Annual Report 2016

Panasonic Annual Report 2016

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Contents

03 Editorial Policy Foundation for Growth

About Panasonic 43 Corporate Governance 43 Corporate Governance Structure 05 Financial/Non-Financial Highlights 47 Message from an Outside Director 49 Directors, Audit & Supervisory Board 07 Toward Sustainable Growth Members and Executive Ofﬁcers 08 Management Philosophy/History 52 Risk Management 11 Business Environment 53 Compliance 54 CSR Management 12 Business Areas 55 Social Responsibility 13 Value Creation Flow 55 Human Resources Development and Promoting Diversity 56 Messages from Non-Japanese Executive Growth Strategy Ofﬁcers 57 Respect for Human Rights 15 Financial Results and 58 Raising Quality Levels and Ensuring Future Strategies Product Safety/Supply Chain Management 18 Interview with the President 59 Environmental Responsibility 24 Message from the CFO 59 Environmental Governance 60 CO2 Reduction/Resources Recycling/ 27 Interview with the CTO Water Resource Conservation 31 Overview of Divisional Companies 61 Green Products (GPs) 32 Messages from Divisional Company Presidents Fiscal 2016 Results 32 Appliances Company 34 Eco Solutions Company 63 Major Financial Indicators 36 AVC Networks Company 38 Automotive & Industrial Systems Company 64 Financial Review 40 Overview of Business Divisions 69 Consolidated Financial Statements 73 Stock Information 74 Corporate Bonds/Corporate Data About the cover and overall design of the report Note: Risk Factors Panasonic has employed photographs that depict some of its Please refer to the Company’s sporting activities to express its strong will and energy to push Annual Securities Report (Yukashoken Hokokusho) toward future growth. for details regarding business and other risks. Panasonic Annual Report 2016

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Growth Strategy Our Products and Businesses Helping Solve Social Issues Appliances Company Automotive & Industrial Systems Company

Page 24 Message from the CFO Robust Financial Position Driving Sustainable Increases in Corporate Value Hideaki Kawai Receiving Awards for Page 33 Senior Managing Director Helping to Reduce Environmental Impact Automotive Battery Page 39 Manufacturing Company Established in China Eco Solutions Company

Page 27 Interview with Page 18 the President Interview with the CTO Accelerating the Development of Technology Serving Customers and Useful for Creating the Society of the Aiming for Sustainable Growth Future over the Next 10 Years Developing Driver Page 39 Assistance Systems Kazuhiro Tsuga Yoshiyuki Miyabe Elderly Apartments with Page 35 President Senior Managing Director Support Services that Enhance Comfort Opened in Kanagawa and Safety Prefecture in Japan Green Products (GPs) Foundation for Growth AVC Networks Company

We spoke to Kazuhiko Toyama about his thoughts on corporate governance following his appointment as a director of the Company in June 2016. Page 47 Message from an Outside Director High-Reliability, Page 61 Kazuhiko Toyama Interactive Security Page 37 Pb 0% ADDED Zinc Director System Field Tests Carbon Battery Panasonic Annual Report 2016

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Disclaimer Regarding Forward-Looking Statements

Editorial Policy This Annual Report includes forward-looking statements (that include those within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934), This Annual Report integrates details of the Company’s management strategies that are designed as amended about Panasonic and its Group companies (the Panasonic Group). Panasonic discloses its to secure medium- and long-term growth, environmental, social and governance (ESG) activities consolidated financial forecasts for fiscal 2017 based on International Financial Reporting Standards (IFRS). To that provide the foundation for further expansion, as well as operating results and financial position. the extent that statements in this Annual Report do not relate to historical or current facts, they constitute The Report is issued mainly for the benefit of investors. In producing this Report, Panasonic has forward-looking statements. These forward-looking statements are based on the current assumptions and beliefs referred to the framework put forward by the International Integrated Reporting Council (IIRC). of the Panasonic Group in light of the information currently available to it, and involve known and unknown risks, As a new initiative, the Company’s president and senior executives have outlined their thoughts uncertainties and other factors. Such risks, uncertainties and other factors may cause the Panasonic Group’s in an external third-party interview format. In the interview with the president, Kazuhiro Tsuga actual results, performance, achievements or financial position to be materially different from any future results, elaborates on his efforts since taking office, as well as his stance performance, achievements or financial position expressed or implied by these forward-looking statements. toward strategies aimed at promoting sustainable growth, including Panasonic undertakes no obligation to publicly update any forward-looking statements after the date of this M&As. In the interview with the CTO, Yoshiyuki Miyabe comments Annual Report. Investors are advised to consult any further disclosures by Panasonic in its subsequent filings on the Company’s technology strategies. In addition to outlining under the Financial Instrument and Exchange Act of Japan (the FIEA) and other publicly disclosed documents. details of the R&D 10-year Vision as well as open innovation initiatives, Mr. Miyabe comments on a wide range of issues, The risks, uncertainties and other factors referred to above include, but are not limited to, economic conditions, including the application of the Company’s strengths in the particularly consumer spending and corporate capital expenditures in the Americas, Europe, Japan, China and other consumer electronics field to boost its B2B business activities. Asian countries; volatility in demand for electronic equipment and components from business and industrial The design of the front cover and report as a whole has been customers, as well as consumers in many product and geographical markets; the possibility that excessive currency completely overhauled. The sporting motif is an expression of the Hideaki Harada rate fluctuations of the U.S. dollar, the euro, the Chinese yuan and other currencies against the yen may adversely Company’s strong will and energy to push toward future growth. affect costs and prices of Panasonic’s products and services and certain other transactions that are denominated in General Manager Building on the issue of this Report, we hope to ramp up dialogue Corporate Planning Department these foreign currencies; the possibility of the Panasonic Group incurring additional costs of raising funds, because with shareholders and investors. Corporate Strategy Division of changes in the fund raising environment; the possibility of the Panasonic Group not being able to respond to 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 not achieving expected results or incurring unexpected losses in connection with the alliances or mergers and Using the Navigation Buttons acquisitions; the possibility of not being able to achieve its business objectives through joint ventures and other collaborative agreements with other companies, including due to the pressure of price reduction exceeding that Search PDF content Return one page Forward one page which can be achieved by its effort and decrease in demand for products from business partners which Panasonic highly depends on in BtoB business areas; the possibility of the Panasonic Group not being able to maintain Search Contents Return PAGE Next competitive strength in many product and geographical areas; the possibility of incurring expenses resulting from any defects in products or services of the Panasonic Group; the possibility that the Panasonic Group may face 3 intellectual 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 other assets in which the Panasonic Group has holdings or changes in valuation of long-lived assets, Return to Contents Page number including property, plant and equipment and goodwill, deferred tax assets and uncertain tax positions; future changes or revisions to accounting policies or accounting rules; the possibility of incurring expenses resulting from Using Category Tabs a leakage of customers’ or confidential information from Panasonic’s systems due to unauthorized access or a detection of vulnerability of network-connected products of the Panasonic Group; as well as natural disasters About Panasonic Growth Strategy Foundation for Growth including earthquakes, 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 translated version of Panasonic’s Click to go to the ﬁrst page of each category securities reports under the FIEA and any other documents which are disclosed on its website. Panasonic Annual Report 2016

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Financial/Non-Financial Highlights Toward Sustainable Growth Management Philosophy/History Business Environment Business Areas Value Creation Flow

About Panasonic

05 Financial/Non-Financial Highlights

07 Toward Sustainable Growth

08 Management Philosophy/History

11 Business Environment

12 Business Areas

13 Value Creation Flow Panasonic Annual Report 2016

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Financial/Non-Financial Highlights Toward Sustainable Growth Management Philosophy/History Business Environment Business Areas Value Creation Flow

Panasonic Corporation and Subsidiaries Financial Highlights Years ended March 31

Net Sales 7.6 trillion yen Operating Proﬁt 415.7 billion yen Net Income Attributable to Panasonic Corporation 193.3 billion yen Operating Proﬁt/Sales Ratio 5.5 % Net Income Attributable to Panasonic Corporation/Sales Ratio 2.6%

(Trillions of yen) (Billions of yen) (%) (Billions of yen) 8 7.6 600.0 5.5% 6.0 300.0 2.6% 4.0 3.6 193.3

6 415.7 0 (%)0 400.0 4.0

4 −300.0 −4.0 4.0 200.0 2.0 2 −600.0 −8.0

0 0 0 −900.0 −12.0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Domestic Operating Profit (left scale) Net Income Attributable to Panasonic Corporation (left scale) Overseas Operating Profit/Sales Ratio (right scale) Net Income Attributable to Panasonic Corporation/Sales Ratio (right scale)

Looking at trends over the past five years, sales decreased as the Company Looking at trends over the past five years, the impact of the downturn in In fiscal 2012 and 2013, Panasonic incurred net losses due mainly to the narrowed its range of unprofitable TV models while transferring and sales was offset mainly by reductions in fixed costs, which included the impact of structural reforms, and the posting of impairment losses on goodwill downsizing businesses. Sales in automotive- and housing-related benefit of restructuring, efforts to streamline material costs and business and intangible assets. Thereafter, Panasonic recorded a significant increase in businesses, on the other hand, grew. structure improvements. Operating profit increased for the fourth net income for the second consecutive fiscal year due mainly to the increase in consecutive fiscal year by diligently strengthening its profit structure. operating profit and the decrease in the provision for income taxes.

Panasonic Corporation Shareholders’ Equity 1.7 trillion yen Capital Investment (Tangible Assets)* 248.8 billion yen Free Cash Flow 124.4 billion yen ROE* 11.0 % Depreciation (Tangible Assets)* 235.0 billion yen

(Trillions of yen) (%) (Billions of yen) (Billions of yen) 2.0 11.0% 20.0 400.0 600.0

400.0 1.5 1.7 0 300.0 248.8 235.0 2000. 124.4 1.0 −20.0 200.0 0 0.5 −40.0 100.0 –200.0

0 −60.0 0 –400.0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Panasonic Corporation Shareholders’ Equity (left scale) *Please refer to Note 9 on page 63. Capital Investment *Please refer to Note 5 on page 63. Free Cash Flow ROE (right scale) Depreciation

Shareholders’ equity decreased due to the net losses incurred while ROE was Panasonic narrowed its capital investment in order to improve its financial Free cash flow increased up to fiscal 2014 owing mainly to an increase in operating negative up to fiscal 2013. Thereafter, the Company’s ROE recovered exceeding structure. The Company enhanced its capital investment in such key profit and initiatives to generate cash such as the improvement of working capital. 10% due mainly to the increase in operating profit and the decrease in the businesses as rechargeable batteries for automotive use with the aim of Although the Company increased strategic investment and capital investment, provision for income taxes, resulting in a significant improvement in net income. stimulating future growth in recent years. free cash flow for fiscal 2016 amounted to a positive 124.4 billion yen. Panasonic Annual Report 2016

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Financial/Non-Financial Highlights Toward Sustainable Growth Management Philosophy/History Business Environment Business Areas Value Creation Flow

Non-Financial Highlights Panasonic Corporation and Subsidiaries

Size of Contribution in Reducing CO2 Emissions 43.12 million tons Recycled Resource Utilization Ratio 16.9 % Recognition from Outside the Company Factory Waste Recycling Rate 99.2 % (Year Ended March 31, 2016)

11.01 10.47 Size of indirect 99.2% (%) Panasonic has been selected as a component of the mil. tons mil. tons contribution in 100 Dow Jones Sustainability World Indices (DJSI World) and reducing CO2 Factory waste emissions 41.22 41.58 43.14 43.12 recycling rate FTSE4Good Index—both of which are global socially mil. tons 40.55 mil. tons mil. tons mil. tons Size of direct 75 mil. tons contribution in responsible investment indices. Selection in DJSI World reducing CO2 Total resources emissions used is for the 11th consecutive year and the FTSE4Good 50 Energy-creating Index is for the 16th consecutive year. Panasonic has also products Recycled resource utilization ratio been selected for inclusion in CDP Japan 500’s Climate

emissions Energy-saving 2 25 products 14.7% 17.2% 16.3% 16.9% Disclosure Leadership Index, which certiﬁes companies

CO 15.7% Production 8.0% Recycled activities resources used that excel in disclosing climate change information. 0 2006 20122013 2014 2015 2016 2009 2012 2013 2014 2015 2016 (Base year) (Reference) Note: Please refer to “CO2 Reduction” on page 60. Note: Please refer to “Resources Recycling” on page 60.

Panasonic has established and ceaselessly promotes indices that reflect reducing CO2 We promote recycling-oriented manufacturing from three perspectives: emissions by enhancing production efficiency as well as by improving performance for minimizing input resources while maximizing recycled resources, eliminating final and the spread of energy-saving/generating products. In addition to our usual disclosure waste disposal volumes, and recycling used products. We maintain at high of the size of contribution in reducing CO2 emissions in the consumer electronics field, levels recycling indices that reflect these perspectives. we have begun providing data for the housing, automotive, and B2B fields.

Number of Women in Managerial Positions 423 persons Number of Patent Filings*1 14,075 Percentage of Women in Positions of Responsibility 6.7% Number of Patents Held*2 103,260

(Persons) (%) (Patents) 600 6.7% 7.5 150,000

423 103,260 400 5.0 100,000

200 2.5 50,000 14,075

0 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 Number of Women in Managerial Positions (left scale) Number of Patent Filings Percentage of Women in Positions of Responsibility (right scale) Number of Patents Held Note: Please refer to “Human Resources Development and Promoting Diversity” on page 55. *1 Source: Panasonic. Total number of worldwide patent ﬁlings for Panasonic Corporation and its key consolidated subsidiaries. Cumulative ﬁgures Positioning the promotion of diversity as an important management initiative, we In light of rapid changes in operating conditions and circumstances surrounding (January–December) for each year are shown. Data for 2016 is not provided recognize that the promotion of women to upper management and positions intellectual property, Panasonic is stepping up patent applications centered on since the relevant information had not been determined as of the date this with decision-making authority are issues that need to be addressed, key business fields as well as efforts to narrow patents held to those necessary report was edited. particularly in Japan. We encourage the participation of women in management for future businesses. *2 Source: Panasonic. Total number of patents held worldwide for Panasonic by conducting career advancement seminars and promoting other initiatives. Corporation and its key consolidated subsidiaries. Figures are as of the end of December each year. Data for 2016 is not provided since the relevant information had not been determined as of the date this report was edited. Panasonic Annual Report 2016

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Financial/Non-Financial Highlights Toward Sustainable Growth Management Philosophy/History Business Environment Business Areas Value Creation Flow

Toward Sustainable Growth

Panasonic achieved the management goals outlined in its “Cross-Value Innovation 2015 (CV2015)” mid-term management plan one year in advance in fiscal 2015. Undertaking a variety of measures in fiscal 2016, the Company shifted its focus toward generating profit by expanding sales in fiscal 2016 in order to achieve sustainable growth. As a result, we have successfully bolstered our profit structure and secured an increase in earnings. Despite these positive developments, we were unable to adequately address the changes in our business environment. Impacted by a variety of factors, including the strong yen, Panasonic recorded a downturn in sales in the fiscal year under review. While our unwavering commitment to growth when we set the fiscal 2019 sales target of 10 trillion yen remains intact, we decided to review our approach toward growth after taking into consideration the aforementioned circumstances. Reflecting once again on the original principle that profit shows how much we contribute to customers, we have renewed our commitment to realizing profit growth over the medium term in order to continue contributing to customers. With this in mind, we have positioned fiscal 2017 as a year during which we will lay the foundation for future growth and invest in growing business areas in an effort to achieve our profit goals for fiscal 2019. In addition to strengthening upfront investments in businesses that can be expected to experience high rates of growth, we will continue to undertake strategic investments totaling 1 trillion yen. Moving forward, we will continue to promote “Cross-Value Innovation” in order to create new value by combining the strengths of both the Company and its business partners. As the focus shifts increasingly toward publicly listed company following the introduction of Japan’s Corporate Governance Code, the requests and expectations of stakeholders can be expected to become more sophisticated and diverse in nature. Against this backdrop, we will strengthen our structure and systems in order to better address environmental, social and governance (ESG) concerns while enhancing our corporate value. So please stay tuned to Panasonic. August 2016

Shusaku Nagae Kazuhiro Tsuga Chairman (Left) President (Right) Panasonic Annual Report 2016

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Management Philosophy/History

Nearly a century of contributions to “society and quality of life throughout the world”

“We will devote ourselves to the progress and development of society and the Based on the Management Philosophy, the Panasonic Code of Conduct well-being of people through our business activities, thereby enhancing the quality defines the criteria for specific endeavors that should be observed in day-to-day of life throughout the world.” The Basic Management Objective is Panasonic’s activities. The Panasonic Code of Conduct is shared by the entire Group, all management philosophy that embodies its mission and devotion. The Company’s directors, executive officers and employees as well as at Panasonic sites outside founder, Konosuke Matsushita, first formulated this Basic Management Objective Japan. Today, at a time of major shifts in a number of aspects, including along with the Company Creed in 1929. From that time up to the present day, via economic conditions, social structure and the global environment, Panasonic will revisions that were made in 1946, its tenets have consistently formed the basis of in the years to come open up a new future to continue being a company that the Company’s fundamental approach to business. For guidance, we also assists social development and to realize sustainable growth. continue to uphold our Seven Principles.

Panasonic’s Management Philosophy Structure

Panasonic Code of Conduct Guidance in Putting the Management (Revised and updated, current 2016 criteria) http://www.panasonic.com/global/corporate/ Philosophy into management/code-of-conduct/list.html Practice: Evolution in response to changes in social Management Philosophy conditions, etc.

Basic Management Objective Recognizing our responsibilities as industrialists, we will devote ourselves to the progress and development of society Foundation of and the well-being of people through our business activities, Activities of thereby enhancing the quality of life throughout the world. Management: Company Creed Immutable Progress and development can be realized only through the combined efforts and cooperation of each employee of our company. United in spirit, we pledge to perform our corporate duties with dedication, diligence and integrity. Seven Principles Contribution to Society, Fairness and Honesty, Cooperation and Team Spirit, Untiring Effort for Improvement, Courtesy and Humility, Adaptability, Gratitude Founder Konosuke Matsushita Panasonic Annual Report 2016

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Foundation–1945 1946–1990 From Wiring Equipment to Extensive Lineup Toward Becoming a General Electronics Manufacturer of Electrical Products Amid steadfast business expansion, founder Konosuke Matsushita To realize “the progress and development of society,” the recognized the Company’s mission as “bringing happiness to people Company took the lead in bringing electronics into homes across and contributing to the prosperity of society.” the world.

Panasonic was founded in 1918 as Matsushita Denkikigu Seisakusho in the business of Quick to predict the advent of the home appliance era in Japan, the Company launched a manufacturing wiring equipment. Supplying such appliances as lamps and irons that succession of products, including TVs, washing machines and refrigerators, and balanced superior performance against affordable prices later resulted in steady business contributed to the rapid spread of consumer electronics in the 1950s. expansion. In the 1930s, the Company moved into new fields, including radios, motors, In 1959, the Company made proactive advances into overseas operations that started storage batteries and light bulbs, and laid the foundations of a variety of businesses. with the establishment of a U.S. sales company. From the 1960s onwards, the Company Amid this business expansion, founder Konosuke Matsushita recognized the “true supplied a succession of products—including color TVs, air conditioners, consumer-use mission” of the industrialist as “contributing to the progress of society” in 1932. That microwave ovens, tape recorders and consumer-use VCRs—to meet the needs of mission has been handed down to the present day. Following reorganization, Matsushita customers who were becoming more diverse and sophisticated. Having strengthened Electric Industrial Co., Ltd. was formed in 1935. business in the fields of industry and components, the Company accelerated growth toward becoming a general electronics manufacturer.

In 1927, this compact, multipurpose lamp The Company commenced the production From the latter half of the 1950s, TVs, washing VHS-format home VCRs were launched in went on sale under the name “National of radios in 1931. Less prone to failure machines, refrigerators and other consumer 1977. Balancing high performance with Lamp” in the hope that it would become than other companies’ products, another electronics spread rapidly. The Company operability, they served as a market an essential item throughout Japan. selling point was that the radio was easier grew to become the leading manufacturer growth driver in the spread of home video. to repair in the event of a malfunction. of consumer electronics in Japan. Panasonic Annual Report 2016

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Financial/Non-Financial Highlights Toward Sustainable Growth Management Philosophy/History Business Environment Business Areas Value Creation Flow

1991–2010 2011–Present Day Leading the Digitization and Network Enabling Expanding Business Fields to Serve Customers of Consumer Electronics and Society Panasonic accelerated the supply of information and communication- Combining the Group’s strengths, we are also focusing on the automobile related products and digital consumer electronics. The Company and housing as well as B2B businesses. Based on our Management promoted the establishment of systems to fulﬁll CSR. Philosophy, we are aiming to realize “A Better Life, A Better World.”

