion yen a year ago due turing benefits. ness including aircraft in-flight entertainment compared with 17.3 billion yen a year ago. mainly to lower sales for notebook PCs and Download DATA BOOK (Segment Information) systems, sales significantly decreased due digital household products, although mainly to sales decline in the digital AV net- • Eco Solutions demand for smartphones and tablets grew. works business including TVs and the dis- Sales increased by 1% to 1,547.9 billion yen Segment profit significantly improved to 19.2 play devices business including panels. from 1,525.8 billion yen a year ago. Despite billion yen compared with the loss of 16.6 Panasonic Corporation Annual Report 2013 PAGE Financial and Corporate Data 27 >> Financial Review
Financial Position and Liquidity Dividend Policy the amount of “Capital investment (tangible 2013, a decrease of 78.1 billion yen com- The Company recorded a significant net assets)” and “Depreciation (tangible assets)” pared with the end of the last fiscal year. Assets, Debts and Equities loss for the second consecutive year, and for fiscal 2012 are changed. The Company’s consolidated total assets as global business condition surrounding the of March 31, 2013 decreased by 1,203.2 Company is expected to be continuously Cash Flows billion yen to 5,397.8 billion yen from the uncertain. Under these circumstances, the • Cash flows from operating activities end of the fiscal 2012 due mainly to Company recognizes that it is one of the Net cash provided by operating activities for decreases in other assets and other current most important and urgent to improve its the year ended March 31, 2013 amounted assets affected by the impairment losses of financial position. The board of Directors of to 338.8 billion yen, an increase of 336.8 goodwill and intangible assets, and Panasonic resolved not to distribute a year- billion yen from a year ago due to an increases in valuation allowances for end dividend, resulting in non-dividend for increase in operating profit and a decrease deferred tax assets, as well as a decrease in the fiscal 2013. in trade receivables. property, plant and equipment, and invest- ments and advances affected by disposals Capital Investment and Depreciations • Cash flows from investing activities of investments. Total liabilities decreased by Capital investment (tangible assets) during Net cash related to investing activities 530.0 billion yen to 4,093.5 billion yen due fiscal 2013 decreased by 7% to 310.9 billion amounted to an inflow of 16.4 billion yen, to the 9th unsecured straight bond redemp- yen, compared with 333.7 billion yen in fiscal compared with the outflow of 341.9 billion tion and a decrease in short-term bond. 2012. Principal capital investments were yen a year ago due primarily to a decrease Panasonic Corporation shareholders’ equity directed to solar cell manufacturing facilities in capital expenditures and an increase in decreased by 665.8 billion yen compared in Malaysia, rechargeable batteries manufac- proceeds from disposals of investments and with the end of the fiscal 2012 to 1,264.0 turing facilities in China, and facilities related property, plant and equipment. billion yen as of March 31, 2013. Despite an to organic LED panels in Japan. Deprecia- improvement in accumulated other compre- tions (tangible assets) during fiscal 2013 • Cash flows from financing activities hensive income (loss) due to the yen depre- decreased by 6% to 277.6 billion yen com- Net cash used in financing activities ciation, this decrease in shareholders’ equity pared with 295.8 billion yen in fiscal 2012. amounted to 491.1 billion yen, an increase was primarily due to a decrease in retained Effective from the beginning of fiscal 2013, of 438.0 billion yen from a year ago due earnings corresponding to the net loss investments and depreciation expenses in mainly to a decrease in short-term bonds. attributable to Panasonic Corporation. Non- molding dies are included in “Capital invest- Taking into consideration the exchange controlling interests decreased by 7.5 billion ment (tangible assets)” and “Depreciation rate fluctuations, cash and cash equivalents yen to 40.3 billion yen as of March 31, 2013. (tangible assets),” respectively. Accordingly, totaled 496.3 billion yen as of March 31, Panasonic Corporation Annual Report 2013 PAGE Financial and Corporate Data 28 >> Consolidated Financial Statements