With the advent of the information-oriented society, the Company completed its Information In 2011, to further raise the Group’s capabilities we made SANYO Electric Co., Ltd. and and Communications Systems Center in 1992 and accelerated the development of ICT Panasonic Electric Works Co., Ltd. into wholly owned subsidiaries. The former possesses technologies and products. The Company then released onto the market a succession of strengths in rechargeable batteries and solar power generation panels, the latter in products, such as the first mobile phones in the industry to weigh less than 100g, which housing equipment. contributed to the increased sophistication of ICT society. The Company contributed to the The following year, Kazuhiro Tsuga became president of the Panasonic Corporation. In spread of digitized consumer electronics, for example by getting a jump on its industry rivals 2014, we formulated strategies not only for consumer electronics but also for the and launching digital TVs in the United States in 1998. automotive, housing and B2B businesses on which we will be focusing. We also In the meantime, amid the environmental issues that have grown into a global problem, formulated our “A Better Life, A Better World” brand slogan, which is based on our the Company formulated Matsushita Environmental Charter (Environmental Statement and Management Philosophy, and a sustainability policy that clearly states our social Code of Conduct) in 1991. Since then, having set up an office in charge of corporate social contributions and the social responsibilities that we should fulfill in today’s society. We are responsibility (CSR) in 2003, the Company has innovatively promoted upgrades to its CSR targeting sustainable growth on the basis of these strategies and policies. system. The Company changed its name from Matsushita Electric Industrial Co., Ltd. to Panasonic Corporation in 2008.

Cloud

Solar Photovoltaic Systems

Energy Smart Creation-storage HEMS Linked Systems

The Company delivered the ﬁrst mobile Launched in 1998 to seize the opportunity The high-capacity, highly reliable Home energy management systems phones in the industry to weigh less than presented by the start of digital terrestrial automotive lithium-ion batteries underpin enable the “visualization” of residential 100g to NTT Mobile Communications broadcasting in the United States, this the spread of eco-cars such as electric energy usage and thus support Network, Inc. (today NTT DOCOMO, Inc.) digital TV was compatible with all U.S. vehicles. power-conserving lifestyles. in 1996. digital terrestrial broadcast formats. Panasonic Annual Report 2016

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Financial/Non-Financial Highlights Toward Sustainable Growth Management Philosophy/History Business Environment Business Areas Value Creation Flow

Business Environment

Increase in the Middle and World Population of Middle and Upper Global Residential Construction Investment Global Automobile* Unit Production Upper Class Demographics Classes* Forecasts Forecasts Forecasts Mainly in Emerging Countries (Millions of people) (Trillions of U.S. dollars) trillion (Millions of vehicles) million Coupled with Steady Growth 6.0 4.7 U.S. dollars 120.0 100.24 vehicles 6,000 Other emerging in Global Housing and countries 5,000 million 5.0 100.0 Automotive Markets 3,164 people 4,000 ASEAN 4.0 80.0 million 484 people The purchasing power of both the middle 3,000 3.0 60.0 and upper classes largely in emerging China 2,000 million 2.0 40.0 countries is expected to increase. At the 1,119 people 1,000 1.0 20.0 same time, global housing and Industrialized countries 1,120 million people automotive markets are forecast to 0 0 0 2010 2020 Forecasts (Year) ’14 ’15 ’16 ’17 ’18 ’19 ’20 (Year) ’15 ’16 ’17 ’18 ’19 ’20 ’21 steadily expand. In addition, each country Africa Latin America Russia and CIS Middle East Forecasts Estimate Forecasts (Years ended/ending March 31) and region is putting in place greenhouse Southwest Asia ASEAN China Industrialized countries gas reduction targets against the Source: White Paper on International Economy and Trade Source: IHS (as of March 2016) Source: IHS Automotive (as of February 2016) 2013 (Outline), Japan Ministry of Economy, Trade and * Passenger cars and commercial vehicles (under 3.5 tons) backdrop of growing concern toward the Industry, June 2013 environment. Accounting for each of * Households with annual disposable income of more than these factors, the scale of the smart 5,000 U.S. dollars house and environmentally-conscious National and Regional Goals for Reduction Global Smart House-Related* Market Global Production of Environmentally- vehicle markets is projected to balloon in of Greenhouse Gases Forecasts Conscious Vehicles* Forecasts a rapid and dramatic fashion. (Trillions of yen) (Millions of vehicles) Harnessing its many technologies, Reduction of 26% trillion million Japan 20 17 yen 8.00 6.09 vehicles Panasonic will work to create and deliver (compared with 2013) by 2030 value to its global customers and society EU Reduction of more than 40% 15 6.00 while addressing the substantial growth (compared with 1990) by 2030

in demand. 10 4.00 United Reduction of 26–28% Note: The views expressed in this document are those States (compared with 2005) in 2025 of Panasonic Corporation and are not those of IHS. 5 2.00 Reduction of 60–65% in CO2 emissions China per unit of GDP (compared with 2005) due the positioning of CO2 emissions circa 2030 0 0 as the peak ’12 ’13 ’14 ’15 ’16 ’17 ’20 (Year) ’15 ’16 ’17 ’18 ’19 ’20 ’21 Estimate Forecasts Estimate Forecasts HEV PHV EV (Years ended/ending March 31) Reduction of 33–35% per unit of GDP India (compared with 2005) by 2030 conditional upon clean technology and funding support Source: Reality and Future Prospect of Smart–House Related Source: Company estimate Technology and Market 2014 issued by Fuji Keizai * Hybrid electric vehicle (HEV); plug-in hybrid vehicle (PHV); Co., Ltd. electric vehicle (EV) Source: Website of the United Nations Framework Convention * Solar power generation systems, fuel cells, housing distribution on Climate Change (UNFCCC) Secretariat, and panel boards, smart meters, home energy management various media releases (as of July 2016) systems (HEMS), etc. Panasonic Annual Report 2016

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Financial/Non-Financial Highlights Toward Sustainable Growth Management Philosophy/History Business Environment Business Areas Value Creation Flow

Business Areas

Consumer Electronics Housing Automotive B2B

Aspire to more Homes & Living Become an integral supplier Leverage core products to - To the lifestyle we all desire - Offering inspiring homes of “Comfort”, “Safety” and offer better living with and living spaces “Environment” our partners

Major businesses Major businesses Major businesses Major businesses Air-conditioning Housing equipment Infotainment systems Aviation Cooking Remodeling Automotive electronics Factory solutions Housekeeping Primary contracting Automotive batteries Food distribution solutions Logistics solutions Beauty and health Energy management Devices and systems for green cars Energy systems solutions AV Elderly-care (Create/store energy) Social infrastructure Panasonic Annual Report 2016

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Financial/Non-Financial Highlights Toward Sustainable Growth Management Philosophy/History Business Environment Business Areas Value Creation Flow

Value Creation Flow

Needs Panasonic Providing Value

Ascertaining the concerns and Divisional Companies Business Areas A Better Life, A Better World requirements of consumers as well as social issues and Based on the DNA that it has fostered as a consumer conditions electronics manufacturer with a close afﬁnity with people’s lives, Panasonic is providing a better life and a better world to each and every individual. Appliances Company Consumers’ concerns Business Creating products that people and requirements Divisions yearn for and also match the Consumer needs of each region Reducing housework Cross-Value Electronics Pursuing a rich lifestyle Eco Solutions Providing total space value Company Balancing concerns for the Innovation Business environment and comfort Divisions Panasonic draws on Realizing fulﬁlling lifestyles for Ensuring peace of safety and the elderly security the advanced and Housing etc. specialized AVC Networks technologies as well Helping to bring about a Company as the manufacturing comfortable and safe capabilities of its motorized society Social issues and Business Divisions Business Divisions in conditions combination with the Responding to the shift in strengths of external Automotive demand toward environmentally- conscious vehicles Growing concern for the business partners to create new value. environment Automotive & Industrial Systems Helping to strengthen the Growing anxiety about Company competitiveness of customers’ businesses accidents and crime Business Divisions Growing population in B2B Helping to build a safe and emerging countries secure society Please refer to “Overview of Business Aging of developed countries Divisions” on pages 40-41. etc. etc.

Business partner strengths Panasonic Annual Report 2016

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Financial Results and Future Strategies Interview with the President Message from the CFO Interview with the CTO Overview of Divisional Companies Messages from Divisional Company Presidents Overview of Business Divisions

Growth Strategy

15 Financial Results and Future Strategies

18 Interview with the President

24 Message from the CFO

27 Interview with the CTO

31 Overview of Divisional Companies

32 Messages from Divisional Company Presidents

32 Appliances Company 34 Eco Solutions Company 36 AVC Networks Company 38 Automotive & Industrial Systems Company

40 Overview of Business Divisions Panasonic Annual Report 2016

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steadfastly proceed with preparations for to customers. That is to say, continuing to Financial Results and Future Strategies future growth, as typified by the acquisition serve customers carries the meaning of of Hussmann Corporation, a U.S.-based “growth associated with profit” and manufacturer of business-use refrigerated “constant profit-making.” Going forward, by 2% year on year, to 7,553.7 billion yen, and freezer display cases. the management indicator toward which the and the decision was made to review the * Air-Conditioner, Lighting, Housing Systems, Automotive Company is aiming over the mid-term is Fiscal 2016, ended Infotainment Systems, Rechargeable Battery and fiscal 2019 sales target of 10 trillion yen. In PanaHome “profit growth,” and sales are positioned as March 31, 2016 addition to intentionally narrowing sales of one means by which to achieve that target. such products as TVs, revenue decreased Maintained Increases in Earnings by as a result of a variety of factors including Mid-Term Strategies Reorganizing into Four Business Areas Enhancing Proﬁtability Even though deterioration in solar and ICT-related Up until now, Panasonic has applied its Revenue Decreased, Steadily Promoted businesses. Focus on “Proﬁt Growth” growth strategy by means of a “5×3 Matrix” Strategic Investments In contrast, and amid the slump in net While always giving consideration to that combines the five business areas of Panasonic had set fiscal 2016 as a year to sales, operating income increased by 9% management over the mid-term, Panasonic Consumer Electronics, Housing, Automotive, steer toward “generating profit by expanding year on year, to 415.7 billion yen, and net regards its management philosophy as its BtoB Solutions, and Devices in three regions: sales growth” and transition to a stage of income attributable to Panasonic Corporation foundation. The vision that the Company is Japan; Europe and the United States, “sustainable growth,” but its six large-scale rose by 8% year on year, to 193.3 billion yen, aiming for and the very meaning of its including Central and South America; and Business Divisions* failed to lead thereby securing a profit increase. This largely existence, the management philosophy is the strategic regions of Asia, China, the corporate-wide revenue growth, and the reflected successful efforts to strengthen nothing other than for Panasonic to Middle East and Africa. In the meantime, Company was unable to increase profit the Company’s earnings structure. In continue to serve its customers. Profit is an the Company has judged it appropriate to through sales as had originally been planned. addition, the Company was able to shift to indicator by which the Company measures include the Devices business area across all As a result, consolidated net sales decreased execute specific strategic investments and the amount of service that is being provided the other areas and reorganized its growth strategy into the four business areas of Consumer Electronics, Housing, Automotive, and B2B. Over the years to come, Panasonic will promote a business strategy by means Net Sales Operating Profit and Ratio to Sales Net Income Attributable to Panasonic Corporation of the “4×3 Matrix” that combines the four

(Trillions of yen) (Billions of yen) (%) (Billions of yen) business areas and three regions. 5.5% 9 600.0 6.0 300.0 First, in the Consumer Electronics, 7.7 7.6 5.0% Housing, and Automotive business areas, 415.7 381.9 193.3 6 400.0 4.0 200.0 179.5 the Company will aim to generate new sales growth by delivering value widely to end customers (consumers). In whichever 3 200.0 2.0 100.0 market it is competing, the Company has taken measures in each business area and 0 0 0 0 2015 2016 2015 2016 2015 2016 is confident of its path toward growth. Operating Profit [left scale] In the meantime, for the B2B business Operating Profit/Sales Ratio [right scale] area, Panasonic is aiming to achieve higher (Years ended March 31) Panasonic Annual Report 2016

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profitability overall by contributing to an operating profit to sales ratio of 5% or Invest in High Growth Businesses strengthen its competitiveness, thereby customers’ competitiveness. The Company more and operating profit of 300 billion yen Also, working on the basis of individual realizing growth in excess of the industry is currently working on a business model to or more while working to generate new Business Divisions, Panasonic has average. secure high profitability, analyzing industries, sales growth. classified them into three categories In high growth businesses, where a core products and regions where its Meanwhile, in B2B businesses outside depending on characteristics that include higher level of growth can be expected, the advantage is evident. the housing and automotive fields, we will business environment and competitive Company will allocate its management In the Devices business area, the Company target an operating profit to sales ratio of strength, and implements business resources, including upfront investments is aiming to strengthen its competitiveness 10% and operating profit of 300 billion yen strategies with clear-cut features. For aimed at future growth as well as strategic and survive in an industry in which there are by delivering value that only the Company businesses where sales growth is hard to investments totaling 1 trillion yen in a many specialized manufacturers. Over the can provide. As these growth strategies expect, the Company will rigorously pursue concentrated manner as an engine for mid-to-long term, the Company is looking steadily get on track in the Consumer higher profitability rather than pursue sales increased revenue and earnings. for opportunities by shifting from ICT, where Electronics, Housing and Automotive as businesses with further profit Specifically in the context of high growth commoditization flourishes, to automotive businesses, we will put in place a structure improvement required. At the same time, businesses, for example, in addition to and industrial applications. that is capable of steadfastly promoting the Company will work in earnest to reduce accelerating the pace of efforts aimed at profit growth on a Group-wide basis by the amount of deficit in businesses that bringing a wide range of premium products Medium-Term Management Indices of definitively building up profits and adding continue to incur losses. In steady growth to targeted countries in Asia, the Consumer Each Business Area B2B businesses that can be expected to businesses in growth markets, Panasonic Electronics business area is expanding its In the Consumer Electronics, Housing and deliver high profitability. will aim to generate the steady growth in product lineup in India and working to Automotive businesses, Panasonic will target sales and stable profits by continuing to strengthen its sales base in Africa toward capturing further growth markets. The Housing business area is significantly increasing and upgrading its Management Indicator by Business Area Invest on High Growth Business bases to expand its home remodeling and Pursue profit growth depending on business Further accelerate upfront investments, Age-free (elderly-care) businesses in Japan. direction by business area continue to focus on high growth business with 1 trillion yen in strategic investments In Asia, PanaHome is accelerating its urban development business in cooperation with Target from - Expand ‘premium’ product lineup in targeted countries FY 2021 onward Consumer in Asia local developers. Consumer Electronics - Strengthen product lineup and sales force in India and Africa The Automotive business area will grow Electronics OP Margin: % its next-generation cockpit system business, ≥ 5 - Expand operating sites for remodeling and Age-free OP: 300.0 such as by accelerating its collaboration Housing Housing (elderly-care) business in Japan billion yen - Accelerate urban development business in Asia with leading automotive mirror company, or more Ficosa International. In addition, the Automotive - Grow with next-generation cockpit system Automotive business area will concentrate Automotive - Strengthen ADAS and battery business for further growth its resources on R&D and manufacturing OP Margin: 10% sites to strengthen its Advanced Driver B2B OP: 300.0 billion yen - Create new business pillars following Avionics and Assistance System (ADAS) and battery B2B food-distribution business business for fiscal 2019 onward in a bid to (IFRS Basis) secure further growth. Panasonic Annual Report 2016

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In B2B business, following the acquisition target reflects the Company’s success in ICT-related business. On a positive note, expenses on “Investments.” Assuming a of Hussmann Corporation, the food distribution carrying out structural reforms over the past the consolidation of Hussmann Corporation temporary increase in fixed costs, for fiscal business will become one of the Company’s few years and securing a sound is expected to have a favorable effect on 2017 the Company has thus decided to major pillars. In the years to come, this management structure. It also indicates that our performance. On this basis, we have set firmly implement investments for upfront business area plans to continue its avionics we are finally in a position to pursue our target for net sales in fiscal 2017 at 7.6 investment leading to future sales and and food distribution businesses while operations with an eye on net income. trillion yen. This is roughly the same level as profits, centering on high-growth working to create a new business pillar. Panasonic will also work to ensure that the fiscal year under review. businesses, especially the Automotive and In addition to actively conducting upfront other line items, including other income and Operating profit after adjustments (line Housing business areas. investments geared to the growth of these expenses (accounting line items that equate item close to conventional operating profit) Fiscal 2017 is positioned as a “year for businesses, Panasonic will continue to to conventional income (deductions)), are at is expected to decrease to 385.0 billion yen laying the foundations” in which Panasonic execute strategic investments of the order an appropriate level and promote due to an increase in fixed costs for future will make firm investments in growth of 1 trillion yen, mainly in M&A. management that focuses on improving net growth. Other income (line item close to businesses toward the realization of its income, a source of corporate value. conventional non-operating income) is vision. By means of proactive upfront Targeting Operating Proﬁt of 450 Billion expected to improve significantly year on investment and the strategic investment of Yen, Net Income of More Than 250 Billion year. As a result, operating profit is one trillion yen, the Company is aiming to Yen in Fiscal 2019 Policy for Fiscal 2017 expected to amount to 310.0 billion yen (a realize increases in both sales and profits in Due to these initiatives, Panasonic is aiming year-on-year increase of 35%) and net fiscal 2018 and to constantly expand both for operating profit of 450 billion yen and Steadfastly Make Investments “Year for income attributable to owners of the parent sales and profit in fiscal 2019. net income attributable to owners of the Laying Foundations” of Growth Businesses company 145.0 billion yen (a year-on-year Note: Effective from the end of fiscal 2017, the Company has decided to voluntary adopt International parent company of more than 250 billion Looking ahead to our fiscal 2017 targets decrease of 9%). Financial Reporting Standards instead of generally yen (IFRS basis) as its companywide and forecasts (IFRS basis), we anticipate Up to now, there were certain businesses accepted accounting practices in the United States in the preparation of its consolidated management targets for fiscal 2019. This our results will be negatively impacted by that did not adequately invest in future financial accounts. renewed focus on net income as a financial the continued drop in demand in the growth or undertake forward-looking

FY2019 Group Financial Target FY2017 towards Future

Operating Profit: FY2017 FY2018 FY2019 from FY2021 onward 450.0 billion yen Both sales and Lay foundations for growth profit increase Net Income*: Constantly expand Invest on growing business area both sales and profit Future 250.0 billion yen or more Panasonic * Net income attributable to owners of the parent company Upfront investment / strategic investment: 1 trillion yen

(IFRS basis) Panasonic Annual Report 2016

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Interview Serving Customers and Aiming for Sustainable Growth with the President Panasonic acquired SANYO Electric Co., Ltd. Position of President and Actions Takeen (SANYO) and the former Panasonic Electric Works Co., Ltd. (PEW), which were both made into wholly owned From the time you became president in fiscal 2013 subsidiaries in fiscal 2012. Upon reviewing Panasonic’s and up until now, the Company has experienced a business portfolio, how were these two companies difficult environment from a performance perspective. positioned? Looking back, including the period to fiscal 2016, the Company’s profit structure has improved substantially. The acquisitions of PEW and SANYO were investments in Tell us about the challenges Panasonic faced when you fields different from that of consumer digital products. The became president and the surrounding background. acquisition of these two companies was an investment in products, but it was also a matter of gaining organizational As basically a consumer electronics manufacturer, capability to respond to the industry. The acquisition of PEW Panasonic has produced products that can be sold in large strengthened the housing business and the acquisition of volume. We have aimed for a global sales business model as SANYO reinforced the energy and B2B businesses. After Kazuhiro far as possible. Furthermore, we have developed a so-called becoming president, I took time to study what kind of Tsuga “vertically integrated business” that produces not only growth strategy to draw up and execute, leveraging the President finished products, but also devices. resources of Panasonic, PEW, and SANYO. These products are TV sets, Blu-ray Disc recorders, and mobile phones, and Panasonic has invested in these including the devices that are incorporated in them. Unfortunately, the products in which we invested at that time have subsequently fallen into the scope of impairment loss. Contributing factors were the rapid commoditization of digital consumer products and the fact that the previously successful vertically integrated model may no longer provide Panasonic with an unparalleled competitive edge. Also, our global marketing capabilities were put to the test, and we were unable to properly overcome the challenge presented by South Korean manufacturers. Panasonic Annual Report 2016

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Management Goals Changed from Sales to and to narrow our operations to industries where we could business, we want to support the service industry together Operating Profit and Net Income clearly convey our worth to customers in B2B businesses with service operators. To do this, human investment other than the housing and automotive fields. Fiscal 2016 tailored to scale is essential as is the case for all in the In fiscal 2016, you set 10 trillion yen as a sales was an important year for understanding the circumstances service industry. target for fiscal 2019 and also announced that you will that the Company is now in. At the beginning of the year, I The Company will not always continue to increase human make strategic investments of 1 trillion yen through said that each year is a battle. But, with the difficult investments on a permanent basis. In the distribution and fiscal 2019. Can you explain the reason for this? conditions encountered from the first year, we were also logistics industry where Panasonic has been involved with able to get a clearer picture. In terms of aiming for future service operators in the B2B business, or in the nursing care After becoming president, as a result of spending two years sales and profit growth, we have decided to pursue industry where we conduct business, the structure has carrying out structural reforms, we returned profits and free profitability by forming longer and deeper ties in particular historically been more labor intensive. In the future, we will cash flow to their normal state in fiscal 2015. We achieved industries and with particular customers even if it takes time. be able to help customers reduce labor and streamline our mid-term management plan one year ahead of schedule, This message is part of our goal change. operations by bringing our technologies, such as robotics and as a result of considering what to do next, we decided and IoT*, to these industries. We will be looking to realize to take significant strides toward growth. In aiming for higher profits in fiscal 2018 and achieve our profit goals for growth, how much the Company can invest and how much it Steadily Prepare for Future Growth with fiscal 2019 by steadfastly preparing for these growth can increase sales are important management indicators. Upfront Investments businesses in fiscal 2017. Therefore, in fiscal 2016, we expanded business with those * IoT: Internet of Things. Under the IoT concept, physical objects are as the axes of our index. While you set Group management goals that more connected to the Internet, which enables the collection and exchange of firmly emphasize profitability through fiscal 2019, the data. Objects can then be automatically controlled and remotely operated. Then, one year later, in your business policy for Company outlook for fiscal 2017 is for operating profit to fiscal 2017, you changed the fiscal 2019 Group decrease (US GAAP basis) compared with fiscal 2016. management goal from sales to profit. What led you to What is the reason for that? change your goal after a short period of time? Consolidated operating profit (US GAAP basis) for fiscal The direction of our strategy of seeking to increase sales and 2017 is expected to decrease year on year, mainly due to profit for fiscal 2019 remains unchanged. However, we upfront investments. believed that our management goals for fiscal 2019 needed These upfront investments include investments to to be changed. Looking back over fiscal 2016, carrying out develop ADAS and battery systems in the automotive M&A and capital investments first required that we find business and expenses to recruit and train personnel for the investment targets, which took more time than we initially expansion of operating sites for remodeling in the domestic had thought. While I had hoped that sales would also housing business and for the Age-free (elderly-care) steadily improve, they did not increase as much as we business. initially expected. Panasonic is not only involved in the traditional Meanwhile, I felt that it was important to engage in manufacturing industry business model, but is trying to activities where we could make the most of our strengths confront the service industry. In particular, in the B2B Panasonic Annual Report 2016

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Insistence on and Positioning of M&A easy-to-understand example of cross-value innovation through M&A. Panasonic’s stance of seeking to increase sales On the other hand, it is difficult to say that one can get by What is Panasonic aiming for? and profits for fiscal 2019 remains unchanged and it will working from scratch in a new business for the service continue to aggressively make upfront and strategic industry in the B2B business field. In that case, buying a Companies doing the same things as other companies is not investments, but I want to ask you about the importance large core of a company and bringing it to Panasonic, marks good. Although competitors may exist in each individual of M&A as an option for doing so. What is most the birth of cross-value innovation. Panasonic is not a business, it could become even more difficult for the important when considering M&A? company that is accustomed to M&A at this point in time Company as a whole to compare itself with other companies and has not yet performed M&A that involves importing a and to benchmark in the future. That is because the M&As are a means by which to build the shape of a business large core of a company, but we are establishing internal Company is faced with many possibilities. However, after and to work toward the ideal future format. What Panasonic systems and structures for that purpose. trying to narrow down business fields a little further, we has in mind when it conducts M&A is “cross-value came up with “Consumer Electronics,” “Housing,” innovation,” also an in-house slogan of ours, and the When you consider the “4 x 3 matrix” that “Automotive,” and “B2B.” acceleration of this innovation is the basis of Panasonic’s integrates the four business areas of Consumer In the consumer electronics business, the Japanese M&A. The Company has many technologies, products, and Electronics, Housing, Automotive, and B2B in three market for home appliances is shrinking, but Panasonic’s people in its 37 business divisions. These divisions have regions, how do you set priorities for M&A? Also, what share has increased and steadily grown. However, not come about through vertical splitting, and each has kind of businesses do you target for M&A? everything is done the same way in all countries. Because developed in its existing business area, but several elements home appliances are pretty much a “glocal” business, the must be multiplied or expanded in order to address new We narrow down M&A targets with the “4 x 3” matrix, but Company is close to the lives of people in those regions and business areas. This we believe will become the source of even with that, there is still a high probability that resources our required growth potential for the future. Therefore, we will become too dispersed. In the years ahead, the question recognize that M&A is necessary when internal capability of how we raise M&A efficiency will be important. alone is insufficient. However, depending on your view, you could also say that as a Company that is engaged in a wide variety of Tell us specifically about M&A based on businesses, Panasonic enjoys many possibilities and cross-value innovation. options. This also means that we should explore various possibilities for the 1 trillion yen framework established for In fiscal 2016, we announced the acquisition of Hussmann strategic investments, such as M&A. Exploring the intention Corporation. This acquisition is not only a step toward the of using 1 trillion yen and considering more projects is sale of showcases, but also provides a steppingstone into beneficial. For example, in a B2B business such as Avionics, the food distribution business, which is expected to which is not all that large, high-quality markets and experience strong global growth. In addition, the acquisition businesses exist. M&A focuses on creating such promising of Hussmann Corporation brings to the table an excellent businesses. management team. Therefore, Hussmann has joined forces with Panasonic and we are both motivated by this. This is an Panasonic Annual Report 2016

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focuses on regions where it can take definitive steps to What are your thoughts on the B2B business? we will work together with automakers. The automotive develop, manufacture, and sell. By seriously thinking about industry calls car parts manufacturers “Tier 1” or “Tier 2” what investments to make in which countries, we thought In the B2B business, we think that we can more quickly depending on their relationship with automakers, but since we could achieve steady growth in home appliances and we achieve a 10% operating profit ratio by not randomly we do business together with automakers, we could be believe that the growth of such appliances will definitely creating new businesses, but by creating long-term called “Tier 0.5.” continue in the future. businesses such as Avionics. As a result of our four In addition, when thinking about the future growth of Divisional Companies and various locally led initiatives, sales In the automotive industry, there are parts these businesses, it is extremely important to have a core in the B2B business grew in fiscal 2016. However, after manufacturers that are strong in electrical systems. device that represents your strength. Take cooking reviewing new businesses from the perspective of their Where do Panasonic’s strengths lie? appliances for example. Panasonic is strong in devices such long-term viability and whether they truly leverage our as actuators and sensor that are used in IH and microwave strengths, we will accelerate efforts to realize a new vision of In a word, Panasonic is an electronics manufacturer that has ovens. However, when we make major changes to today’s a “Panasonic that supports the service industry together a good understanding of cars and can propose new microwave ovens to create something new, we need to take with service operators.” As for business scale, we want to solutions in the area of user interface. For example, in the core device and make it new. If we have a strong device, collect “points.” We see little or no problem even in the case putting forward cockpit space proposals, we have unique we can supply it to other companies on an OEM basis. of a collection of small business domains. Even if the technologies and a keen understanding of automobiles. These are possibilities that we will continue to pursue. business scale is not that big, such as Avionics, we will go to There are not many manufacturers who can make such In the housing business, we don’t just think about the great lengths to serve the customer with an approach that proposals. One of our strengths is that we work in close house from the point of view of selling a product, we believe aims to continue initiatives that expand these points of partnership with car manufacturers and spare no effort to that development with “city value” in mind is important. contact. It is important to know how far we can increase serve them. What increases city value the most, what do we need to do such a “point” without allowing other companies to enter to impart value, and what must we do to raise the asset and lose to the competition. In that process, we do not In the automotive-related business, M&A, which value of the city itself? These questions all lead to creating always excessively focus on exposing the Panasonic brand, emphasizes scale, is increasing. Will Panasonic’s the kinds of cities we desire to live in. In Japan, asset but rather we desire to increase those fields where the automotive business pursue a level of scale that requires deterioration in cities has become a major problem, but we average customer understands what we are doing. huge investment? Also, in expanding the automotive may be able to discover a solution by thinking about it in business globally, will companies from emerging terms of smart city and smart town initiatives. Investor interest in the automotive business is countries become future threats? In the automotive business, we want to make new extremely high so I would like to question you in greater automobiles together with automakers by leveraging depth. In what ﬁelds do automakers most want to As I mentioned before, Panasonic will develop together with electronics technology, where Panasonic has an collaborate with Panasonic? automakers to make new cars. In fact, right here, employees unparalleled competitive edge. This does not necessarily who have been engaged in digital consumer electronics mean that we will compete with existing auto parts We will enter fields that complement automakers and form a have fulfilled a major function by leveraging their expertise manufacturers. part of their operations. and technology. Naturally, the Company’s management Automakers are strong in mechanical areas. We believe resources are limited. As a result, we do not intend to go that our strengths lie in the electric and electronic areas as wildly chasing after scale. well as battery systems. It is in each of these domains that However, in the automotive battery business we are Panasonic Annual Report 2016

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second to none in technology and monozukuri (manufacturing) thought there was actually a very strong relationship Policies and Main Initiatives for and it is a field in which we must compete to become the between each of the consumer electronics, housing, and Growth-Supporting Environmental/Social/ world’s best. This is an industry where capacity finally automotive businesses. In the future, auto space could Governance (ESG) Activities doubled after 10 years, so victory or defeat does not happen also be housing space and housing space could become in the short term and the battle will continue for the next 10 close to cars. What do you think about the possibility of Tell us about some of Panasonic’s corporate years. Therefore, we will invest to be number one in the Panasonic creating new products, services and governance activities. world while constantly competing in quality and price. We industries never seen before based on its knowledge of are prepared to keep risk lower than before by shortening consumer electronics? Since its foundation, Panasonic has operated its businesses the time it takes to get a return on investment. based on the management philosophy of “contributing to the Whether companies from emerging countries become What is needed now is a new industry and products based progress and development of society and the well-being of future competitors or not, when you take into account the on a new industry. For example, in the case of cars, people through its business activities.” In addition, under its quality of hardware and devices and the system for peripheral industries have not yet caught up, but in the basic philosophy of “A company is a public entity of delivering these, this is not a field where Asian companies, future, if the electric car and automated driving become society,” it is vital that the Company fulfills its reporting for example, can easily catch up. common place, 10 to 20 years from now the car will look responsibility through dialogue with various stakeholders completely different than it does today. I think that the including shareholders and customers, and swiftly take fair A moment ago, you commented that employees “cross-value innovation” advocated by Panasonic is really and honest action with a commitment to transparency in its who have been engaged in digital consumer electronics necessary when seen from the perspective of making cars business activities. have fulﬁlled a major function by leveraging their and housing for the future. Corporate governance is viewed as an important expertise and technology in automobile business. I Panasonic has so many technologies and products and foundation for raising corporate value through such the people to support them. For new industries, we can take activities. (Please see “Corporate Governance Structure” on on challenges while converging and generating synergies pages 43–46). using various multipliers, instead of these separate items. This will then become our future competitive strength and In ﬁscal 2016, the application of Japan’s version of source of growth. There are many links and contact points the Corporate Governance Code began. Has this created between our home appliances and consumers. With this any changes to Panasonic’s governance? solid track record and performance, our strength lies in the ability to offer new solutions in the area of user interface as I In November 2015, we established the optional Nomination mentioned a while ago. The significance of this is that B2B and Compensation Advisory Committee that advises on the customers including automakers have expectations of us suitability of the remuneration system for Directors and and we continue to grow, primarily in the consumer Executive Officers, and the nomination of candidates for electronics, housing and automotive fields. Directors, Executive Officers and Audit & Supervisory Board members. Outside Director Hiroko Ota, an independent director, serves as the Committee Chairperson. Moreover, in connection with our evaluation of the effectiveness of the Board of Directors, we started a questionnaire about the Panasonic Annual Report 2016

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composition and operation of all members attending Board problems, such as climate change and resource depletion, viewpoints. The same applies to senior management. of Directors’ meetings, the results of which are reported at human rights and labor issues in the supply chain is Panasonic is prepared to utilize human resources from Board meetings. Although the effectiveness of the Board of important, so we are focusing on initiatives in these areas. different backgrounds, if they have a high level of expertise. Directors was evaluated as basically adequate, a wide range Moreover, we are performing strict progress management This means that we choose to be a company consisting of of constructive opinions and proposals were put forward for these types of initiatives. We have set Key Performance people who can serve customers and the community that have been implemented in sequential order. The Indicators (KPIs) in every type of plan, including Green Plan regardless of nationality and company history. This kind of questionnaire will be carried out on an ongoing basis. 2018, our environmental action plan, to address approach, and the conditions and corporate culture resulting Furthermore, we established a committee made up of environmental issues, and we are steadily managing from it, is the “Diversity of People” for Panasonic. In the Outside Directors and Audit & Supervisory Board members. progress. future, we believe that we will need to have personnel To encourage lively deliberation by the Board of Directors exchanges with the acquired companies and to aggressively from a neutral and objective point of view, we expect a Tell us about Panasonic’s approach toward recruit external human resources. sufficient exchange of information and sharing of issues. “Human Resource Diversity.” Through these initiatives, we expect to achieve more transparent, fair, speedy and decisive decision-making. In Panasonic was among the first to widen the playing field for the future, we will continue to research corporate women and foreign employees. We have established a wide governance structures that contribute to the practice of our range of measures and infrastructure so that diverse human management philosophy and strengthen the effectiveness of resources can compete on an equal footing and without governance. handicap. (Please see page 55 for details about “Human Resource Development and Utilization of Diverse Human Please tell us about Panasonic’s environmental Resources”). and social policies. Our approach is not to just set numerical targets for the number of women and foreign employees, rather, our first We see our management philosophy, which I mentioned thought is, “Can we serve customers and the community?” before, as a basic CSR policy, and following these ideas, In order to serve the community, we need to address various officers and employees are constantly striving to contribute industries, markets, and customers and further develop our to the community through our main business and to take fair business model. To that end, we need diverse views and and honest action. approaches. The Company has formulated the Panasonic Code of Panasonic has performed M&A in Japan and abroad, but Conduct and Sustainability Policy as specific guidelines. In in terms of management and working style, it has not always addition to defining the responsibilities that the Company incorporated the business cultures of the companies it has must fulfill in today’s society, we have promoted a variety of acquired. However, amid a rapidly changing business initiatives, including those related to the environment, human environment, there comes a limit to internal human rights and labor, safety and health, ethics, and supply chain resources. With the intermingling of the acquisition target management based on global standards. In recent years in and outside people, we must absorb the good points of particular, we recognize that consideration of environmental these companies, even though we may have clashing Panasonic Annual Report 2016

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Net cash: 293.8 billion yen Also, in November 2015 Standard & Poor’s ana d Capital Efficiency Shareholders’ equity ratio: 30.5% raised our credit rating from BBB+ to A-. ROE: 11.0% Please describe the Company’s EBITDA margin: 9.1% principal financial policies and current financial position.

Robust Financial Position To achieve sustainable increases in corporate value, I believe the Company Shareholders’ Equity Ratio / ROE Driving Sustainable Increases Net Cash (Years ended March 31) (Years ended March 31) needs to balance financial stability and in Corporate Value capital efficiency, while reinforcing each of (Billions of yen) (%) them. In terms of financial stability, we work 500.0 50.0 331.5 293.8 to maintain a positive net cash position and 29.7 30.6 30.5 23.4 increase the shareholders’ equity ratio in 25.0 10.6 11.0 order to ensure a robust financial position 0 8.6 −47.6 that is capable of sustaining proactive 0 business management through investment. With respect to capital efficiency, we −500.0 −25.0 endeavor to consistently deliver returns that −643.3 −47.2 outperform the expected rate of return from −1,000.0 −50.0 Hideaki capital markets and emphasize return on 2013 2014 2015 2016 2013 2014 2015 2016 Kawai invested capital. By working throughout the Shareholders’ Equity Ratio ROE Senior Managing Director Company based on these financial policies, our key financial indicators for fiscal 2016 (ended March 31, 2016) were as shown at right. EBITDA Margin (Years ended March 31) Credit Ratings as of June 30, 2016

(%) 10.0 Ratings Short- Long-term (outlook) 9.1 agency term 8.7 9.0 Rating and 8.2 Investment A (stable) a-1 8.0 Information 6.9 7.0 Standard & A− (stable) A-2 Poor’s (Rating upgrade)

6.0

Moody’s Baa1 (positive) — 0.0 2013 2014 2015 2016 Panasonic Annual Report 2016

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cycle (CCC)* by six days compared with the Proactive Investment in Growth potential returns on investment, and ensure Generation through Our preceding fiscal year, to 30 days. and Returning Proﬁt to thorough post-investment monitoring, Businesses and Generate Cash In fiscal 2017, to support proactive Shareholders through Dividends thereby following up responsibly on from the Balance Sheet business operations targeted to achieve investment projects. growth strategies from a financial Would you describe cash used in Meanwhile, the Company considers the Please explain your initiatives for perspective, we will continue to promote ﬁnancing activities from the perspective return of profits to shareholders to be generating cash. companywide initiatives to generate cash of investment and shareholder returns? measures of prime importance, and and streamline assets. Specifically, we will conducts its management accordingly. Recognizing that cash flow is the source of step up initiatives to improve cash flow in The Company will proactively make upfront Based on this understanding, Panasonic, in corporate value, we have been managing each of our business divisions by shifting to and strategic investments to achieve its principle, distributes profits after taking into the Company in a manner that emphasizes a new phase of the cash flow targets for fiscal 2020 and beyond: an consideration its consolidated business cash flow. implementation project, and transfer the operating profit ratio of 5% or higher and performance and the need to provide stable In addition to measures to enhance locus of activity from our head office operating profit of 300 billion yen or more in and continuous growth in dividends while profitability for each of the Divisional direction to efforts led by each of the the Consumer Electronics, Housing, and targeting a dividend payout ratio of between Companies and business divisions, we are Divisional Companies. On this basis, each Automotive businesses; an operating profit 30% and 40%. working to bolster cost competitiveness business division will enhance its measures ratio of 10% and operating profit of 300 In line with the above-stated policy, for through procurement reforms, undertaking for reaching its CCC improvement targets billion yen in the B2B business. fiscal 2016 the Company awarded an annual initiatives to lower the effective tax rate. and scrutinize capital expenditure in the aim We will use the newly established dividend of 25.0 yen per share, 7.0 yen more Through such efforts, we are making a of generating further cash flow. “CCM* by business division rate” to make than in the preceding fiscal year, resulting in thorough effort to augment our ability to decisions on these investments, thoroughly a consolidated dividend payout ratio of * Cash conversion cycle (CCC) is an indicator of a generate cash through our business activities. company’s cash efficiency. CCC expresses the number ensuring that each business division 30%. We have continued to increase In addition, through such measures as of days of sales represented by the total of accounts achieves profits exceeding their cost of dividends since resuming their payment in receivable and inventories less accounts payable. The curtailing accounts receivable, reducing fewer the number of days, the greater is the amount of capital. At our head office, as well, at the fiscal 2014. inventories, and liquidating assets, in fiscal free cash flow available for strategic use. preliminary investment consideration stage * CCM is the abbreviation for capital cost management. 2016 we improved the cash conversion we will examine risk scenarios, evaluate Please refer to page 26 for details.