Consolidated Financial Statements Download DATA BOOK (Balance Sheets) Consolidated Balance Sheets March 31, 2012 and 2013 Millions of yen Millions of yen 2012 2013 2012 2013 Assets Liabilities and Equity Current assets: Current liabilities: Cash and cash equivalents ��������������������������������������������������������������������� 574,411 496,283 Short-term debt, including current portion of long-term debt ����������������� 633,847 480,304 Trade payables: Time deposits ��������������������������������������������������������������������������������������� 36,575 1,674 Notes ������������������������������������������������������������������������������������������������� 53,243 52,205 Short-term investments ������������������������������������������������������������������������� 483 — Accounts �������������������������������������������������������������������������������������������� 797,770 739,581 Trade receivables: Total trade payables ������������������������������������������������������������������������� 851,013 791,786 Notes ������������������������������������������������������������������������������������������������� 73,044 56,752 Accrued income taxes ��������������������������������������������������������������������������� 32,553 32,162 204,842 201,460 Accounts �������������������������������������������������������������������������������������������� 963,202 905,973 Accrued payroll ������������������������������������������������������������������������������������� Other accrued expenses ����������������������������������������������������������������������� 749,495 713,314 Allowance for doubtful receivables ����������������������������������������������������� (26,604) (23,398) Deposits and advances from customers ������������������������������������������������� 71,102 75,669 Net trade receivables ����������������������������������������������������������������������� 1,009,642 939,327 Employees’ deposits ����������������������������������������������������������������������������� 7,651 6,610 Inventories ��������������������������������������������������������������������������������������������� 801,991 786,845 Other current liabilities ��������������������������������������������������������������������������� 329,001 297,854 Other current assets ������������������������������������������������������������������������������� 454,663 269,954 Total current liabilities ����������������������������������������������������������������������� 2,879,504 2,599,159 Total current assets ������������������������������������������������������������������������� 2,877,765 2,494,083 Noncurrent liabilities: Long-term debt ������������������������������������������������������������������������������������� 941,768 663,091 Retirement and severance benefits ��������������������������������������������������������� 566,550 621,802 Other liabilities ��������������������������������������������������������������������������������������� 235,667 209,487 Investments and advances ����������������������������������������������������������������������� 451,879 276,978 Total noncurrent liabilities ����������������������������������������������������������������� 1,743,985 1,494,380
Equity: Panasonic Corporation shareholders’ equity: Common stock: Property, plant and equipment: Authorized — 4,950,000,000 shares Land ����������������������������������������������������������������������������������������������������� 374,855 313,991 Issued — 2,453,053,497 shares ��������������������������������������������������������� 258,740 258,740 Buildings ����������������������������������������������������������������������������������������������� 1,679,665 1,638,974 Capital surplus ��������������������������������������������������������������������������������������� 1,117,530 1,110,686 Machinery and equipment ��������������������������������������������������������������������� 2,590,026 2,723,993 Legal reserve ����������������������������������������������������������������������������������������� 94,512 96,259 Retained earnings ��������������������������������������������������������������������������������� 1,441,177 673,604 Construction in progress ����������������������������������������������������������������������� 90,786 60,173 Accumulated other comprehensive income (loss): 4,735,332 4,737,131 Cumulative translation adjustments ����������������������������������������������������� (482,168) (297,015) Less accumulated depreciation ������������������������������������������������������������� 2,972,774 3,061,703 Unrealized holding gains (losses) of available-for-sale securities ����������� 13,283 (218) Net property, plant and equipment ��������������������������������������������������� 1,762,558 1,675,428 Unrealized gains (losses) of derivative instruments ������������������������������� (3,728) (4,573) Pension liability adjustments ��������������������������������������������������������������� (262,542) (326,423) Total accumulated other comprehensive income (loss) ��������������������� (735,155) (628,229) Treasury stock, at cost: 141,394,374 shares (141,351,296 shares in 2012) ����������������������������� (247,018) (247,028) Other assets: Total Panasonic Corporation shareholders’ equity ��������������������������� 1,929,786 1,264,032 Goodwill ������������������������������������������������������������������������������������������������� 757,417 512,146 Intangible assets ����������������������������������������������������������������������������������� 345,751 223,013 Noncontrolling interests ����������������������������������������������������������������������������� 47,780 40,241 Total equity ��������������������������������������������������������������������������������������� 1,977,566 1,304,273 Other assets ������������������������������������������������������������������������������������������� 405,685 216,164 Total other assets ����������������������������������������������������������������������������� 1,508,853 951,323 Commitments and contingent liabilities 6,601,055 5,397,812 6,601,055 5,397,812 Panasonic Corporation Annual Report 2013 PAGE Financial and Corporate Data 29 >> Consolidated Financial Statements
Download DATA BOOK Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income (Loss) (Statements of Operations) Years ended March 31, 2012 and 2013 Consolidated Statements of Operations Consolidated Statements of Comprehensive Income (Loss) Millions of yen Millions of yen 2012 2013 2012 2013 Revenues, costs and expenses: Net income (loss) ����������������������������������������������������������������������������������������� (816,144) (775,168) Net sales ��������������������������������������������������������������������������������������������������� 7,846,216 7,303,045 Other comprehensive income (loss), net of tax: Cost of sales ��������������������������������������������������������������������������������������������� (5,864,515) (5,419,888) Translation adjustments ����������������������������������������������������������������������������� (19,887) 198,287 Selling, general and administrative expenses ��������������������������������������������� (1,937,976) (1,722,221) Unrealized holding gains (losses) of available-for-sale securities ����������������� (3,476) (13,416) Interest income ����������������������������������������������������������������������������������������� 13,388 9,326 Unrealized gains (losses) of derivative instruments ������������������������������������� (6,018) (845) Dividends received ����������������������������������������������������������������������������������� 6,129 3,686 Pension liability adjustments ��������������������������������������������������������������������� (79,874) (62,481) Other income ������������������������������������������������������������������������������������������� 44,124 91,807 (109,255) 121,545 Interest expense ��������������������������������������������������������������������������������������� (28,404) (25,601) Comprehensive income (loss) ����������������������������������������������������������������������� (925,399) (653,623) Impairment losses of long-lived assets ������������������������������������������������������ (399,259) (138,138) Goodwill impairment ��������������������������������������������������������������������������������� (163,902) (250,583) Less comprehensive income (loss) attributable to noncontrolling interests ����� (44,210) (6,299) Other deductions ��������������������������������������������������������������������������������������� (328,645) (249,819) Comprehensive income (loss) attributable to Panasonic Corporation ����������� (881,189) (647,324)
Income (loss) before income taxes ��������������������������������������������������� (812,844) (398,386)
Provision for income taxes: Current ����������������������������������������������������������������������������������������������������� 69,206 66,532 Deferred ��������������������������������������������������������������������������������������������������� (59,439) 318,141 9,767 384,673
Equity in earnings of associated companies ������������������������������������������������� 6,467 7,891
Net income (loss) ����������������������������������������������������������������������������� (816,144) (775,168)
Less net income (loss) attributable to noncontrolling interests ����������������������� (43,972) (20,918)
Net income (loss) attributable to Panasonic Corporation ����������������� (772,172) (754,250)