Cash Conversion Cycle Free Cash Flow Dividend per Share

(Days) (Billions of yen) (Yen) 50 800.0 30 46 25 594.1 38 600.0 40 36 20 18 400.0 355.2 353.5 13 30 30 10 200.0 124.4 0 0 0 0 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016

(Years ended March 31) Panasonic Annual Report 2016

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Augmenting Return on Invested have used a consistent “CCM rate,” which How is the Company revising its channeling it into Divisional Companies Capital and Cash Efﬁciency stands for the expected rate of return from “Intra-company capital system?” and business divisions where growth is capital markets. We have put in place the anticipated. What speciﬁc measures are you new “CCM by business division rate,” which Panasonic’s “Intra-company capital The objectives in this revision to the undertaking with regard to your reflects the business and regional system” views each business division as an “Intra-company capital system” are to instill emphasis on return on invested capital? characteristic of each business division. independent business enterprise, setting within each of the Divisional Companies Our objective in setting the “CCM by “Intra-company capital” as the amounts of and business divisions an awareness of the The Company works tirelessly to improve its business division rate” is to incorporate cash needed to manage the business. Until balance sheet as well as of earnings, and to management control framework in order to individual business risk (business now, the amount of intra-company capital encourage management that pays thorough ensure a thorough management focus on characteristics, regional characteristics) for had been fixed for a long period of time, attention to return on invested capital. return on invested capital. Specifically, in each business division, thereby focusing and revisions were made as directed by our Furthermore, the revision aims to create a fiscal 2016 we established a “CCM by awareness on the expected rate of return head office. With the current revisions, each system to prioritize the allocation of business division rate,” and in April 2016 from capital markets and encouraging of the Divisional Companies and business required cash on growth businesses, which reviewed our “Intra-company capital system.” management thoroughly attentive to return divisions is able to use its own judgment in in turn can maximize Group-wide return on “CCM” is a management control index on invested capital. “CCM by business setting a necessary amount of invested capital. established by Panasonic, which division rate” is Panasonic’s KPI for Intra-company capital, taking into account The Company plans to continue incorporates capital efficiency. “CCM” is evaluating operating performance. By using its future investment plans and capital accelerating its initiatives to enhance derived by deducting capital costs from the this KPI in making investment decisions, we efficiency. This approach allows our head capital efficiency. earnings generated by businesses. Positive are working to increase return on invested office to amass excess cash and capital, “CCM” indicates that a business has fulfilled capital throughout the Company. its minimum earnings requirement expected by the capital market. New Intra-Company Capital* System In the past, throughout the Company we Management aimed at thorough capital efficiency [Reduction in Intra-company capital]

Accumulate Reduction in More net cash at Divisional invested capital CCM by Business Divisions Structure Overview of Balance Sheet for than necessary Companies, headquarters Appropriate for strategic investment a Divisional Company or Business Division Decrease in capital Intra-company cost (CCM) Business Cost of invested assets capital CCM Each of the Divisional Required profit (= invested assets x CCM rate) Intra- Companies and Net cash capital Pursue profit in excess company business divisions Retained earnings capital conducts reviews of of capital cost Intra-company capital in accordance with Management aiming to achieve Required their own growth through reinvestment Regional Retained Business characteristics characteristics capital management [Implement strategic investment earnings orientation. (including M&A)] Invested capital Cost of capital Ratio of invested = shareholders’ equity + CCM by (WACC) assets by region Increase in Rise in capital invested ( interest-bearing debt ) * The Company sets the amount of cash Capital capital increase business needed for management as “Intra-company requirements division rate capital,” based on the following calculation Increase in capital cost (CCM) for individual business divisions. Intra-company Regional capital Invested assets Intra-company capital = fixed capital + coefficient Required capital Pursue profit in excess standard working capital – reserves, retained Retained earnings of capital cost earnings, etc. Panasonic Annual Report 2016

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Panasonic’s chief technology officer and “technological evolution.” In general, EnE tet rinng an Erra that Redeﬁnes Interview (CTO), Yoshiyuki Miyabe, is in charge of the speed of social change has always been Technologgical Development the Company’s R&D Division, which much faster than in the world of technology. ini Teerms of “What” Instead oversees the development of new It seems that almost no one speculates of “HoH w” with the CTO technologies and products by each about what society will be like 10 years Divisional Company to enhance its from now. In the world of technology, What do you mean by “how” and businesses, and the Advanced Research however, there are many fields in which “what”? Accelerating the Development Division, which conducts innovative technical progress over a decade can be of Technology Useful for research to promote the growth of predicted based on a forward extension of Around 2000, when the digitalization of next-generation technologies. Nikkei today’s technology. While there are audio/visual consumer electronics was Creating the Society of the Business Publications, Inc. managing certainly fields in which that is impossible, taking place, Panasonic operated five key Future over the Next 10 Years director Naoki Asami interviewed Mr. we can for example forecast the evolution businesses: semiconductors, displays, Miyabe about Panasonic’s technology of semiconductor technology, including optical disks, mobile communications, and strategies. potential technological breakthroughs digital TVs. At that time, each business had related to steadily increasing data a clearly defined technological approach. processing speeds and the ability to handle The approach to technological development Pursuing a Strong Balancn e greater data volume. In the energy field as focused on “how” for realizing the between “Social Change” ana d well, it is possible to predict the future of propositions at hand of making displays “Technological Evvolution” technological progress to a certain extent larger and thinner as well as enabling large for batteries and other items. optical disk capacity. People involved in R&D ask what they Today, however, the business domains Yoshiyuki To begin, please tell me about your Miyabe basic stance as the head of Panasonic’s can do for our rapidly changing society in which Panasonic operates have Senior Managing technology divisions. In your opinion, while keeping an eye on technological expanded dramatically as the Company has Director what should Panasonic’s R&D involve? evolution from a medium- to long-term moved increasingly into the B2B services perspective. I think we must always and solutions, including the housing and What I often say to my engineering staff is maintain this awareness. automotive fields. Within this wide range of that we should pursue a strong balance I would also like to add that when it businesses, engineers and researchers are between two types of change that move at comes to technological development going more concerned with who is the target of two different speeds, “social change” forward, we need to place more emphasis on “what” rather than “how.” Interviewer Mr. Naoki Asami

Managing Director, Nikkei Business Publications, Inc. Previously served as the Silicon Valley bureau chief, editor-in-chief at Nikkei Electronics, and Nikkei Business publisher Panasonic Annual Report 2016

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this technology and what new products and Formulating Our Shifting from For such an approach to work, however, businesses will be created than how to Forward-Looking R&D “Black Box Strategies” to information-gathering capabilities are realize the specific propositions placed 10-Year Vision “Open Innovation” essential. It is rare for new business and before them. In other words, determining product ideas to suddenly appear in a “what” is more important. There are thought to be two In your search for new types of closed environment. Ideas are generated approaches for establishing R&D “what” questions, would you agree that from various types of outside stimulus. To be certain, the onset of the themes, “bottom-up” starting with the recent idea referred to as “open Back when it faced challenges as overseas previous digital revolution was predicted researchers and engineers working in innovation” is more important than manufacturers began to make a serious rally, well in advance. Accordingly, using the the ﬁeld and “top-down” based on broad relying only on in-house technologies Panasonic kept its engineers closed within technological elements available, we policies set by management. Which following the principle of R&D facilities and out of the spotlight. realized our long-held dream in that approach is currently prevailing at “self-sufﬁciency?” 10-year period. Panasonic? This was the so-called “Black Box” Absolutely. If we find fields that look strategy. Taking this argument to its extreme, in the I would say both. The Company established promising in the near future by looking for interim no products based on completely its R&D 10-Year Vision in fiscal 2016. This clues among major outside trends, an Changing times required us to shift away new ideas emerged. All that happened was vision, which is our medium-term R&D plan, effective entry approach may be to from this closed mindset around two or cathode-ray picture tubes gave way to thin involved various year-long discussions generate strengths through three years ago, but it has been a difficult panels and DVD players replaced VHS. between me and the CTOs of each of the technology-related tie-ups and process and the remnants of the previous During this time, there was “almost no need” Divisional Companies with the aim of collaborations. mindset still linger today. The shift to a for engineers to consider the question of deciding which fields need to be focused on “what.” However, during the analog companywide over the next 10 years. consumer electronics age earlier on, Our top-down approach involved engineers at Panasonic were searching for formulating two key fields in the R&D various forms of “what” regarding game 10-Year Vision: IoT/Robotics and Energy. consoles, word processors and other items. The bottom-up approach we took in these I think the next 10 years will be an age two wide-ranging fields involved engineers when we will once again look for these from each division asking themselves what kinds of “what” questions. I am interested in role they can play while looking for redefining a new Panasonic’s concept of individual themes. For instance, around half “what” by asking what kinds of new of the engineers in the Advanced Research services and products should be provided Division are free to search for whatever to society. approach they feel is useful within the two IoT/Robotics and Energy fields of the R&D 10-Year Vision.

Wonder LAB Osaka Panasonic Annual Report 2016

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more open approach can be seen at Applying Panasonic’s Strengths Panasonic handles some of these devices, I today’s needs by identifying changing Wonder LAB Osaka and Panasonic Cultivated in Consumer think machines must adapt to people in social trends and taking on the challenge of Laboratory Tokyo. Previously closed to Electronics to the B2B Business order to make B2B a major success. When developing new technologies to meet these outsiders, certain portions of our R&D boarding an airplane, no one asks changes. domains are now sending the message, Many people primarily view passengers to take a seminar on how to “come on in.” This has in turn opened up Panasonic mainly as a company that use the onboard audio/video equipment. At Recent Development Successes: Panasonic’s businesses. provides convenience and comfort inside most, people make do with explanations Robot Vacuum Cleaners, Light ID, the home. As shown in the R&D 10-Year written on a single card. Voice Translation Laboratories in Touch with Vision, however, Panasonic has in fact To fulfill this idea of machines adapting Actual Trends in the Outside significantly expanded into business to people, we are leveraging our varied Among the technological World fields outside the home, including social experience and knowhow in consumer development successes over the past infrastructure, and thereby has electronics. This is Panasonic’s key strength. year, which three do you give the highest Under what circumstances did the incorporated a set of values based on marks for as CTO? Panasonic Wonder LAB Osaka come into safety and the environment that differs It can be said that avionics in the being? from Panasonic’s previous focus on United States is example of a successful The first is our robot vacuum cleaner. As a consumer electronics. service industry field. product that we have wanted to create for What kicked things off was hearing from many years but had been unable to, robot people at the R&D frontline. Around To be certain, the B2B field outside of This is a field in which we have established vacuum cleaners represent the successful summer last year, mid-tier engineers at the consumer electronics has widened a solid foothold. The business concept for efforts of an R&D system that extends Advanced Research Division stated that considerably. While perhaps an avionics involves providing value to airplane beyond divisions. This product was they wanted to create this kind of a facility. I afterthought, B2B is a field that can be passengers on long-haul flights by making developed through collaboration between also previously said that in order to rated on its own terms as part of the service available entertaining ways to pass the time the consumer electronics vacuum cleaner generate successful output from engineers, industry that makes direct contact with onboard. As an extension of providing and robotic control groups. In Japan, this we need to engage in numerous activities in ordinary consumers. While referred to as newspapers and meals to eliminate has been our biggest seller in its category. order to acquire positive input. While “consumer electronics” in the home, we boredom during flights, there arose a need This is also an example of us displaying our information can be found to a certain extent evaluate B2B for the most part based on for finding ways to provide music and movie underlying R&D strengths by setting and on the Internet these days, we decided to the fact that ordinary consumers use the service on flights. We were one of the first working toward our objectives. give this project a try given the need to machines despite being sold directly to to enter this market and recently launched The second success is Light ID, which is make contact with a more real aspect of the client companies, such as bank ATMs, an in-flight communications business that technology that enables high-speed outside world. convenience store refrigerator showcases, enables passengers to connect to onboard reception of light ID signals through image and video equipment used on airplanes. networks. As tools to kill time, these sensors installed in smartphones through For equipment used by specialists such systems serve the same role as the development of photonic technology. as medical devices and data center smartphones used reflexively by people The invention of this technology was based equipment, people must adapt to machines, riding trains. Based on this consistent on many long years of effort. In reality, which includes reading manuals and long-standing concept, we continue to however, when light ID was initially undergoing specialized training. Although provide ways to spend time best suited for developed, it was incompatible with Panasonic Annual Report 2016

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smartphone operating systems, so an With more and more people from next-generation large-volume archival disc engineer involved took it upon himself to various non-English-speaking countries after deciding on specifications with other negotiate with major operating system likely to visit Japan in the future, this companies. Unlike semiconductor memory companies, allowing us to complete system technology will be indispensable for and hard disks, archival discs feature environments that would enable the use of communicating with foreign tourists. various characteristics, such as the ability this technology. to store data for at least 10 years and to Promising Fields: Robotics, safely turn power off when not being used, So the axiom is not just to Optical Storage, Energy so I want to steadily expand the use of commercialize technology but also to these items. Beyond simply being sold via induce other companies to help provide Finally, which three ﬁelds do you devices, we are promoting research into value for users. expect to see major successes in? how these devices can be used as systems. The third is the energy field. Amid Yes. This is essentially something that The first is robotics. Panasonic boasts a progress being seen in rechargeable battery engineers working at manufacturing large staff of mechatronics engineers, performance, safety, and charging speed, companies must do. There is no point in enabling it to expand beyond a narrow Panasonic is working to maintain its leading developing items that work in a interpretation of IT technology to position in this field. Moreover, as fuel cells technological sense but cannot be used encompass robotics. In this field as well, able to directly use hydrogen as a fuel practically. Engineers have steadfastly there are promising products and services should be commercialized in two or three fulfilled their mission of bringing inventions that can be used by the service industry. years, this field looks very promising. into commercial application. Given that these products will be used by While I’ve spoken about various topics, ordinary consumers, robots must to a the basis of all of our technological Undoubtedly, this is the embodiment certain extent be attractive. Before robots development is found in Panasonic’s of Panasonic’s R&D spirit. It is truly can be fun, however, they need to have management philosophy, which places the legendary. strength and dexterity to be useful in utmost importance on improving the assisting with human activities. well-being and quality of life of people The third success is voice translation. As a The second is the big data optical around the world through our business project that got underway upon Tokyo storage field. While we have been activities. Going forward, we will use our winning the right to hold the Olympic developing optical disc technology for a technologies to provide useful products that Games, we are pursuing the development of long time, the market for optical storage far surpass the expectations of customers this technology in collaboration with public within the home is expected to shrink with and society. R&D institutions and other companies. We connection to the Internet and cloud were specifically in charge of finding ways services. On the other hand, with data to convert voice signals into letters. With a volume gradually increasing throughout prototype currently undergoing field testing, society, there will be a need for data we are working to become the undisputed centers with large-volume recording media. leader in this technology. Consequently, we have released the first Panasonic Annual Report 2016

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Overview of Divisional Main Products and Services Principal Business Areas (As of March 31, 2016) Companies Consumer Housing Automotive B2B Electronics

Air-conditioners, TVs, refrigerators, Appliances Company washing machines, personal-care products, microwave ovens, home audio equipment, video equipment, vacuum cleaners, Please refer to Please refer to rice cookers, bicycles, showcases, pages 32–33. page 33. large-sized air-conditioners, compressors, fuel cells

Lighting fixtures, lamps, wiring devices, Eco Solutions Company solar photovoltaic systems, water-related products, interior furnishing materials, Please refer to Please refer to ventilation and air-conditioning equipment, pages 34–35. page 35. air purifiers, nursing-care-related products

Aircraft in-flight entertainment systems, AVC Networks Company PCs and tablets, projectors, digital cameras, surveillance cameras, social infrastructure systems equipment, Please refer to fixed-phones, mobile phones pages 36–37.

Car-use-multimedia-related equipment, Automotive & Industrial electrical components, lithium-ion batteries, Systems Company automotive batteries, dry batteries, electronic components, automation controls, Please refer to Please refer to semiconductors, electronic materials, LCD panels, pages 38–39. page 39. electronic-components-mounting machines, electric motors, welding equipment Panasonic Annual Report 2016

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Strategically allocating resources to high three highly growing businesses. In addition of 125 billion yen, on an IFRS basis, in fiscal Appliances growth businesses to allocating human resources and capital to 2019, the fiscal year ending March 31, 2019. Company (AP Company) The AP Company is engaged in the each of these businesses on a priority basis, development, manufacture, and sale of a wide the AP Company is actively pursuing M&A Strategy 1 Consumer Electronics range of products that extend from such opportunities while engaging in other We are drawing on our strengths | Business consumer electronics as TVs and refrigerators inorganic investments. Classified as steadily accumulated in Japan to expand into to the B2B field, including retail store growing businesses, the company is working ASPIRE TO MORE overseas markets in the Consumer showcases and commercial air-conditioners. to expand its activities in such major In charge of the Group’s consumer electronics Electronics Business. At the same time, As indicated in the table at the bottom appliances business fields as refrigerators business activities, the AP Company is we are working to expand our B2B right of the page, activities undertaken by and washing machines, as well as the working to expand business on a global basis. Business by engaging in non-continuous the AP Company cover six broad fields. In devices business, etc. The company has Guided by the overarching vision, “ASPIRE activities and utilizing IoT*. specific terms, the company has identified also identified the profitability improvement TO MORE: To the lifestyle we all desire,” every the air-conditioner business including home business category, which is comprised of effort is being made to deliver products that * IoT: Internet of Things. Under the IoT concept, physical objects are connected to the Internet, which enables as well as commercial air-conditioners, the the AV business including TVs. In match the yearnings of customers in each the collection and exchange of data. Objects can then commercial refrigeration & food equipment endeavoring to secure stable results, the AP region and demographic around the world. be automatically controlled and remotely operated. business, and the small & built-in business, Company is working to boost growth in line In addition to Japan, the AP Company has which includes such diverse items as beauty with an upswing in earnings while ensuring identified Asia, China, and Europe as priority and health enhancing products as well as the proper management of risks. Moving countries and regions. Looking ahead, the AP induction heating (IH) cooking equipment, as forward, every effort will be made to achieve Company will harness its strengths in each sales of 2.8 trillion yen and operating profit region and engage in multiple activities in a

Strengths Advanced consumer electronics- Business Categories within the AP Company Tetsuro Homma related technological capabilities President accumulated over many years Air-conditioner business Room Air-conditioners, Commercial Air-conditioners, Consumer Electronics B2B Water heaters, etc. A development structure that is Highly Commercial refrigeration & capable of swiftly and accurately Showcases, Kitchen facilities, Vending machines, growing food equipment business addressing local needs Dispensers, etc. etc. business B2B Small & built-in business Beauty products, Health products, Cooking appliances, IH cooking equipment, Dishwashers, Rice cookers, Consumer Electronics Opportunities Microwave ovens, Irons, Nano-e devices, etc. Major appliances business Growth in both the middle- and Refrigerators, Washing machines, Vacuum cleaners, Steadily Consumer Electronics Toilet seat with shower, etc. upper-class demographics of growing emerging countries and regions business Devices business /etc. Compressors, Condensing units, Vacuum insulation including China and Southeast Asia panels, Fuel cells, Meter devices, Electric power Consumer Electronics B2B assist bicycles, etc. Growing energy conservation needs Proﬁtability AV business etc. improvement TVs, Recorders, Audio equipment, etc. business Consumer Electronics

Please refer to page 66, “Segment Information,” for fiscal 2016 performance. Panasonic Annual Report 2016

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bid to build as a major business pillar. leverage the Group’s domestic know-how. The ability to establish relationships with Through these means, the AP Company will Our Products and Businesses Helping Solve Social Issues customers by linking with diverse customers work to accelerate the pace of business growth. through diverse points of contact, the ability The AP Company established the to convey value to customers through the J Marketing Division in China in April 2016. concept*1 as well as Daily Premium*2, and the With this initiative, positive steps have been integration of operations through consolidated taken to consolidate marketing activities, manufacturing and sales management which were previously conducted on an provide the underlying strengths of the AP individual product basis. From a product Company’s Consumer Electronics Business. perspective, every effort is being made to These strengths have allowed the AP establish premium brands under a “healthy, The WX Series home-use room air-conditioner featuring ECO NAVI technology HFC-free freezer system Company to secure a leading market share*3 affordable, and classy + smart” concept. Consumer Electronics and B2B Products Receive in Japan across a wide range of products In Europe, the AP Company is collaborating Awards for Helping to Reduce Environmental Impact including room air-conditioners, microwave with local manufacturers to expand sales in Promoting the Development and Widespread Use of Products That ovens, dishwashers, shavers, dryers, and the small appliances business of such Help Conserve Energy and Prevent Global Warming front load washers. premium products as shavers and beauty As a part of its overseas business appliances that incorporate European designs The AP Company is actively engaged in the global development of environmentally-conscious development activities, the AP Company is as well as features that address the needs of products. In fiscal 2016, Panasonic’s WX Series home-use room air-conditioner, which features ECO NAVI*1 technology as well as comfortable and energy-efficient operations, applying those marketing methods that have professionals. In this manner, the AP Company received the Chairman’s Prize in the Product and Business Model Category of the 2015 Energy proven successful in Japan in tune with the is endeavoring to foster a new earnings pillar. Conservation Grand Prize*2. Furthermore, the Company’s Hydrofluorocarbon (HFC) -free specific attributes of each region and country. *1 Home appliances that deliver a simple, high-end freezer system, which in using CO2 has a considerably smaller impact on global warming At the same time, considerable weight is being appeal targeting the middle to older age compared with HFC, received the award for excellence in the Ozone Layer Protection and placed on strengthening the consolidated demographic. Global Warming Prevention Awards*3. The award was in recognition of the system’s many *2 Home appliances that add a special something to features, including its substantially reduced size and weight compared with conventional management of local manufacturing and people’s daily lives through a full range of features sales in an effort to accelerate the pace of and an elegant appeal. products as well as its ability to reduce material costs and to lower conveyor pressures business growth. From a product portfolio *3 Fiscal 2016, Company estimate and therefore be easily installed. In addition to such activities as the introduction of a CO2 refrigerant HFC-free freezer in Indonesia and Taiwan, the AP Company is endeavoring to perspective, the AP Company is focusing on promote the widespread global use of environmentally-conscious products. bolstering its premium zone lineup. *1 ECO NAVI is a proprietary technology created *2 Organized by the Energy Conservation Center, In Asia, every effort will be made to Strategy 2 | B2B Business by Panasonic to automatically detect and cut Japan. introduce products that not only deliver new wasteful electricity use in home appliances. *3 Organized by Nikkan Kogyo Shimbun, Ltd. value, but also closely address the specific High growth through inorganic activities needs of each region. The thrust of the AP including M&As Company’s endeavors will revolve mainly In its retail store showcase activities, which around air-conditioners, refrigerators, have been identified as a highly growing Leveraging this company’s business expand its global business. Moreover, washing machines, and TVs. The AP Company business, Panasonic newly acquired Hussman platform, the AP Company will release products Panasonic will provide Hussman with access will adopt a premium brand strategy that Corporation, based in the U.S., a company in the world’s largest food distribution market, to its energy-saving, IoT, and CO2 refrigerant promotes “Made in Japan” products, etc., while that manufactures industrial refrigerated, the U.S., as well as Canada, Mexico, and the technologies with a view to fostering a high- strengthening field marketing activities that freezer display cases and systems. Oceania region going forward in order to earnings global business. Panasonic Annual Report 2016

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Collaborating with PanaHome, the ES market is set to steadily expand, helped Strategy 1 | Housing Business Eco Solutions Company drives growth in Panasonic’s along by government policies that make the Company Housing Business Realizing growth by creating new value in environment more conducive for growth, Panasonic as a whole targets sales of 1.6 tune with the needs of each era amid the broadening view of housing as a (ES Company) trillion yen (up 20% from fiscal 2016) in the Over the past 15 years, the number of new fixed asset that should be built to last for use Housing Business by fiscal 2019. In housing starts has decreased by 25% in over one’s lifespan and passed down to the We are moving toward our goals in the collaboration with PanaHome Corporation Japan overall. In contrast, sales at the ES next generation. The ES Company seeks to Housing Business by focusing on (PanaHome), a housing maker and listed Company increased by about 20%*1 over expand the remodeling business by addressing new-era needs in the subsidiary, the ES Company will play a the same period. This growth is attributable proposing to customers “total space value,” from building construction materials and remodeling business, energy major role in achieving this target. to the creation of new businesses such as the Age-free business, as well as our ability housing equipment to air conditioners and management business, “Age-free” to raise selling prices by offering our lighting, leveraging the strength of its (elderly care) business as well as our customers additional benefits through the abundant contact points with customers Strengths overseas business. provision of new value, such as the fully through Living Showrooms and local electrical A lot of contact points with automated self-cleaning toilet A·La·Uno, and appliance stores, such as Panasonic-Shop. customers and marketing the release of new products featuring Amid worsening environmental problems and capabilities via a robust domestic sales network upgraded functionality and designs for growing consumer needs for energy savings, existing products. Panasonic aims to grow the government has created a policy and Comprehensive solutions capabilities with broad product by creating value in tune with current needs, systems to encourage the spread of net zero lines centered on the remodeling, energy energy homes*2. As such, the energy management and Age-free businesses. management market looks likely to grow. Ability to develop products that deliver value for new needs In Japan, the new housing market is The ES Company aims to expand the energy Tamio Yoshioka etc. projected to contract while the remodeling management business by offering better President

Opportunities Growth in remodeling market and Sales Targets increase in elderly population in (Trillions of yen) Japan 2.3 Major changes in the electric 1.9 2.0 Non- housing power and energy markets due to 0.6 0.7 a changeover in energy policy in 0.6 Japan Housing Growth in housing construction 1.4 1.3 1.6 investment in emerging countries and regions including Southeast Asia 2016 2017 (Target) 2019 (Target) (Fiscal year) etc. Note: Group total, including PanaHome. IFRS basis.

Please refer to page 66, “Segment Information,” for fiscal 2016 performance. Panasonic Annual Report 2016

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services and solutions to customers by partners in ASEAN countries with rising proposing solutions that combine solar middle and wealthy classes to provide its Our Products and Businesses Helping Solve Social Issues panels and storage batteries as well as by own unique value in living environments, by providing apps that display the analysis of proposing an integrated approach to big data obtained from home energy “skeleton” as the frame of the home and management systems. Japan’s population “infill” as its interior fixtures including has greyed, with 26%*3 of the total housing equipment, lighting, wiring and population being 65 or older. Providing ventilation equipment. services and living environments for the *1 Underlying sales in Japan, excluding the impact of elderly has become an important issue. The business restructuring, Panasonic estimate. ES Company has accordingly been *2 Homes that consume the energy they generate, for a advancing the Age-free business with the net zero difference. Age-free House Kawasaki Noborito *3 As of October 1, 2014; Source: 2015 White Paper on aim of providing nursing care services as the Elderly Elderly Apartments with Support Services Opened well as building and operating serviced in Kanagawa Prefecture in Japan apartments for the elderly. Using the Helping the Elderly Lead Worry-free and Comfortable Lives know-how that the company has nurtured Strategy 2 | B2B Business since operations commenced in 1998, Through the Age-free business, the ES Company has been working to improve the combined with various products and Creating new demand in LED lighting and livelihoods of the elderly with better living environments. In September 2015, we opened technologies of the Panasonic Group, we engineering fields in non-housing markets the Age-free House Kawasaki Noborito as our first elderly apartment facility with support services in the Tokyo metropolitan area. PanaHome was in charge of the design and are able to provide living environments and In B2B operations, the ES Company is construction of the building, leveraging its know-how in constructing elderly homes and services that cannot easily be imitated by concentrating on the LED lighting, energy nursing care facilities. The property features a variety of Panasonic products, including rivals. We are accelerating business management and engineering fields. durable fixtures with fine wood textures, nursing care equipment such as special development through the provision of peace Regarding LED lighting, Panasonic has a bathrooms and electric-powered beds, and home appliances including air conditioners of mind in nursing care support by high share of the non-housing market, which and air purifiers. By bringing together the strengths of the Panasonic Group, we are “Panasonic.” Looking ahead, we would like includes office buildings, factories, outdoor preparing living environments that afford comfort and peace of mind for the elderly. to help people manage their health with areas and retail stores in Japan. Nevertheless, sensing technologies and lighten the burden we aim to increase our market share by on caregivers with robotics technology. developing new products that match the In its overseas business, the ES unique needs of each field. installation and maintenance as a subcontractor Company is working to expand operations in We are also engaging in new fields such (construction project contract work) for solar CIS, the Middle East and Africa by as automotive devices and projection projects in North America. leveraging its sales channels with Anchor lighting. Electrical Pvt. Ltd. in India and VIKO Electrik In the engineering field, the ES Company in Turkey (acquired companies) for its wiring has been expanding business in remodeling equipment, a category where Panasonic and maintenance, centered on energy boasts high market shares in mainly Asia. management in Japan, as well as business Collaborating with PanaHome’s housing for comprehensive orders encompassing business, Panasonic is working with local parts and materials supply to design, Panasonic Annual Report 2016

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The AVC Company plays a central role in businesses. industry. In addition, the AVC Company is AVC Networks all of Panasonic’s B2B businesses Raising operating profit ratio of 10% and helping to improve store operations by Company The AVC Company plays a central role in all operating profit of 300 billion yen as B2B promoting automation and visualization of Panasonic’s B2B businesses, providing objectives that must be met throughout through the use of the AIS Company’s (AVC Company) solutions to service industry customers Panasonic, the AVC Company is playing a production management systems. found only at Panasonic. In the B2B role in reaching these goals. Targeting fiscal Typical examples in the entertainment Becoming an expert in the service business, we have positioned 2019 sales of around 200 billion yen for field involve providing solutions related to industry, the AVC Company is driving “retail/logistics,” “entertainment,” “public,” retail/logistics and 300 billion yen each for image display equipment, which are core the growth of B2B businesses by and “avionics” in particular as four key fields entertainment, public, and avionics, we aim systems used at stadiums. We aim to create unprecedented, new experiences for providing solutions to customers’ over the medium-term. Becoming experts in for total AVC Company sales of 1,250 billion these fields with regard to the service yen and an operating profit ratio of 7.0%, on spectators by producing realistic sensations management challenges and integrating industry, the AVC Company will provide an IFRS basis. and shared experiences by combining core products with IoT. value-oriented solutions that integrate core imaging equipment (i.e. large-screen LED products with IoT to customers and vision systems, projectors, broadcasting ultimately their customers (end users) in cameras, digital signage) with technologies Strategy | B2B Business order to contribute the success of client such as total production management Promoting solution provision for systems and SNS video streaming systems. management issues in each of the four Plans are in place for over 100 core fields high-brightness projectors produced by the Strengths In the retail/logistics field, Panasonic AVC Company to be used at the 2016 Rio provides solutions centered on such de Janerio Olympic Games to project Capabilities in differentiated products as Point-of-Sale (POS) systems, images of the opening and closing technologies (optical, image analysis, sturdiness, payment systems, security cameras, digital ceremonies. We will continue focusing on Yasuji Enokido communications, etc.) signage, and handy terminals. stadium-oriented solutions with an eye to President Product development capabilities Typical examples of our initiatives in this the 2020 Tokyo Olympic/Paralympic Games. field are the solutions we provide to the In the public field, Panasonic aims to Engineering/system integration/sales capabilities that restaurant industry. In addition to offering contribute to the creation of a safe and support solutions businesses our existing POS and other touch point secure society by providing such items as etc. systems, we are gradually providing security cameras, ruggedized PCs/tablets as solutions that enable the rapid provision of well as innovative solutions that combine products to customers, including in-store these products to the public sector, local Opportunities KIOSK systems that enable users to confirm governments, and utilities. For instance, Global expansion of the service menus and place orders by employing touch starting with ruggedized PCs targeting industry panels as well as drive-thru systems and policing industry in the United States (which Increasing IoT investment in the mobile-order systems. In September 2015, boasts the No. 1 market share), we provide service industry Panasonic acquired Quick Service Software ruggedized tablets and in-car cameras and etc. Inc., a company that provides store recorders. In fiscal 2016, Panasonic began operations software for the fast food providing wearable cameras for use by

Please refer to page 67, “Segment Information,” for fiscal 2016 performance. Panasonic Annual Report 2016

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police officers. Looking ahead, we will geared toward the food retail industry. provide management systems that integrate Through these means, we will strengthen the Our Products and Businesses Helping Solve Social Issues a wide array of information including solution business. investigation-related imaging taken from In Europe, we will establish an Innovation imaging equipment. Center similar to the one in North America as Security center In the avionics field, Panasonic provides well as a solutions company focusing on Real-time monitoring optimal solutions to its airline customers such key fields as the logistics and transport of security personnel locations along with repair/maintenance services for industries. and on-site conditions

core in-flight entertainment systems and Going beyond relying on internal resources, Camera images, Security instructions, onboard communication services. Going we also plan to grow into a highly profitable positioning data, images of suspicious etc. people, etc. forward, we plan to accelerate the expansion business entity with an operating profit ratio of our businesses to new fields through of over 10% from fiscal 2021 and beyond by Security personnel synergies generated with satellite continuously engaging in M&A throughout Wearable cameras, smartphones

communications services company ITC Japan, North America, and Europe. Security personnel using wearable cameras Global, which we acquired in August 2015.

Enhancing systems to expand solution Interactive Security System Field Tests businesses in Japan, North America, and Helping to Maintain Airport Safety and Security Europe With the rapid rise in overseas tourists visiting Japan in recent years, overcrowding at The AVC Company is enhancing solutions airports, sightseeing spots, and event venues is increasing. As this trend is expected to tailored to specific industries mainly in continue through to the opening of the Tokyo Olympics in 2020, there is a need to Japan, North America, and Europe while establish efficient and effective security systems at such locations. Under these working to create new core businesses after circumstances, the AVC Company in the cooperation of the Narita International Airport avionics. Corporation conducted field tests at Narita International Airport in February and March In Japan, we are focusing on creating 2016 of interactive security systems that use wearable cameras and location positioning new value and businesses through joint technologies. Putting this system into practical use will make it possible to confirm the location of security personnel and transmit onsite video images in real time. Based on development activities with customers by these functions, the aim of this system is to facilitate rapid and accurate responses to leveraging Panasonic’s Innovation Center, terror and other heinous crimes as well as accidents caused by overcrowding. which was established in April 2015. In fiscal 2016, we created new system products (i.e. Light ID and automated translation), made possible through technological exchanges with 135 companies in Japan and a series of field tests performed with customers. In North America, we established the North American head office and Innovation Center in fiscal 2016. We will establish the Solution Division in fiscal 2017, which is Panasonic Annual Report 2016

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Rolling out the advanced technologies and will push forward various measures in each Strategy 1 | Automotive Business Automotive & know-how gained through our digital of the Comfort, Safety, and Environment Industrial Systems consumer electronics operations in the Contributing to the growth of a motorized areas. In specific terms, energies will be automotive and industrial business society through the development of directed toward promoting next-generation Company Panasonic’s strength lies in the advanced advanced systems cockpits to ensure a pleasant and safe (AIS Company) technologies and know-how that the Group By seamlessly integrating the image driving experience in the Comfort area. has accumulated through the development processing, downsizing, optics, heat Considerable weight will also be placed on and manufacture of digital consumer radiation, sensing, and other technologies safety, focusing mainly on Advanced Driver We are concentrating our resources in electronics. Drawing on this inherent used in the Group’s digital consumer Assistance Systems (ADASs) that help to areas of growth, including the automotive strength, the AIS Company is looking to electronic products with the infotainment- detect and determine dangers thereby and industrial ﬁelds, while expanding our apply these technologies and know-how to related technologies that are typically used averting accidents and ensuring the safety of Automotive and B2B businesses by making the automotive and industrial businesses, in car AVC equipment that have been pedestrians and vehicles. Efforts will be the most of our wide range of proprietary which continue to exhibit growth potential, in developed over many years as well as its channeled toward the sale of battery and technologies as well as through collaboration. a bid to expand its business. widely acclaimed, high capacity, and highly power supply systems for use in electric, reliable battery technologies, all in the hybrid, and other environmentally-conscious automotive field, the AIS Company is vehicles in the environment area. targeting business growth. In the Comfort area, the AIS Company is Strengths Overall, Panasonic is targeting sales of endeavoring to expand its cockpit system A wealth of technical assets 2.0 trillion yen in the Automotive Business in business by working hand-in-hand with car developed through the Group’s digital consumer electronics activities fiscal 2019, up from sales of 1.3 trillion yen manufacturers in the development of (image processing, sensing, in fiscal 2016, on an IFRS basis. In order to products. In addition to the in-car Display- downsizing, etc.) achieve this level of sales, the AIS Company Audio system that is connectable with such Yoshio Ito Automotive infotainment system mobile devices as smartphones, successful President technologies products include head-up displays that allow Battery technologies that boast high drivers to view essential information without capacity and outstanding reliability Automotive Business Fiscal 2019 requiring a large amount of eye movement, etc. Sales Targets (IFRS basis) and large-scale center information displays installed on the center console. Opportunities Fiscal 2016 Fiscal 2019 Results Targets In the Safety area, energies are being Progress of network-connecting and channeled toward ADAS development and Comfort electronization in vehicles 570 billion yen 750 billion yen Area sale. The AIS Company is drawing on its Shift in demand from gasoline- competitive advantage in such areas as powered vehicles to environmentally- Safety 360 billion yen 600 billion yen conscious vehicles Area in-car camera modules, where it maintains a Growth in energy savings and storage high market share, while leveraging the Environment needs in the industrial business; 350 billion yen 650 billion yen strengths of a wide range of sensing devices Area continued development of the fourth in combination with the Group’s high-speed industrial revolution; growing IoT use Overall image processing, image recognition, vehicle etc. Automotive 1.3 trillion yen 2 trillion yen Business communication, deep learning artificial

Please refer to page 67, “Segment Information,” for fiscal 2016 performance. Panasonic Annual Report 2016

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intelligence, security, and other technologies. Strategy 2 | B2B Business In fiscal 2016, Panasonic entered into a Our Products and Businesses Helping Solve Social Issues capital and business alliance with Ficosa Growth in such industrial business as International, S.A. (Ficosa) based in Spain. factory solutions (FS) and power storage Working with Ficosa, the AIS Company is In its B2B operations, the AIS Company developing a host of new products, including anticipates substantial growth in its FS business electronic mirror systems, as well as focusing activities. Keys to this growth are mounting especially on the European market. machines and robots, both core products that Amid the shift from gasoline-powered are used to increase labor efficiency while vehicles to environmentally-conscious automating the production process. Compared

vehicles, the AIS Company recognizes that with many of its competitors, the AIS Company Panasonic Automotive Energy Dalian Co., Ltd. Image of a next-generation cockpit system substantial opportunities exist for growth in is uniquely positioned to develop and produce (rendering) the environment business area. The AIS a broad lineup of sensors that are used in the Automotive Battery Manufacturing Company Established in China Company continues to receive a steady manufacture of these core products. Utilizing Contributing to the Widespread Use of Environmentally-conscious Vehicles stream of new orders for its lithium-ion IoT at the production frontline and incorporating batteries, a mainstay product that is already fourth industrial revolution trends, the AIS China, which continues to face mounting environmental issues as a result of its economic being installed in the vehicles of many Company is not only contributing to the efficient growth, is experiencing an upswing in demand for environmentally-conscious vehicles. Against this backdrop, and in conjunction with a local partner, the AIS Company established Panasonic leading automobile manufacturers. In order operation of individual facilities and equipment, Automotive Energy Dalian Co., Ltd. to manufacture automotive batteries in Dalian, China in to address burgeoning demand, the AIS but also proposing solutions that help fiscal 2016. Drawing on the AIS Company’s technologies and know-how in the production and Company constructed a plant in Nevada in improve the entire production process. quality control of automotive batteries, the joint-venture company will manufacture products for the United States in fiscal 2015. A Turning to the outlook of certain industries use in environmentally-conscious vehicles while addressing forecast burgeoning demand. manufacturing company was also of the labor shortfall associated with the established in China in fiscal 2016. decline in the workforce, the AIS Company’s Developing Driver Assistance Systems that Enhance Comfort and Safety automation and robot technologies can be Contributing to the Prevention of Trafﬁc Accidents Inorganic growth through collaboration and expected to play an important role in Reducing the incidence of traffic accidents is an important issue in today’s motorized M&A supporting the service and other sectors. society. Focusing mainly on such key devices as in-car cameras and sonar, the AIS In addition to the strengths of proprietary Power storage systems are another source Company is actively engaged in the research and development of advanced driver devices and systems, it is vital that the of potential growth. This is especially so given assistance systems (ADASs) that employ the Group’s sophisticated image processing and Company pursues partnerships with the growing interest in natural energy and image recognition technologies. Combined with its strengths in next-generation cockpit companies that possess unique products and preparations in the event of a natural disaster. systems, which incorporate a variety of features, including head-up displays, the AIS Company is technologies to achieve sales of 2.0 trillion The AIS Company is active in power storage developing systems that ensure information critical to driving safety is properly relayed to the yen in the Automotive Business. Accordingly, systems business that employ lithium-ion driver. In this manner, every effort is being made to enhance safety in the motorized society. Panasonic is promoting collaboration and batteries. Traditionally, the Company’s storage M&As with companies such as Ficosa in the systems business activities have mainly served development of electronic mirror systems. as backup sources of power at base stations forward proposals for use in buildings and management. Proposals will ensure that the Panasonic will look to stimulate inorganic and data centers. However, given their high commercial facilities. Moving forward, the AIS battery characteristics can be maximized growth by incorporating advanced expertise energy density and the ability to install them in Company will put forward systems solutions while extending to all facets of operation, and know-how from external sources. limited spaces, steps are being taken to put in combination with modules for energy including maintenance. Panasonic Annual Report 2016

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Overview of Business Divisions (As of April 1, 2016)

Kitchen Appliances Business Division Appliances Company Development, manufacture and sale of Eco Solutions Company AVC Networks Company induction heating (IH) cooking equipment, microwave ovens, rice cookers, built-in cooking appliances, dishwasher dryers, etc.