Yen 2012 2013 Net income (loss) per share attributable to Panasonic Corporation common shareholders: Basic ��������������������������������������������������������������������������������������������������������� (333.96) (326.28) Diluted ������������������������������������������������������������������������������������������������������� — — Panasonic Corporation Annual Report 2013 PAGE Financial and Corporate Data 30 >> Consolidated Financial Statements
Download DATA BOOK (Statements of Equity) Consolidated Statements of Equity Years ended March 31, 2012 and 2013 Millions of yen Millions of yen 2012 2013 2012 2013 Common stock: Treasury stock: Balance at beginning of year ��������������������������������������������������������������������� 258,740 258,740 Balance at beginning of year ��������������������������������������������������������������������� (670,736) (247,018) Balance at end of year ������������������������������������������������������������������������������� 258,740 258,740 Repurchase of common stock ������������������������������������������������������������������� (436) (35) Sale of treasury stock ������������������������������������������������������������������������������� 424,154 25 Capital surplus: Balance at end of year ������������������������������������������������������������������������������� (247,018) (247,028) Balance at beginning of year ��������������������������������������������������������������������� 1,100,181 1,117,530 Sale of treasury stock ������������������������������������������������������������������������������� (1,752) — Noncontrolling interests: Equity transactions with noncontrolling interests and others ��������������������� 19,101 (6,844) Balance at beginning of year ��������������������������������������������������������������������� 387,343 47,780 Balance at end of year ������������������������������������������������������������������������������� 1,117,530 1,110,686 Cash dividends paid to noncontrolling interests ����������������������������������������� (11,642) (10,549) Equity transactions with noncontrolling interests and others ��������������������� (283,711) 9,309 Legal reserve: Net income (loss) attributable to noncontrolling interests ��������������������������� (43,972) (20,918) Balance at beginning of year ��������������������������������������������������������������������� 94,198 94,512 Other comprehensive income (loss), net of tax: Transfer from retained earnings ����������������������������������������������������������������� 314 1,747 Translation adjustments ������������������������������������������������������������������������� 1,059 13,134 Balance at end of year ������������������������������������������������������������������������������� 94,512 96,259 Unrealized holding gains (losses) of available-for-sale securities ������������� (151) 85 Pension liability adjustments ������������������������������������������������������������������� (1,146) 1,400 Retained earnings: (238) 14,619 Balance at beginning of year ��������������������������������������������������������������������� 2,401,909 1,441,177 Balance at end of year ������������������������������������������������������������������������������� 47,780 40,241 Sale of treasury stock ������������������������������������������������������������������������������� (166,334) (17) Net income (loss) attributable to Panasonic Corporation ��������������������������� (772,172) (754,250) Cash dividends to Panasonic Corporation shareholders ��������������������������� (21,912) (11,559) Transfer to legal reserve ����������������������������������������������������������������������������� (314) (1,747) Balance at end of year ������������������������������������������������������������������������������� 1,441,177 673,604
Accumulated other comprehensive income (loss): Balance at beginning of year ��������������������������������������������������������������������� (625,300) (735,155) Equity transactions with noncontrolling interests and others ��������������������� (838) — Other comprehensive income (loss), net of tax: Translation adjustments ������������������������������������������������������������������������� (20,946) 185,153 Unrealized holding gains (losses) of available-for-sale securities ������������� (3,325) (13,501) Unrealized gains (losses) of derivative instruments ��������������������������������� (6,018) (845) Pension liability adjustments ������������������������������������������������������������������� (78,728) (63,881) (109,017) 106,926 Balance at end of year ������������������������������������������������������������������������������� (735,155) (628,229) Panasonic Corporation Annual Report 2013 PAGE Financial and Corporate Data 31 >> Consolidated Financial Statements
Download DATA BOOK (Statements of Cash Flows) Consolidated Statements of Cash Flows Years ended March 31, 2012 and 2013 Millions of yen Millions of yen 2012 2013 2012 2013 Cash flows from operating activities: Cash flows from financing activities: Net income (loss) ��������������������������������������������������������������������������������������� (816,144) (775,168) Increase (decrease) in short-term debt with maturities of Adjustments to reconcile net income (loss) to net cash three months or less, net ������������������������������������������������������������������������� 141,451 (25,168) provided by operating activities: Proceeds from short-term debt with maturities longer than Depreciation and amortization ��������������������������������������������������������������� 374,785 339,367 three months ������������������������������������������������������������������������������������������� 280,677 433,820 Net gain on sale of investments ������������������������������������������������������������� (5,822) (29,125) Repayments of short-term debt with maturities longer than Provision for doubtful receivables ����������������������������������������������������������� 12,162 6,641 three months ������������������������������������������������������������������������������������������� (60,000) (650,938) Deferred income taxes ��������������������������������������������������������������������������� (59,439) 318,141 Proceeds from long-term debt ������������������������������������������������������������������� 828 648 Write-down of investment securities ������������������������������������������������������� 16,636 4,017 Repayments of long-term debt ����������������������������������������������������������������� (370,052) (226,320) Impairment losses on long-lived assets and goodwill ����������������������������� 563,161 388,721 Dividends paid to Panasonic Corporation shareholders ����������������������������� (21,912) (11,559) Cash effects of changes in, excluding acquisition: Dividends paid to noncontrolling interests ������������������������������������������������� (11,642) (10,549) Trade receivables ������������������������������������������������������������������������������� 24,228 128,088 Repurchase of common stock ������������������������������������������������������������������� (436) (35) Inventories ������������������������������������������������������������������������������������������ 40,318 64,625 Sale of treasury stock ������������������������������������������������������������������������������� 73 8 Other current assets ��������������������������������������������������������������������������� 17,130 51,168 Purchase of noncontrolling interests ��������������������������������������������������������� (10,640) (940) Trade payables ����������������������������������������������������������������������������������� (103,788) (68,282) Other, net ������������������������������������������������������������������������������������������������� (1,441) (25) Accrued income taxes ������������������������������������������������������������������������� (7,473) 4,817 Net cash used in financing activities ������������������������������������������������� (53,094) (491,058) Accrued expenses and other current liabilities ������������������������������������� (9,089) (117,098) Retirement and severance benefits ����������������������������������������������������� (29,374) (8,811) Effect of exchange rate changes on cash and cash equivalents ������������������� (7,428) 57,774 Deposits and advances from customers ��������������������������������������������� (14,547) 3,247 Net decrease in cash and cash equivalents ������������������������������������������������� (400,415) (78,128) Other, net ����������������������������������������������������������������������������������������������� (761) 28,402 Cash and cash equivalents at beginning of year ������������������������������������������� 974,826 574,411
Net cash provided by operating activities ����������������������������������������� 1,983 338,750 Cash and cash equivalents at end of year ����������������������������������������������������� 574,411 496,283
Cash flows from investing activities: Proceeds from disposition of investments and advances ��������������������������� 104,542 195,401 Increase in investments and advances ������������������������������������������������������� (6,945) (4,144) Capital expenditures ��������������������������������������������������������������������������������� (495,342) (320,168) Proceeds from disposals of property, plant and equipment ����������������������� 53,333 146,562 Decrease in time deposits, net ������������������������������������������������������������������� 30,952 36,795 Other, net ������������������������������������������������������������������������������������������������� (28,416) (38,040)