Beauty and Living Business Division Development, manufacture and sale of beauty appliances (shavers, hair dryers, oral care products, etc.), health enhancing products (blood pressure monitors, body composition meters, massage chairs, etc.), Air-conditioners TVs cooking appliances (home bakeries, coffee Modular kitchen systems Solar photovoltaic systems Projectors Notebook PCs makers, juicers, etc.) and electric irons Air-Conditioner Company Lighting Business Division Imaging Network Business Division Panasonic Cycle Technology Co., Ltd. Development, manufacture and sale of Development, manufacture and sale of Development, manufacture and sale of Development, manufacture and sale of air-conditioners for home, office and store residential, facility, store and outdoor lighting digital cameras (compact/interchangeable electric power-assisted bicycles, bicycles, use, multi-unit air-conditioners for fixtures, lamps, devices, etc.; marketing of lens), video cameras and business-use electric power-assisted units, bicycle buildings, gas heat pump air-conditioners, lighting design proposals for exterior and interior broadcasting equipment products, etc. absorption chillers, CO2 hot water supply spaces using lighting software technologies Storage Business Division systems, etc. Refrigeration and Air-Conditioning Energy Systems Business Division Devices Business Division Development, manufacture and sale of TV Business Division Development, manufacture and sale of wiring recording media, SD memory cards and Development, manufacture and sale of Development, manufacture and sale of devices, distribution panel boards, solar data archive system air-conditioner compressors, refrigeration TVs, portable TVs, etc. photovoltaic systems, energy management- compressors, vacuum insulation materials, etc. related equipment, condominium intercom Visual Systems Business Division Home Entertainment Business Division Smart Energy System Business Division systems, building systems, etc. Development, manufacture and sale of Development, manufacture and sale of projectors and business-use displays Development, manufacture and sale of Blu-ray and DVD recorders, audio Housing Systems Business Division smart gas meter-use devices, fuel cells, etc. equipment, etc. Development, manufacture and sale of water- Panasonic Avionics Corporation Cold Chain Business Division related products including modular kitchen Development, manufacture and sale of Refrigerator Business Division systems and modular baths, interior furnishing in-flight entertainment systems, in-flight Development, manufacture and sale of Development, manufacture and sale of materials including floor, door, storage unit communications services, etc. showcases, commercial-use refrigerators refrigerators, freezers, etc. materials, and exterior finishing materials including and freezers, ice-making machines, drink drainpipe and roofing materials, residential IT Products Business Division vending machines, etc. Laundry Systems and Vacuum Cleaner building frames, and home elevators, etc. Development, manufacture and sale of PCs, Business Division Hussmann Corporation tablets, settlement systems, etc. Development, manufacture and sale of Panasonic Ecology Systems Co., Ltd. Development, manufacture, sale and washer/dryers, clothes dryers, vacuum Development, manufacture and sale of air servicing of commercial-use refrigerated cleaners, etc. purifiers, electric fans, ventilating fans, and freezer display cases blowers for factory and facility use, etc. (Continued on the next page) Panasonic Annual Report 2016

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Security Systems Business Division Automotive & Industrial Panasonic Storage Battery Co., Ltd. Development, manufacture and sale of Development, manufacture and sale of Other surveillance and security cameras, Systems Company lead-acid storage batteries for automotive surveillance image recorders, etc. use, valve-regulated lead-acid batteries, etc.

Communication Products Business Electromechanical Control Business Division Division Development, manufacture and sale of Development, manufacture and sale of cordless telephones, TV door intercom relays, connectors, touch panels, automotive systems, home network systems, etc. power supply, automotive switches, light touch switches, motors, FA sensors, etc. Office Products Business Division Development, manufacture and sale of Lithium-ion batteries Audio with display Panasonic Semiconductor Solutions Housing Urban development PBX*1, SIP*2 terminals, document scanners, Co., Ltd. compact multi-function printers, etc. Automotive Infotainment Systems Development, manufacture and sale of PanaHome Corporation power semiconductors, LSIs, image Business Division Construction of detached housing, System Solutions Company (Japan) sensors, optical semiconductors, etc. Development, manufacture and sale of car apartment housing for leasing, etc.; Development of system solutions (public AV systems, car navigation systems, car remodeling contract work and construction; systems, social systems, Device Solutions Business Division audio systems, car speakers, etc. sale of land, properties and condominiums; logistics/distribution, etc.); systems Development, manufacture and sale of real estate brokerage, leasing and integration, implementation, operation and conductive polymer capacitors, various Automotive Electronics Systems management; manufacture and sale of maintenance capacitors (aluminum electrolytic/film), Business Division system materials for industrial housing anti-heat sheets, resistors, inductors, in-car Development, manufacture and sale of and industrial-use sensors, industrial inkjet Notes: vehicle control units, automotive sensor print heads, etc. 1. The acronym for Private Branch eXchange. An modules, switches, ITS terminals, smart in-house telephone switching system that keyless systems, thermal and energy interconnects multiple telephone extensions to each Electronic Materials Business Division management equipment, etc. other as well as to outside telephone networks. Development, manufacture and sale of 2. The acronym for Session Initiation Protocol. A Rechargeable Battery Business Division circuit board materials, semiconductor network communications protocol for establishing encapsulation materials, plastic molding sessions between two or more telecommunications Development, manufacture and sale of compounds, advanced films, etc. devices over the Internet. lithium-ion batteries, automotive batteries, battery modules for power storage, power Panasonic Liquid Crystal Display Co., Ltd. storage systems, Ni-Cd batteries, chargers, Development, manufacture and sale of IPS etc. liquid crystal display (LCD) panels Energy Device Business Division Smart Factory Solutions Business Division Development, manufacture and sale of dry Development, manufacture and sale of batteries, micro batteries, nickel-metal placement machines, screen printers, FPD hydride rechargeable batteries, etc. bonders, electronic component insertion machines, welding systems, laser oscillators, etc. Panasonic Annual Report 2016

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Corporate Governance Social Responsibility Environmental Responsibility

Foundation for Growth

43 Corporate Governance 43 Corporate Governance Structure 47 Message from an Outside Director 49 Directors, Audit & Supervisory Board Members and Executive Ofﬁcers 52 Risk Management 53 Compliance 54 CSR Management

55 Social Responsibility 55 Human Resources Development and Promoting Diversity 56 Messages from Non-Japanese Executive Ofﬁcers 57 Respect for Human Rights 58 Raising Quality Levels and Ensuring Product Safety/ Supply Chain Management

59 Environmental Responsibility 59 Environmental Governance

60 CO2 Reduction/Resources Recycling/ Water Resource Conservation 61 Green Products (GPs) Panasonic Annual Report 2016

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Corporate Governance Corporate Governance Structure Message from an Outside Director Directors, Audit & Supervisory Board Members and Executive Officers Risk Management Compliance CSR Management Social Responsibility Environmental Responsibility

of society.” Officer System to separate the monitoring The Company recognizes that corporate function from the executing function with Structure governance is the important basic structure regards to management, and Directors (As of June 24, 2016) for the aforementioned purpose and is have duties of monitoring execution of working to enhance its effectiveness. business. Basic Policy The Company elects Outside Directors The Company, since its establishment, has Outline of Structure/Reason for Adoption from among managers of external entities, operated its business under its management The Company has adopted the Audit & who have extensive managerial experience philosophy, “contributing to the progress Supervisory Board System composed of the in various careers and deep insight, and and development of society and the Board of Directors and Audit & Supervisory are expected to provide valuable opinions well-being of people worldwide through its Board Member/Audit & Supervisory Board, on decision-making related to business business activities.” Also, the Company holding the following elements. execution and monitoring of the execution believes it is important to increase corporate of Directors’ duties. value by fulfilling accountability through The Board of Directors At the annual general meeting of dialogue with various stakeholders such as The Board of Directors is composed of 17 shareholders, all directors were reelected. shareholders and customers, making effort Directors including 4 Outside Directors, of to execute transparent business activities, which 1 is a woman (Outside Director). and swiftly conducting business activities The Chairperson of the Board is the Corporate with fairness and honesty based on its basic Chairman (Inside Director). Governance philosophy of “a company is a public entity The Company has introduced an Executive Organization Form: Company with Corporate Governance Structure Audit & Supervisory Board

Directors17 Nomination and Compensation Advisory Committee 1 (of which 4 are Outside Directors) Board of Directors * Executive Officers

Election Supervisory Functions Empowerment & Supervision Executive Functions Corporate Strategy Decision-making Functions Integration of Group’s Divisional Companies Comprehensive Strengths Business Divisions

Audit Group Strategy Regional Management Meeting*2 Audit & Supervisory Board Corporate Strategy Head Office

Shareholders Meeting Election Auditing Functions Audit *3 Audit & Supervisory Board Members 5 Professional Business Support Sector Collaboration (of which 3 are Outside A&SB Members) Technology & Accounting Auditor Design Sector Election Accounting Audit

*1 Deliberates on advisory matters and reports to the Board of Directors *2 Complements Board of Directors’ decision-making *3 Including affiliated companies (Japan and overseas), etc. Panasonic Annual Report 2016

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Audit & Supervisory Board Members (A&SB equal position of Managing Directors or 1. Optional Nomination and Compensation Members) and Audit & Supervisory Board equivalent position. Advisory Committee (A&SB) The Company elects Outside A&SB In November 2015, the Company has Nomination and Compensation The A&SB is composed of 5 A&SB Members from among managers, lawyers, established an optional Nomination and Advisory Committee members including 3 Outside A&SB and certified public accountants, who have Compensation Advisory Committee that Members, of which 1 is a woman (Outside extensive expertise with various careers includes at least 1 Independent Outside Outside Directors: 2 A&SB Member) and deep insight and can be expected to Director. The Company sets A&SB Members who conduct valuable audits of the decision In response to inquiries from the Board, are able to exert their monitoring functions made regarding business execution and this committee deliberates and reports to Inside Directors: 2 according to their individual discretionary the execution of business by directors. the Board on the appropriateness of the decision, but not to majority vote decision. Company’s Director and Executive Officer Report Request Advice The A&SB Members are also able to Strengthened Governance for Fiscal 2016 Compensation System and on the results of The Board of Directors independently act upon their own decision On June 1, 2015, the Company began internal reviews on the nomination of in pursuing liabilities of Directors. applying the Corporate Governance Code candidates for Director, Executive Officer, The Company sets Full-time Senior A&SB that targets companies listed on the and Audit & Supervisory Board Member. Members who are well versed about domestic financial instruments exchanges improvement of agenda materials. We have corporate operations and are able to such as the Tokyo Stock Exchange. A 2. Analysis and Evaluation of the Board of sequentially implemented those opinions comprehend actual condition of number of matters requested by said Code Directors Effectiveness and proposals that are practicable and will businesses by exercising their right to visit have already been implemented. Since it has To enhance the effectiveness of the Board of continue to make improvements based on and investigate operating sites. The Senior implemented the following three measures in Directors, the Company’s Board of Directors the results of self-evaluations and thereby A&SB Members are elected from among fiscal 2016, the Company has implemented conducted a survey in December 2015 to all enhance deliberations at the Board meeting. those who have experiences as higher or all of the principles of the Code. Board members regarding the following We will continue to implement Board of items, and the results and evaluations of the Directors effectiveness evaluations and also survey were reported at a meeting of the improve the evaluation method. Board held in March 2016. Major Past Measures to Strengthen Governance Measures to Strengthen Composition of the Board of Directors 3. Outside Directors and Outside A&SB Governance for Fiscal 2016 Operation of the Board of Directors Members Committee (location held, time required, proceeding We established a committee of Outside Introduced performance-based compensation details, agenda materials, preliminary Directors and Outside A&SB Members as a Before 2000 system and adopted Outside A&SB Members studies) forum for exchanging information and and Outside Directors 1. Optional Nomination Decision-making function of the Board of sharing knowledge, which held its first and Compensation Directors meeting in March 2016. Advisory Committee Monitoring functions by the Board of By convening the committee, the June 2003 Began Executive Ofﬁcer system Directors exchange of information and sharing of 2. Analysis and Evaluation Other requests and comments knowledge based on the independent and Established the independence of the Board of Directors An analysis of the survey responses objective standpoints among Outside March 2010 standards for independent Directors / revealed that the present state of Board of Directors and Outside A&SB Members are Audit & Supervisory Board Members Director effectiveness is basically considered encouraged and contribute to the lively (A&SB Members) 3. Outside Director and adequate. On the other hand, a wide range debate of the Board of Directors. Outside A&SB Members of constructive opinions and proposals were June 2014 Began current stock option system Committee presented such as the role of the Board of Directors and its membership, the expected agenda set at the Board of Directors, and Panasonic Annual Report 2016

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Utilization of Outside Directors Company or subsidiary. Purpose of Electing and Qualification of Also, “past” shall mean “within the last Illustration of Compensation Structure Independent Outside Directors three years” and “major business partner” The Company elects independent Outside shall mean the annual amount of transaction Long-term incentive Directors from the standpoint that there be exceeds 2% of either of their annual Stock-type compensation stock options no conflict of interest between the Company consolidated sales. “Significant” shall be Basic compensation and the Outside Directors, and the Company judged as 12 million yen. For a detailed Short-term incentive can increase and enhance the effectiveness definition of the Company’s independence Performance-based compensation of the monitoring of the Board based on an standards please refer to the “Corporate objective and neutral point of view. Governance Report.” Candidates for independent Outside Amount of Compensation for Directors and A&SB Members for the fiscal year ended March 31, 2016

Director who satisfy the following Provision of Information and Assistance to Amounts (million yen) independence standards are elected from Outside Directors Classification Number of persons Basic Performance- Stock-type compensation among those who have extensive knowledge The division in charge provides support to compensation based compensation stock option and expertise, such as managers or experts Outside Directors, such as prior explanation Directors (other than Outside Directors) 16 1,144 662 335 147

of external entities. of agendas of the Board meeting and A&SBMs (other than Outside A&SBMs) 3 66 66 — — provision of information to enable effective Outside Directors 4 46 46 — — Independence Standards for independent discussions at the Board meeting. Directors / Audit & Supervisory Board Outside A&SBMs 3 39 39 — — Members (A&SB Members) Compensation Note: Three directors and one A&SB Member who retired at the conclusion of the 108th Ordinary General Meeting of The Company established independence Performance-based Compensation Shareholders held on June 25, 2015 are included in the above. standards for independent Directors/Audit & The Company implemented performance-based Directors which Received Compensation over 100 million yen Supervisory Board Members (A&SB compensation as a short-term incentive to Members) based on independence provide incentive to boost business Amounts (million yen) Name Classification Basic Performance- Stock-type compensation standards required by financial instruments performance, and it shall be determined in compensation based compensation stock option exchanges such as the Tokyo Stock conjunction with performance evaluation for Kazuhiro Tsuga Director 127 64 44 19 Exchange. The following persons are not Panasonic as a whole and the specific considered independent. businesses a Director is in charge of, based Major business partner of the Company or on performance indicators, such as net sales, Stock-type Compensation Stock Options allottees to further contribute to the said executing person (including those who operating income, free cash flow, and CCM*. The Company implemented stock-type improvement of long-term operating results had fallen under this category in the past) * CCM (Capital Cost Management) is a management compensation stock options as a long-term and higher corporate value through sharing Consultant, accountant or attorney (who control index developed by the Company to evaluate incentive. Said stock options are to allot the benefits and risks of share holdings with return on capital. currently is or was in the past, in the case stock acquisition rights to Directors Panasonic’s shareholders. of a legal entity) who receives a significant (excluding Outside Directors) of Panasonic For details about the conditions for the amount of money from the Company and Executive Officers and certain other issuance and exercise of said stock options, The aforementioned close relative (a officers who are responsible for business please refer to the “Corporate Governance second-degree or closer relative) or a close operations over the Panasonic Group for the Report.” relative of an executing person of the purpose of providing an incentive for Panasonic Annual Report 2016

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Information Disclosure/Dialogue descriptive content and the appropriateness Constructive Dialogue between IR Activities for Individual Investors Information Disclosure Approach and of the disclosure procedures under the Shareholders and Investors The Company, for timely disclosure to System supervision of the President and Director in The Director in charge of Planning is individual investors, actively discloses its The Company’s basic policy concerning charge of Accounting and Finance. responsible for Investor Relations (IR) management information through the information disclosure is as follows. Based on listing regulations, Company activities. The President of the Company, Company’s official website and external information that requires timely disclosure Director in charge of Accounting and media. The Company also conducts shall be immediately reported to the Investor Finance, Director in charge of Planning, and presentation meetings for individual We will provide our various stakeholders, Relations, Corporate Planning Department or each President of Divisional Companies investors. including customers and shareholders, the Financial & Accounting Department and mainly engage in dialogue with shareholders with fair and accurate information on disclosed timely and appropriately. and investors. This includes announcements corporate financial affairs, business of financial results and individual meetings. policies and activities, as well as Internal Control for Financial Reporting Also, the Investor Relations is in charge of corporate social responsibility activities The Company has documented the actual day-to-day communication with shareholders in a timely, understandable and status of its internal control system, with and investors. appropriate manner. At the same time, integrated control provided by the Internal Views obtained from shareholders and we will listen to our customers’ requests Control Promotion Office, in order to ensure investors through IR activities and and comments and reflect them in our reliability in the financial reporting of the management issues are appropriately business activities. We will seek to be an Panasonic Group including its subsidiaries, relayed to senior management and the enterprise with high transparency. ranging from the control infrastructure to relevant departments including divisional (From the Panasonic Code of Conduct) actual internal control activities. companies in internal meetings such as the Specifically, the Company has reinforced Group Strategy Meeting and are utilized to Under this basic policy, we disclose its internal controls by implementing improve the quality of management of the information where disclosure of this self-checks and self-assessment programs entire Group. information is required by securities-related at each of the Divisional Companies and laws and regulations of all relevant countries business divisions, etc. Then, Internal IR Activities for Institutional Investors and and regions as well as other information that Auditing Managers of the Divisional Security Analysts is deemed as necessary to disclose in a fair Companies appointed by the Company at The Company conducts presentation and timely manner while at the same time each of the Divisional Companies, etc. meetings of quarterly financial results endeavoring to disclose accurately, fairly, conduct audits. Based on the audits, the announcements, annual presentation and sufficiently. Internal Control Promotion Office supervises regarding business policy of the Company Moreover, the Company has established the Groupwide internal control audits in and Divisional Companies, as well as tours Presentation meeting for individual investors disclosure control procedures and in the order to confirm the effectiveness of each to individual business sites including a visit preparation and submission of annual company’s financial reporting. With the aim to exhibition of products for customers. securities reports, quarterly and other of further enhancing the Group’s internal Also, for overseas investors, the reports, the Disclosure Committee, which is control system, in fiscal 2016 Panasonic had Company holds presentation meetings comprised of managers from principal approximately 400 personnel assigned to utilizing conferences hosted by financial departments that handle relevant conduct internal audits in the Internal institutions. information, confirms the validity of the Auditing Group. Panasonic Annual Report 2016

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Message from Changes in Panasonic’s its weaknesses amid changing times and a precise manner. If it is not, then this strength an Outside Director Business Environment and changing management environment. in the work site will be destroyed. the Turning Point for Therefore, we need to recombine some of Whether we can build a hybrid model that Japanese-style Management the organization’s genes into stronger combines both a work site that pursues “this genes. In the electronics industry, after the and that” and a management that clearly Why did you agree to become an bubble economy collapsed, we clearly decides “this or that” is the key to the future. outside director of Panasonic? recognized that the paradigm had shifted considerably. It has often been said that Concentration of Power to I have been involved in numerous corporate globalization and the digital revolution are Management and Monitoring by revitalization projects, and if anything, most the cause of this shift. Within this new the Board of Directors of my recommendations concerning the paradigm, we must improve upon the basic ideal form of corporate governance have idea of what the ideal form of the company What is required to carry out come across as “tough.” For Panasonic to and management is. brilliant decision-making at the call someone like myself made me think they Many Japanese companies in this quarter management level? were serious about corporate governance century have suffered because they are reform. When thinking about what role I can unable to respond to this new paradigm. Of When you come right down to it, essentially, play, rather than a company that has carried course, given our long history, we cannot it is important to concentrate power to out recent governance reforms, I tend to change overnight. Still, we have to change management. As for having to decide in a think there is considerable potential for me and I wish to take on this challenge. top-down manner, it is best to have Board of to help out in a traditional Japanese Directors support so that management can company, a company that has succeeded In the years ahead, in what way make bold decisions. with so-called “Japanese-style should Japanese-style management For example, let’s consider the case of Kazuhiko Toyama management.” I think Panasonic falls into change? some business deciding whether to take a this latter category. route “going from the right” or “going from Apr. 2003 I do not necessarily reject Japanese-style The source of Japanese companies’ strength the left.” Even though management wanted Senior Representative Director (COO), management. Japanese-style management is, basically, their style of competing through to choose the route “going from the right,” Industrial Revitalization Corporation of Japan is rooted in Japanese society and culture teamwork. For that reason, they should not because the Board of Directors had a say in Apr. 2007 and the positive DNA of the Japanese discard this strength. In particular, the ability it, the route “going from the left” was taken, Representative Director (CEO), people. The management philosophy of to bounce ideas around on the work site and and failure resulted. In that case, not Industrial Growth Platform, Inc. (incumbent) Konosuke Matsushita, the founder of to compromise on “this and that” is critical. knowing if the responsibility lies with June 2016 Panasonic, is very much the same thing and To further strengthen this ability in management management or the Board of Directors, we Director of the Company (incumbent) something for which I hold a deep respect. decision-making and leverage the good cannot hold either accountable. The essence of management is figuring out qualities of Japanese companies, brilliant “this If the Board of Directors, which monitors how to maximize the genetic strengths of or that” decision-making at the management management, is considered “guilty” of one’s own organization and how to control level must be performed in a timely and making an improper decision, it cannot Panasonic Annual Report 2016