Net cash provided by (used in) investing activities ��������������������������� (341,876) 16,406 Panasonic Corporation Annual Report 2013 PAGE Financial and Corporate Data 32 >> Stock Information
Stock Information (As of March 31, 2013)
Share Data Major Shareholders Share ownership Percentage of total Number of Shares Issued Transfer Agent for Common Stock Name (in thousands of shares) issued shares (%) 2,453,053,497 shares Sumitomo Mitsui Trust Bank, Limited (Including 141,394,374 shares held by 5-33, Kitahama, 4-chome, Chuo-ku, Osaka-shi, Osaka The Master Trust Bank of Japan, Ltd. (trust account) 101,244 4.12 Panasonic) 540-8639, Japan Japan Trustee Services Bank, Ltd. (trust account) 82,259 3.35 Phone: +81-3-3323-7111 Nippon Life Insurance Company 76,728 3.12 Number of Shareholders State Street Bank and Trust Co. 70,639 2.87 577,756 persons Depositary and Transfer Agent for American Sumitomo Mitsui Banking Corporation 66,817 2.72 Depositary Receipts (ADRs) Stock Exchange Listings JPMorgan Chase Bank N.A. SSBT OD05 Omnibus Account-Treaty Clients 60,943 2.48 Tokyo, Osaka*, Nagoya and 1 Chase Manhattan Plaza, Floor 58 Moxley & Co. LLC 60,641 2.47 New York* stock exchanges New York, NY 10005, U.S.A. Panasonic Corporation Employee Shareholding Association 54,465 2.22 Contact * The cash equity markets of the Osaka Securities Sumitomo Life Insurance Co. 37,408 1.52 JPMorgan Service Center Exchange will be integrated with those of the Tokyo Matsushita Real Estate Co., Ltd. 29,121 1.18 Stock Exchange on July 16, 2013. The Company P.O. Box 64504 delisted its American Depositary Shares from the St. Paul, MN 55164-0504, U.S.A. Notes: 1. Amounts less than one thousand have been discarded. New York Stock Exchange on April 22, 2013. Tel: 1-800-990-1135 (U.S.: toll free) 2. The number of treasury stock is 141,394 thousand shares. 1-651-453-2128 (International)
Company Stock Price and Trading Volume (Years ended March 31) Tokyo Stock Exchange Monthly basis Breakdown of Share Holdings (Years ended March 31) (Thousands) 2009 2010 2011 2012 2013 Stock Price (Yen) 3,000 Number of shares issued at year-end 2,453,053 2,453,053 2,453,053 2,453,053 2,453,053 Treasury stock at year-end 382,411 382,448 382,760 141,351 141,394 2,000 Average common shares outstanding 2,079,296 2,070,623 2,070,341 2,312,167 2,311,683
Note: Amounts less than one thousand have been discarded. 1,000
Breakdown of Issued Shares by Type of Shareholders Breakdown of Issued Shares by Type of 0 Trading Volume (Millions of shares) (March 31 of each year) (%) Shareholders (As of March 31, 2013) 1,500 2009 2010 2011 2012 2013 Treasury Stock 5.8% Japanese 1,000 Japanese Financial Financial Institutions, etc. 34.1 30.8 30.9 34.2 28.3 500 Individuals Institutions, etc. Overseas Investors, etc. 22.5 25.3 22.7 21.9 25.3 2,453,053 28.3% and Others 0 April AprilMarch AprilMarch AprilMarch AprilMarch March Other Corporations 7.1 7.1 7.1 8.4 8.3 32.3% thousand shares 2009 2010 2011 2012 2013 Individuals and Others 20.7 21.2 23.7 29.7 32.3 Overseas High 2,515 1,585 1,480 1,070 781 Treasury Stock 15.6 15.6 15.6 5.8 5.8 Investors, etc. Other Corporations 25.3% Low 1,000 1,062 826 582 376 Total 100.0 100.0 100.0 100.0 100.0 8.3% Period-End 1,069 1,430 1,058 761 654 Panasonic Corporation Annual Report 2013 PAGE Financial and Corporate Data 33
>> Company Information
Company Information (As of March 31, 2013)
Company Outline Basic History of the Company 1918 Konosuke Matsushita founded Matsushita Electric Housewares Manufacturing Works. Company Name Consolidated Companies Sales of the Company’s first product, an improved attachment plug, began. Panasonic Corporation (including parent company) (TSE Securities Code: 6752) 538 companies 1927 The “National” brand name was registered. 1933 A divisional system was instituted. Founded Associated Companies March 1918 (incorporated in December 1935) under the Equity Method 1935 The Company was reorganized and renamed Matsushita Electric Industrial Co., Ltd. 95 companies 1949 The Company’s shares were listed on the Tokyo Stock Exchange and the Osaka Securities Common Stock Exchange.* 258.7 billion yen Corporate HP 1951 The Company’s shares were listed on the Nagoya Stock Exchange. Panasonic Corporate Site http://panasonic.net/ 1959 Matsushita Electric Corporation of America was established. Following this move, the IR Site Company established bases in other parts of the world. http://panasonic.net/ir/ 1971 The Company’s shares were listed on the New York Stock Exchange.