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adequately perform its role. That’s why my hardships. beneficiary is the household and future engage in constructive discussion and role is to respect management Therefore, continued tough descendants. If a company cannot mutually raise their level of understanding is decision-making and to rigorously monitor decision-making, reform after reform, or continuously provide a return the most important thing. As outside progress and results. even larger reforms, must be carried out. commensurate with the risk and growth directors, we have the responsibility of Because humans are creatures that adapt to potential of the business it operates, the engaging in that kind of dialogue. Continuation of Reforms, their environment, each and every person beneficiary will not prosper in the future. while Remembering who makes up the organization should come Because of this consistency, return on the Hardships, is Important to see this as normal. invested capital (ROIC) and return on Furthermore, reforms initially have to equity (ROE) are questioned. What is most important in order for come in some form. However, everyone who ROE should not always be high, the Panasonic to strengthen corporate makes up the organization must then align numerical figure to aim for will vary governance in the years ahead? themselves with that form. At the same time, depending on the nature of the business. each and every person, because they What level is appropriate should be In many cases, the catalyst for carrying out overcame a deficit, needs to maintain a discussed individually and determined corporate governance is a management sense of crisis without getting careless. based on the sound insight of the company crisis. At Panasonic, I think the recording of and shareholders. a huge deficit in fiscal 2012 was probably its Shareholders and Company * A series of flows that returns corporate profits to catalyst for reform. Any human being will try Keep Raising the Level households through a chain of investments to change if he or she has a bitter experience. However, “Danger past and God forgotten” What is the key point in dialoguing What is the role of outside directors is the norm for people. It is important that with shareholders? in dialoguing with shareholders? we continue reforms while remembering the What is important is to continuously raise If the company does not continue to provide total corporate value, including some kind some profit for shareholders, there is no of social value. That will probably also reason for shareholders to invest money have a positive effect on stock value. In over the long term. The continuous particular, there is a dimension in which generation of profit is a very important social the continuation of stock price is decided obligation for the company. overwhelmingly by the continuation of Furthermore, to achieve constructive social value. It is important that both the dialogue with shareholders, the company investment and corporate sides engage in needs to consistently disseminate information dialogue with each other from this with a clear sense of values and logic. Doing standpoint. this continuously, I think, will increase the In addition, if we consider the number of long-term shareholders. investment chain* as a whole, the To have the shareholders and company Panasonic Annual Report 2016

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(As of June 24, 2016) (Based on information contained Directors, Audit & Supervisory Board Members and Executive Ofﬁcers in the Company’s Annual Securities Report)

Directors

Chairman of the Board of Directors President and Director Senior Managing Directors Shusaku Nagae Kazuhiro Tsuga Hideaki Kawai Yasuji Enokido In charge of Accounting and Finance President, AVC Networks Company

Vice Chairman of the Board of Directors Executive Vice President and Director Yoshiyuki Miyabe Mototsugu Sato In charge of Technology and In charge of Planning and Masayuki Matsushita Kazunori Takami Intellectual Property Human Resources In charge of Japan Region, Customer Satisfaction, and Design

Yoshio Ito Tetsuro Homma President, Automotive & Industrial President, Appliances Company Systems Company

Tamio Yoshioka President, Eco Solutions Company Panasonic Annual Report 2016

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Audit & Supervisory Board Members

Managing Directors Senior Audit & Supervisory Board Members Outside Audit & Supervisory Board Members Takashi Toyama Hirofumi Yasuhara Yoshio Sato Mitsuko Miyagawa Director, Government and External (Independent audit & supervisory (Independent audit & supervisory Relations Division / Representative board member) board member) in Tokyo

Jun Ishii Mamoru Yoshida Toshio Kinoshita In charge of Legal Affairs, Fair (Independent audit & supervisory Business & Compliance, Corporate board member) Governance, Risk Management, General Affairs and Social Relations, and Facility Management

Outside Directors Masayuki Oku Yoshinobu Tsutsui Hiroko Ota Kazuhiko Toyama (Independent director) (Independent director) (Independent director) (Independent director)

June 2005 Apr. 2011 Sep. 2006 Apr. 2003 President, Sumitomo Mitsui Banking President, Nippon Life Insurance Minister of State for Economic and Senior Representative Director Corporation / Chairman, Board of Company (incumbent) Fiscal Policy (COO), Industrial Revitalization Directors of Sumitomo Mitsui June 2015 Aug. 2008 Corporation of Japan Financial Group, Inc. (incumbent) Director of the Company (incumbent) Professor of National Graduate Apr. 2007 June 2008 Institute for Policy Studies Representative Director (CEO), Director of the Company (incumbent) (incumbent) Industrial Growth Platform, Inc. June 2013 (incumbent) Director of the Company (incumbent) June 2016 Director of the Company (incumbent) Panasonic Annual Report 2016

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Executive Officers

Managing Executive Officers Executive Officers Laurent Abadie Toshiyuki Takagi Yoshiyuki Iwai Masashi Yamada Kenji Tamura Regional Head for Europe & CIS Vice President, Appliances Company Vice President, Eco Solutions Company Vice President, Eco Solutions Company Vice President, Automotive & Industrial Chairman & CEO, Panasonic Europe Ltd. President, Air-Conditioner Company In charge of Intelligence & Liaison, Legal Director, Housing Systems Business Division Systems Company Managing Director, Panasonic Marketing Europe GmbH Affairs, and Intellectual Property In charge of AGE-FREE Business In charge of Energy Business Masahiro Ido Joseph Taylor In charge of Solution Sales Makoto Ishii Michiko Ogawa Thomas Gebhardt Regional Head for North America Director, Tokyo Olympic & Paralympic In charge of Information Systems and In charge of Technics Brand Vice President, Automotive & Industrial Chairman & CEO, Panasonic Corporation of Enterprise Division Logistics Managing Officer, Appliances Company Systems Company North America In charge of Home Entertainment Business President, Panasonic Automotive Satoshi Takeyasu Toru Nishida Director, Home Entertainment Business Systems Company of America, Division Panasonic Corporation of North America Hidetoshi Osawa In charge of Corporate Communications, Regional Head for Southeast Asia and General Manager, Technics Business Regional Head for China & Northeast Asia Advertising, and Citizenship Oceania Promotion Chairman, Panasonic Corporation of China Managing Director, Panasonic Asia Akira Kono Paul Margis Pacific Pte. Ltd. Vice President, Appliances Company Managing Director, Panasonic Consumer Hirotoshi Uehara Director, Consumer Marketing Division Yukio Nakashima Vice President, AVC Networks Company Marketing Asia Pacific Vice President, Automotive & Industrial (Japan) Senior Vice President, Appliances Company In charge of Avionics Business Systems Company Consumer Marketing Sector for Japan In charge of Consumer Marketing CEO, Panasonic Avionics Corporation Director, Automotive Infotainment Region Director, Consumer Marketing Sector for Japan Region Kazuhiro Murata Systems Business Division Junichiro Kitagawa Vice President, Eco Solutions Company Masashi Nagayasu Masahisa Shibata In charge of Consumer Business for Director, Marketing Division Eiichi Katayama Vice President, Automotive & Industrial Senior Vice President, Automotive & Industrial Systems Europe & CIS Region In charge of Business Development Systems Company Company Hiroyuki Aota General Manager, Business Development Director, Automotive Marketing & Sales In charge of Automotive Business Shinji Sakamoto Vice President, Automotive & Industrial Department, Corporate Strategy Division Division Vice President, Automotive & Industrial Systems Company Makoto Kitano Systems Company In charge of Factory Solutions Business Mitsuki Wada Manish Sharma Senior Vice President, AVC Networks Company In charge of Industrial Business Director, Smart Factory Solutions In charge of Procurement President, Panasonic India Pvt. Ltd. In charge of Business Strategy and Planning Business Division President, Panasonic Factory Solutions President, Global Procurement Company Yuki Kusumi Co., Ltd. Daizo Ito Vice President, Appliances Company Tatsuo Katakura Regional Head for India, South Asia, Middle East In charge of Home Appliances Business Masaki Arizono Vice President, AVC Networks Company and Africa Vice President, AVC Networks Company In charge of Solutions Business for In charge of Visual & Imaging Business Japan Region Director, Visual Systems Business Division President, Panasonic System Networks Co., Ltd. President, System Solutions Company (Japan) Panasonic Annual Report 2016

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Risk Management of management strategies. The Company nominated from among Group management, The G&G Risk Management Committee believes that by combining these two functions, chairs the committee whose membership also monitors progress made concerning Basic Policy it is better positioned to accomplish its consists of divisional companies’ Chief Risk countermeasures as a means to improve Panasonic’s founder, Konosuke Matsushita, business objectives and to increase its Officers (CROs) and managers from and strengthen Group-wide risk management. coined numerous aphorisms which are still corporate value. Furthermore, by disclosing regional headquarters, the Corporate used at the Company: “Hardship now, appropriate information concerning risks to Strategy Head Office, and functional Business Continuity Management (BCM) pleasure later,” “The source of our failures is the public, improving the transparency of its divisions. The Risk Management Promotion The Company engages in BCM, whose goal within us,” “There are signs before all things,” management, and reducing risks through Office serves as the committee’s secretariat. is to prevent a halt to the supply of products or and “Small things can create big problems; preemptive measures, the Company gives its Each year, an assessment of the impact the provision of services when contingencies one must be alert to signs of change and act customers and other stakeholders—as well of risks that could affect the business such as disasters have occurred, or, in the accordingly,” among many others. Using as local communities and the public as a management of divisional companies and rare event that service has halted, to restart these ideas as a cornerstone in its thinking, whole—greater confidence in its organization. affiliated business divisions is undertaken operations as quickly as possible. the Company conducts groupwide risk using a single, global set of standards It is predicted that a major earthquake will management activities covering its operations Organizational Structure incorporating the potential impact on business probably occur in the relatively near future around the world, with the aim of taking In April 2005, Panasonic established the Global operations, probability of risk occurring, and directly under the Tokyo metropolitan area or preemptive actions to eliminate “sources of & Group Risk Management Committee (G&G other factors. Steps are then taken to in the Nankai Trough. Responding to these failure”—that is any factors that could impede Risk Management Committee), which identify major divisional company’s risks and predictions, Panasonic has established a the accomplishment of business goals. promotes risk management throughout the to ensure that appropriate countermeasures cross-divisional company task force, which At Panasonic, risk management functions whole Panasonic Group. The Corporate Risk are implemented. Taking into consideration promotes disaster response capabilities based in parallel with the development and execution Management Executive Officer, who is these major divisional company’s risks, the on the latest government damage predictions. G&G Risk Management Committee considers and identifies those major risks that require attention from a Group-wide perspective. Risk Management Promotion Framework

G&G Risk Management Committee Secretariat Audit & Basic Framework for Risk Management Monitoring / evaluation Committee Chairman: Risk Supervisory Corporate Risk Management Executive Officer Management Board Members: Promotion Divisional Companies, Regional Headquarters, Corporate Strategy Office Report on monitoring status Auditors Head Office/PBSS (professional business support section) Plan Do Check Action

Selecting major Developing Major Corporate Head Office Regional Divisional Companies G&G Risk Risk corporate risks Promoting and promoting Management Monitoring Risks for FY2017 Corporate Strategy Division Headquarters Presidents assessment and monitor measures improvement Committee Regional Head measures measures Global •Natural disaster PBSS (Functions) admini- Risk Management (earthquakes, Functions stration / Committees Each Functional Division Selecting major tsunamis, support Divisional Developing divisional weather-related Companies / Risk Promoting and promoting Risk Functions company’s risks Monitoring Corporate Conferences Regional assessment measures improvement disasters, etc.) Management and formulating and Committees Headquarters measures Committees measures •Quality problems Disaster / Accident Regionalonal •Cartels Countermeasures Committee administrationstration Selecting supportport Developing •Cyberattacks division’s major Corporate Behavior Committee Regional Overseas Business Business Risk Promoting and promoting risks and Monitoring Marketing Manufacturing Divisions Divisions assessment measures improvement formulating Companies Companies in Japan measures Information Security Committee measures Panasonic Annual Report 2016

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Compliance functions in our divisional companies, Contact with competitors is allowed only in prohibiting bribery. business divisions, and regional headquarters absolutely necessary cases and subject to In cases of violations of these rules, swift Basic Policy outside Japan. Each year, we designate prior approval. steps must be taken to redress the situation, Under the “Panasonic Code of Conduct,” September to be “Compliance Awareness Agreements and exchanges of information and strict measures must be taken against we at the Company have set down a clear Month,” marked by efforts to strengthen with competitors regarding prices, the violation. In addition, regarding expenses set of rules for compliance with the law our awareness of the need to observe quantity, and other competition-related for social interactions or gifts, prior approval matters are strictly prohibited. and corporate ethics. We strive to achieve ethical and legal requirements. We conduct is required, and detailed reports must be thorough adherence to these rules, with the a “Compliance Awareness Survey” to check One who encounters behaviors that may filed. There is also a process for ensuring give rise to suspicions of cartel must make aim of promoting fair operating practices in the degree of compliance awareness that no government officials are involved, in an objection, leave the room, and file an all countries and regions of the world, and to dissemination among our employees around an effort to preclude corrupt acts. internal report. realize a sustainable society. the world. Once each year, we check the The Company establishes whistle-blowing status of observance and practice of the systems and internal leniency systems to Organizational Structure “Panasonic Code of Conduct” in our improve its ability to self-regulate and To ensure the dissemination of compliance business locations around the world. conduct appropriate monitoring based on and fair business practices at the ground In addition, to prevent improprieties risk assessment, whereby maintains an level throughout the world, we have legal and achieve quick resolutions, we have effective anti-cartel system. departments, directors and executive established hotlines for whistleblowers in our officers in charge of ensuring adherence to domestic and foreign business locations, Preventing Bribery of Government Officials the Code of Conduct, as well as managers in and for our business partners. In 2010, we established the Rules on Dealing charge of export control and other persons In addition to initiatives aimed at with Government Officials for the purpose responsible for supervising various other correcting the issues that we have of preventing bribery of government officials functions in our divisional companies, discovered through such efforts at the or actions that may raise suspicions of such business divisions, and regional business division level, we also bring unlawful behavior. These rules stipulate headquarters outside Japan. In fiscal those issues together centrally and that no employee may offer, give, pay for, 2016, we established a new organization comprehensively at our Head Office and promise to pay for or authorize the payment unifying multiple response functions reflect them in groupwide policies with or the grant of any benefit to any whose aim is to identify compliance, risk, consideration to societal conditions and the government officials in connection with and governance issues that span multiple like, and repeat this process in the pursuit of obtaining or retaining business. An approval work functions. This should help speed up continuous improvement. We are currently process and specific standards were our support for fair operating practices in promoting activities under the themes of established such as for meals with all business units. abiding by antitrust laws and preventing government officials. These are intended to In our observance of our own Code of bribery of government officials. prevent the direct offering of benefit to Conduct, we have a global network of legal government officials and also the indirect departments, directors and executive Major Theme-Based Initiatives offering of benefit through consultants, officers in charge of ensuring adherence to Abiding by Antitrust Laws distributors, lobbyists, or other business the Code of Conduct, as well as managers in We have put the following basic policies partners. Careful screening and designation charge of export control and other persons in place in an effort to prevent cartels, of business partners must be conducted, responsible for supervising various other collusive bidding, and other such violations. and contracts must include provisions Panasonic Annual Report 2016

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CSR Management Panasonic Group constituents monitor their progress and act autonomously. System for the Promotion of CSR Activities Basic Policy For issues affecting the entire group for Our management philosophy forms the basic which there are strong demands from Board of Directors Nomination and Compensation < Supervisory Functions > Advisory Committee* policy of our CSR management activities. society for us to respond, including by < Corporate Strategy Decision-making Functions > In order to put our management philosophy contributing to climate change mitigation * Deliberating inquiries and reporting on results to the Board of Directors into practice, we have established the and adaptation, as well as to water-related Decision-making on Group Strategy Meeting* Panasonic Code of Conduct which includes issues, decisions are made at Board of Corporatewide Issues * Complementing a decision-making in the Board of Directors elements from the OECD (Organisation for Directors’ meetings and at Group Strategy Economic Co-operation and Development) Meetings. Professional Business Support Sector Guidelines for Multinational Enterprises Concerning issues that are deemed the Divisional Supporting the business operations of Companies Divisional Companies and Business Divisions and other norms. In addition, Panasonic most material, the Company makes an as specialized functional departments formulated its Sustainability Policy as a written analysis of and identifies such issues for P Responsible Personnel P DA A D Respect for Human Rights / Officer Occupational Health and Safety record of its efforts to contribute to today’s each area of activity, and incorporates these C Function C society and to fulfill its social responsibility. important issues into its operational policies. < Formulating and promoting Group-wide strategies > Corporate Strategy Head Office Panasonic conducts its CSR activities with Responsible Legal P Business Division A D Fair Operating Practices Officer Function C Organizational Structure respect for worldwide guidelines and For each area of activity relating to CSR— stakeholders’ voices as a fundamental Business Division Responsible Environment P including human rights, fair operating concept. A D Environment Officer Function C practices, and the environment—Panasonic Business Division establishes responsible executives and Dialogs with Stakeholders Responsible Procurement P A D Responsible Supply Chain functional divisions. Each Divisional Panasonic conducts dialogues with its wide Officer Function C Company, Business Division, regional office, range of stakeholders around the world— Business Division

and functional division has created various including customers, investors, suppliers, Responsible Quality P A D Raising Quality Levels and Officer Function C Ensuring Product Safety group meetings and opportunities for governments, industry bodies, NPOs, NGOs, Business Division stakeholder engagement, the results of local communities, and employees—on

which are incorporated into everyday various aspects of its business. The Company CSR Department activities. Using PDCA cycles, these incorporates the opinions it receives into its Responsible or CSR staff at the Officer Divisional CSR & Citizenship Department business activities and product creation. Companies Panasonic Annual Report 2016

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Corporate Governance Social Responsibility Human Resources Development and Promoting Diversity Messages from Non-Japanese Executive Officers Respect for Human Rights Raising Quality Levels and Ensuring Product Safety/Supply Chain Management Environmental Responsibility

Human Resources Promotion Office is established in the Human there are no gender-based inequalities in Resources & Industrial Relations Department, this compensation system. However, Development and endeavoring to create an organizational particularly in Japan, Panasonic is aware Promoting Diversity culture in which diversity thrives and supporting that there is a need to employ greater active participation by female employees. numbers of women in upper management Basic Policy Panasonic has established the Human and decision-making positions; it is striving To deliver products and services that Resources Development Company (HRDC) to ensure gender diversity. contribute to the lives of customers around as an organization that specializes in In terms of senior management, a female the world, and to develop Panasonic’s human-resources-related education and director (current Board member Hiroko Ota) business, it is essential for the Company to training for employees of all levels. was appointed in fiscal 2014, and, in fiscal step up its efforts to develop human talent 2016, a female executive officer (current that can participate actively, and grow, in the Major Theme-Based Initiatives executive officer Michiko Ogawa) has been global business environment. It is also Equal Opportunities named. To accelerate female participation in essential that the Company create an The Company has implemented a “Role / management, Panasonic holds study groups organizational culture in which all individual Grade System” that determines for female employees and provides employees can fully deploy their talents compensation based on the work or role in career-advancement seminars for women Social regardless of age, gender, or nationality. which employees are currently engaged; leaders, creating opportunities for women to Thus, Panasonic regards the promotion of encounter role models’ values and views on diversity as a crucial part of its business working, as well as further strengthening the Responsibility strategy, and hence provides a broad range management capabilities of superiors. of opportunities for anyone with ability and ambition, and actively strives to create a Number of Women in Managerial Global Human Resources Development Positions, Percentage of Women work-friendly environment. To better nurture leaders who can play a in Positions of Responsibility In fiscal 2011, Panasonic compiled this leading role in promoting business that goes

thinking into a Global Diversity Policy. Since (Persons) (%) beyond national and regional borders and 600 6.5 6.7 7.5 then, this policy has been implemented 6.0 who can serve as loci for cooperation, 5.5 5.8 globally. 404 423 Panasonic has established regulations for 400 323 331 354 5.0 inter-regional personnel transfers and strives Organizational Structure 200 2.5 to place its employees wherever in the world The departments responsible for these they can best display their abilities. 0 0 matters consist of the Human Resources & 20122013 2014 2015 2016 For example, Panasonic began full Industrial Relations Department at corporate (As of April for each year) implementation of a program called Number of women in managerial positions head office plus the human resources Percentage of women in positions of responsibility “Working In Japan” in 2007, with the aim of departments in each of the four Divisional Note: Managerial position is defined as section accelerating the development of talent from Companies and in all Business Divisions and leader or higher. Positions of responsibility overseas through the experience of working include positions such as chief or assistant affiliated companies under the Panasonic chief. Total of Panasonic Corporation and its in Japan. As of this writing, a total of more umbrella. key domestic Group companies (excluding than 800 employees have worked in Japan SANYO Electric Co., Ltd.) Currently, Engagement & Diversity as a result of this program. Panasonic Annual Report 2016