* Number of Employees (March 31 of each year) (Persons) 2002 The Company made Matsushita Communication Industrial Co., Ltd., 2009 2010 2011 2012 2013 Kyushu Matsushita Electric Co., Ltd., Matsushita Seiko Co., Ltd., Domestic 132,144 152,853 145,512 133,605 125,067 Matsushita Kotobuki Electronics Industries, Ltd. Overseas 160,106 231,733 221,425 197,162 168,675 and Matsushita Graphic Communication Systems, Inc. into wholly-owned subsidiaries. Total 292,250 384,586 366,937 330,767 293,742 2003 The Company adopted a business domain-based organizational style through restructuring. The Company made Matsushita Electronic Components Co., Ltd. and Matsushita Battery Industrial Co., Ltd. into wholly-owned subsidiaries. Corporate Bonds Information 2004 The Company made Matsushita Electric Works, Ltd. (later renamed Panasonic Electric Works Unsecured Straight Bonds in Japan Co., Ltd.), PanaHome Corporation and their subsidiaries into consolidated subsidiaries. Coupon rate Aggregate principal 2008 The Company changed its name from Matsushita Electric Industrial Co., Ltd. Series Years (per annum) amount of issue Maturity date to Panasonic Corporation. The Company planned to unify its corporate brands under the 7th 5 1.404% 200 billion yen March 20, 2014 “Panasonic” name across the world. 8th 10 2.050% 100 billion yen March 20, 2019 2009 The Company made SANYO Electric Co., Ltd. and its subsidiaries into consolidated subsidiaries. Panasonic 10th 5 0.752% 200 billion yen March 18, 2016 2011 The Company made Panasonic Electric Works Co., Ltd. and SANYO Electric Co., Ltd. into 11th 7 1.081% 150 billion yen March 20, 2018 wholly-owned subsidiaries. 2nd 10 1.49% 20 billion yen December 20, 2013 2012 The Company reorganized its business into nine business domain companies and one Panasonic 3rd 7 1.66% 40 billion yen June 19, 2015 marketing sector. Electric Works* 4th 10 1.593% 30 billion yen June 20, 2019 2013 The Company restructured its Group organization, and introduced divisional management and 18th 10 0.82% 10 billion yen June 17, 2013 a 4 Divisional Company system on April 1. SANYO* 20th 10 2.02% 30 billion yen August 26, 2014 * The cash equity markets of the Osaka Securities Exchange will be integrated with those of the Tokyo Stock Exchange on July 16, 2013. * Panasonic succeeded corporate bonds of Panasonic Electric Works and SANYO on January 1, 2012. The Company delisted its American Depositary Shares from the New York Stock Exchange on April 22, 2013. Panasonic Corporation Annual Report 2013 PAGE Financial and Corporate Data 34
>> Quarterly Financial Results and Investor Relations Offices
Quarterly Financial Results and Investor Relations Offices
Quarterly Financial Results (Years ended March 31)
(Trillions of yen) n Net sales [left scale] Net income (loss) attributable to Panasonic Corporation/Net sales [right scale] (%)
2.50 6.0
2.25 4.0
2.00 2.0
1.75 0
1.50 –40.0 1st quarter 2nd quarter 3rd quarter 4th quarter 1st quarter 2nd quarter 3rd quarter 4th quarter 1st quarter 2nd quarter 3rd quarter 4th quarter 1st quarter 2nd quarter 3rd quarter 4th quarter 1st quarter 2nd quarter 3rd quarter 4th quarter 2009 2010 2011 2012 2013
(Millions of yen) 2009 2010 2011 2012 2013 Net sales Investor Relations Offices 1st quarter 2,151,997 1,595,458 2,161,126 1,929,548 1,814,498 Japan U.S. 2nd quarter 2,191,714 1,737,838 2,206,822 2,075,650 1,823,662 Osaka Panasonic Finance (America), Inc. 3rd quarter 1,879,940 1,886,588 2,285,413 1,960,200 1,801,503 Panasonic Corporation 1270 Avenue of the Americas, Suite 2330, New York, NY 10020, U.S.A. 4th quarter 1,541,856 2,198,096 2,039,311 1,880,818 1,863,382 Investor Relations Office 1006 Oaza Kadoma, Kadoma-shi Phone: +1-212-698-1360 Total 7,765,507 7,417,980 8,692,672 7,846,216 7,303,045 Osaka 571-8501, Japan Phone: +81-6-6908-1121 Europe Net income (loss) attributable to Panasonic Corporation Panasonic Finance (Europe) plc Tokyo 5th Floor 9 Devonshire Square, London, 1st quarter 73,031 (52,977) 43,678 (30,351) 12,809 Panasonic Corporation EC2M 4YF, U.K. 2nd quarter 55,461 6,109 31,040 (105,800) (697,979) Investor Relations Office Phone: +44-20-3008-6887 3rd quarter (63,116) 32,259 39,983 (197,668) 61,340 1-5-1 Higashi-Shimbashi, Minato-ku Tokyo 105-8301, Japan 4th quarter (444,337) (88,856) (40,684) (438,353) (130,420) Phone: +81-3-3437-1121 Total (378,961) (103,465) 74,017 (772,172) (754,250)
Note: Quarterly financial data is unaudited and has not been reviewed by Panasonic’s independent registered public accounting firm in accordance with U.S. GAAS, generally accepted auditing standards in the United States of America. http://panasonic.net/ir/