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Messages from Non-Japanese Executive Ofﬁcers

Diversity: Key to Ongoing Success Maximizing the Beneﬁts of a Multicultural Environment

Paul Margis Manish Sharma

March 1992 August 2008 Joined Matsushita Avionics Development Company Joined Panasonic India Pvt. Ltd. July 2000 April 2012 Appointed Senior Vice President, Chief Technology Appointed Vice President in charge of sales and Officer, Matsushita Avionics Systems Corporation marketing at same company April 2005 April 2016 Appointed President, Panasonic Avionics Corporation Appointed President and CEO of same company (Incumbent) (Incumbent) October 2010 Appointed Executive Officer, Panasonic Corporation WAEA/APEX Lifetime Achievement Award for (Incumbent) long-term dedication and innovative contributions to the airline IFEC industry April 2013 Appointed Executive Officer, Panasonic Corporation (Incumbent)

Aviation has always been my passion, local talent. Prior to joining Panasonic India, I had corporate culture, which helps us to especially inflight entertainment and Even our customers are unique. built a career in the local consumer create a motivated and highly communications. For the past 36 years, Each airline is in a different region with a electronics subsidiaries of companies productive team. Panasonic Avionics has built a global different culture. Our approach in from South Korea and China, where I I believe that Panasonic as a whole talent pool, filled with diverse cultures Avionics is to focus on their unique came into contact with diverse cultures. should not only secure human and skill sets. It’s what has helped us be business model and their culture as we I became aware that more diverse resources with various nationalities, but so successful in this highly competitive create customized solutions for their companies are better able to secure also focus more on building capabilities. market. business. talented human resources and enhance Identifying the core competencies of For example, a significant amount of As a global operation, diversity is all the elements that lead to revenue each and every one of these talented our design activities happen in the absolutely key to our on-going success. growth, such as customer orientation, people will enable the creation of a United States, particularly in California, Our challenge is to embrace these employee satisfaction and global workforce. This will enable us to while the majority of our manufacturing cultural differences and create an decision-making. leverage the benefits of being in a happens in Japan. We’ve also just organization that’s flexible enough to At Panasonic India, we make multicultural environment to the fullest opened a new manufacturing facility in accommodate its customers without systematic efforts to uphold all aspects extent. Dubai, and we have maintenance sacrificing efficiency and good of diversity, such as culture, gender, stations at 59 locations around the governance. age and race. We conduct campaigns world, with each facility using its own to promote a diverse and vibrant Panasonic Annual Report 2016

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Respect for Human Rights Human Rights and Labor Policies” and by Major Theme-Based Initiatives implementing a management system for Initiatives for the Prevention of Slavery Due Diligence Process Basic Policy abiding by that policy. The management and Human Trafficking for Modern Slavery As a company doing business globally, system consists of self-assessment Modern slavery can occur in various forms • Panasonic Code of Conduct Panasonic treats, as a fundamental principle checklists for properly evaluating risks including servitude, forced or compulsory • Standard Purchase Agreement behind its business activities, interactions involving, and the impact on, human rights labour and human trafficking, all of which • 3 STEP PROCUREMENT POLICY with not just its employees but all and for identifying risks, a manual outlining include the deprivation of a person’s (an adult • ASKING SUPPLIERS TO MEET OUR stakeholders with the maximum degree of the procedures for correcting the risks that or a child’s) liberty by another. Panasonic is CSR REQUIREMENTS concern and respect for their human rights. have been identified and for carrying out committed to a work environment that is free (Panasonic Supply Chain CSR Panasonic’s policies concerning human continuous improvement, and other from Modern Slavery in accordance with the Promotion Guidelines) rights are expressly outlined in Panasonic components. laws and regulations of the respective • TRAINING Code of Conduct and Global Human Rights countries in which we operate. • RECRUITMENT and Labor Policies. Organizational Structure We operate a zero-tolerance approach to • SUPPLIER CSR SELF CHECK These policies include items concerning The departments responsible consist of the modern slavery and we are committed to QUESTIONAIRE such issues as working hours; wages; humane Human Resources & Industrial Relations acting ethically and with integrity in all our • CONFIDENTIAL WHISTLEBLOWING treatment; prohibition of discrimination; Department established at the corporate business dealings and relationships and to protection of privacy; concern for the head office, the human resources implementing and enforcing effective human rights of foreign workers, trainees, departments established at each of the four systems and controls to ensure Modern and younger laborers; and the freedom of Divisional Companies, and all Business Slavery is not taking place anywhere in our association plus labor–management Divisions and affiliated companies under the own business or in any of our supply chains. dialogues, among others. Panasonic umbrella. We will not knowingly use Modern Slavery in Panasonic supports the fundamental Panasonic has established an Equal any of our utilities, and/or other commodities, principles of the United Nations Universal Employment Opportunity Office at its head products and/or services supplied, nor will Declaration of Human Rights, the office and appointed full-time consultants we accept commodities, products and/or International Labour Organization (ILO) to staff it. In addition, a consultation desk services from suppliers that we believe to Declaration on Fundamental Principles and was established at each Divisional utilise Modern Slavery. Rights at Work, and the OECD Guidelines for Company and Business Division in an effort We have begun to circulate a CSR check Multinational Enterprises. The major parts of to provide a place for employees to go to questionnaire to our suppliers to ensure these principles are embodied in the discuss their concerns about sexual compliance with our CSR core values and Panasonic Code of Conduct. Panasonic is harassment, harassment based on power policies on Anti-Slavery and Human also taking an active approach to reflecting differentials, topics related to the rights of Trafficking. We will continue to circulate this ideas concerning global human rights in its members of sexual minorities (LGBT*), and questionnaire and ensure compliance. Once management, including by making reference a wide range of other topics relating to our suppliers have responded we will to the UN Guiding Principles on Business human rights. evaluate their compliance with Anti-Modern and Human Rights, which were adopted by Slavery laws and our CSR policies and * LGBT: An acronym for lesbian, gay, bisexual, and the UN Human Rights Council in June 2011. transgender assess how we can achieve continuous In fiscal 2015, Panasonic complemented improvement in the coming years. the Code of Conduct by setting a “Global Panasonic Annual Report 2016

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Organizational Structure the 2005 FF-type kerosene heater accidents with each of our suppliers provided that the Panasonic has installed quality managers and the product safety standards that it supplier agrees with our management Ensuring Product Safety at its Divisional Companies, Business devised, making the use of these technologies philosophy, CSR procurement policies. This Divisions, and overseas subsidiaries. Using and standards even more consistent. Agreement includes items related to CSR Basic Policy the Panasonic Quality Management System, Because of the increasing need for safety such as human rights, safe working Panasonic’s Groupwide Quality Policy states the Company is engaged in continuously features in automobiles, robots, and other environments, and consideration for the that the Company will “truly serve customers improving the quality of its products with products, Panasonic is promoting the environment. We also issue and distribute by way of providing products and services a perspective that puts the customer first. acquisition of safety standard certifications the guidelines we expect our suppliers to that continuously meet and satisfy the needs In 2012, Panasonic reorganized its through intragroup partnerships to assure follow as the Supply Chain CSR Promotion of customers and society.” groupwide General Product Safety safety in these product categories. Guidelines and conduct regular evaluations The Company has also established a basic Committee and established a Safety of supplier initiatives related to CSR in policy regarding an autonomous code of Technology Working Group and a Safety addition to evaluations related to standards conduct for product safety. The Panasonic Standards Working Group under its umbrella Supply Chain for evaluating quality, cost, delivery, and Code of Conduct also states that the Company all as a part of efforts to promote product service (QCDS) and business results. will strive to ensure the safety of its products. safety. Using these working groups, the Management With regard to conflict minerals that Company has firmly entrenched the safety fund organizations that behave without technologies that it developed in response to Basic Policy proper regard for human rights, engage in Panasonic’s fundamental stance toward environmental destruction, practice corruption, procurement is summarized in its and otherwise act unethically in conflict zones, Procurement Policy. Covering three broad we strive to adhere to the Organisation for Quality Management Structure endeavors, the Policy focuses on “Global Economic Cooperation and Development’s Procurement Activities,” “CSR Procurement” (OECD) Due Diligence Guidance for President and “Procurement Activities in Concert Responsible Supply Chains of Minerals from with Suppliers.” Conflict-Affected and High-Risk Areas. Under Direct Supervision The fundamental basis of this policy is Divisional Companies of Head Ofﬁce the concept that, based on relationships Divisional Company Presidents Chief Quality Ofﬁcer (CQO) of mutual trust, and through diligent study Divisional Company Chief Quality Officers Quality & Environment Division and cooperation, our suppliers are Quality Control Division Governance / Supports invaluable partners in creating the value our Product Safety & customers demand. Quality Department Business Divisions Organizational Structure Business Division Directors The department responsible is the Global Quality Assurance Division Procurement Company. Each of our Regional Headquarters Overseas Companies Divisional Companies and their Business Regional Quality Divisions and other affiliated companies Quality Assurance Division Administration Manager has its own procurement department. We sign a Standard Purchase Agreement Panasonic Annual Report 2016

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Corporate Governance Social Responsibility Environmental Responsibility Environmental Governance CO2 Reduction/Resources Recycling/Water Resource Conservation Green Products (GPs)

Environmental Governance through the Operation Policy Meeting led by the Compliance Administrators Meeting (to be executive officer in charge of environmental held twice a year) attended by the executive Basic Policy affairs, who has the authority delegated from the officer in charge of environmental affairs and Striving for the creation of a sustainable president. Divisional Companies, Business environmental compliance administrators at society, we are following our initiative under Divisions, and Regional Headquarters outside the four Divisional Companies was newly the executive officer in charge of environmental Japan establish their own environmental policies established to accelerate decision-making affairs and working to fulfill our corporate and targets based on this Group policy, and for corporate-wide action in the area of the social responsibility through eco-conscious plan and promote their activities accordingly. environment. In addition, as has been the way business activities as well as to resolve The progress and results of activities for until now, successful practices, challenges in environmental issues such as climate change, the key environmental targets we pledged implementation, and approaches to mid-term to resources, water, etc. achieving to society under the Green Plan long-term targets at Divisional Companies and 2018 are examined in the Group Strategy various regions are shared and discussed at Organizational Structure Meeting. This meeting is attended by the the Global Environmental Working Committee Panasonic formulates its annual environmental presidents of Panasonic Corporation and the Meeting, held twice a year, which consists of management policy in accordance with the four Divisional Companies as well as other environmental compliance administrators at Group business policy, Environmental Action members of senior management, for reviews Companies and Regional Headquarters, Environmental Guideline, and the environmental action plan, of policy directions, issues, and, particularly seeking to enhance the level of corporate-wide “Green Plan 2018.” The annual environmental important measures to be adopted. environmental sustainability management Responsibility policy is shared across the entire organization From fiscal 2017, the Environmental through the PDCA management cycle. Environmental Action Guideline Promotion System of Environmental Sustainability Management in Fiscal 2017 Toward achieving a sustainable society, we will strive to develop our business through the creation of environmental value. For this purpose, we will address environmental challenges through our business Board of Directors Meeting activities and will expand our environmental initiatives based on President collaboration with stakeholders. Corporate Strategy Head Ofﬁce

Professional Business Support Sector Business division Initiatives to address Initiatives based on collaboration Divisional Companies environmental challenges with stakeholders Quality & Environment Division Business division Operation Policy Meeting Group Business division Sales & Reducing Resources Strategy CO2 emissions recycling Water Marketing/ Risk & Governance Management Division Meeting Business division Regions Global Procurement Company others Local Business division Customers Supply chain communities Technology & Design Sector Business division Production Engineering Division others Chemical substances Biodiversity Cooperation Environmental Compliance Administrators Meeting Related job functions Global Environmental Working Committee Meeting Quality Issue-speciﬁc promotion system Production Product Chemical Substance Management Committee engineering Co-working Product Environmental Law Working Group Procurement Manufacturing Environmental Information Sharing Group Logistics Human resources Housing Appliance Recycling Committee Public Relations Environmental Action Plan “Green Plan 2018” Panasonic ECO RELAY Corporate Promotion Committee Panasonic Annual Report 2016

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Corporate Governance Social Responsibility Environmental Responsibility Environmental Governance CO2 Reduction/Resources Recycling/Water Resource Conservation Green Products (GPs)

CO2 Reduction generation by energy-creating products. which are to minimize the amount of total Water Resource In other words, it reflects the continuous resources used and maximize the amount Conservation Size of Contribution in Reducing CO2 efforts being made to reduce CO2 emissions. of recycled resources, aim towards zero Emissions Panasonic will continue to maximize the size waste emissions by reducing our final Panasonic has introduced a unique of contribution in reducing CO2 emissions. disposal of waste from production activities, Initiatives for Water Resource Conservation indicator “size of contribution in reducing and recycle used products. through Production Activities CO2 emissions” to accelerate emissions We have been working on the weight By collecting and reusing wastewater from reduction, targeting both our products (for Resources Recycling reduction and downsizing of products to our manufacturing processes and air energy saving and energy creation) and minimize the total resources used, and are conditioning systems, we reduce the production activities. The size of contribution Recycling-oriented Manufacturing continuing to increase resource collection amount of water use and wastewater in reducing CO2 emissions is defined as the As a responsibility of a manufacturer that through introduction of new recycling effluent. This reduces the impact of the amount achieved by deducting the actual uses a large volume of resources, Panasonic technologies and systems to expand the intake and effluent of water in production emissions from the amount that would have has been propelling Recycling-oriented usage of recycled resources. activities on water resources. been emitted without the improvements by Manufacturing under the theme of recycling Furthermore, by reducing the amount of With many regions around the world the energy-saving performance of our resources since 2010, placing it as an factory waste and thoroughly recycling threatened by water shortages, we focus on products and productivity from fiscal 2006, important issue along with CO2 emissions resources from waste, we are working to certain regions to address our use of water and this amount is combined with the reduction. Recycling-oriented Manufacturing eliminate the amount of waste treated in in our activities. emission reduction resulting from power has three aspects under this concept, landfills to as close to zero.

Recycled Resource Utilization Ratio and Water Consumption in Production Activities and Size of Contribution in Reducing CO2 Emissions Factory Waste Recycling Rate Water Consumption Per Basic Unit

(Million tons) (Million m3) (%) 99.3% 99.2% 100 11.01 10.47 98.9% 98.7% 98.8% 80 95 94 93 96 100 41.22 40.55 41.58 43.14 43.12 78 95.5% 60 74 80 60 53 CO 49 2 emissions 45 43 60 40 32 29 40

14.7% 15.7% 17.2% 16.3% 16.9% 20 8.0% 20

0 0 2006 2012 2013 2014 2015 2016 2009 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016 (Base) (Years ended March 31) (Reference) (Years ended March 31) (Years ended March 31)

Size of indirect contribution in reducing CO2 emissions (Size of contribution in Factory waste recycling rate Total resources used Water consumption per basic unit (compared with fiscal 2010 level) reducing CO emissions in the housing, automotive, and B2B businesses) 2 Recycled resource utilization ratio Recycled resources used Water consumption Size of direct contribution in reducing CO2 emissions Note: Recycled resource utilization ratio = Recycled resources used/Total resources used Notes: 1. Water consumption per basic unit = Water used at factories/Production volume. Size of contribution in reducing CO2 emissions through energy-creating products Factory waste recycling rate = Amount of resources recycled/(Amount of 2. Then-SANYO Electric and Panasonic Liquid Crystal Display not included in CO2 emissions through the use of energy-saving products resources recycled + Amount of final disposal) fiscal 2010. CO2 emissions in production activities Panasonic Annual Report 2016

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Corporate Governance Social Responsibility Environmental Responsibility Environmental Governance CO2 Reduction/Resources Recycling/Water Resource Conservation Green Products (GPs)

Green Products (GPs) the creation of such products and services. Our Products and Businesses Helping Solve Social Issues In addition to alleviating impact on the global Super GPs for ﬁscal 2016 Basic Policy environment with top-level environmental We define our products and services that performance, we aim to accelerate the drive accelerate the transition to a sustainable to shift to a sustainable society through a High-Reliability, Pb 0% ADDED Zinc Carbon Battery society, such as energy-saving performances, variety of business operations, including Zinc carbon batteries that are in wide use in developing and emerging countries commonly as Strategic GPs. Of these, we call the those that are expected to reduce impacts require the addition of lead to assure quality. However, because lead is a material with a products that deliver the industry’s top-class through wider dissemination and those high environmental impact, recycling is very difficult. For this reason, Panasonic developed environmental performance “Super GPs,” directly cutting impact in specified regions. a technology that assures the quality and reliability of zinc carbon battery that does not and are actively working for business The ratio of Strategic GPs rose from contain lead, and has made a head start in introducing the technology on a global scale. It is expansion. By promoting wider use, we aim approx. 19% in fiscal 2015 to 21% in fiscal an eco-conscious product that responds to increasingly stricter environmental regulations as well as demands of eco-conscious consumers in countries around the world. to contribute to further reduction of CO2 2016. We will work to further push up this emissions. ratio in the future.

Expanding the Scope of Strategic GPs Panasonic has been devoting much of its energies into the creation of No. 1 eco- Ratio of Strategic GPs conscious products (Superior GPs) until

fiscal 2013. In the course of business 21% reorganizations such as expansion of B2B businesses, Panasonic has decided not only 19% Zinc carbon battery to pursue environmental performance of 17% consumer products but also to work on LED High-Ceiling Lighting/LED Flood Light Projector further expansion of products and services that lead to the mitigation of environmental The LED high-ceiling lighting and LED flood 2014 2015 2016 light projector are an expansion of impact. Starting in fiscal 2014, the concept LED high-ceiling lighting (Years ended March 31) Panasonic’s product lineup in this area, of Strategic GPs has been introduced for with dispersion panel which had centered on products (module type) integrating the light source and its fixture, notwithstanding the dramatic improvement in energy conservation compared to products Deﬁnition of Strategic GPs using an HID light source. The products Products and services that accelerate the transition to a sustainable society: chosen as Super GPs for fiscal 2016 are (1) Products and services that reduce environmental impact with top-level environmental modular in design to create a wider performance in the industry variation in fixture style, light distribution (2) Products and services whose promotion and dissemination lead to reducing environmental and brightness. They can also easily impact replace existing lighting systems and LED flood light projector (3) Products and services that reduce environmental impact on a specific region, or support contribute to wider LED use for high ceiling (module type) measures to address environmental impact lighting and flood light projector systems. Panasonic Annual Report 2016

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Major Financial Indicators Financial Review Consolidated Financial Statements Stock Information Corporate Bonds/Corporate Data

Fiscal 2016 Results

63 Major Financial Indicators

64 Financial Review

69 Consolidated Financial Statements

73 Stock Information

74 Corporate Bonds/Corporate Data Panasonic Annual Report 2016

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Major Financial Indicators Financial Review Consolidated Financial Statements Stock Information Corporate Bonds/Corporate Data Download DATA BOOK (10-Year Summary) Panasonic Corporation and Subsidiaries Major Financial Indicators Years ended March 31

2012 2013 2014 2015 20152016 2012 2013 2014 2015 2016

For the year (Millions of yen) Operating proﬁt/sales (%) 0.6 2.2 3.9 5.0 5.5

Net sales 7,846,216 7,303,045 7,736,541 7,715,037 7,553,717 Income (loss) before income (10.4) (5.5) 2.7 2.4 2.9 taxes/sales (%) Operating proﬁt 43,725 160,936 305,114 381,913 415,709 ROE (%) (34.4) (47.2) 8.6 10.6 11.0 Income (loss) before income taxes (812,844) (398,386) 206,225 182,456 217,048 Net income (loss) attributable (9.8) (10.3) 1.6 2.3 2.6 Net income (loss) attributable (772,172) (754,250) 120,442 179,485 193,256 to Panasonic Corporation/sales (%) to Panasonic Corporation Total asset turnover ratio (Times) 1.1 1.2 1.5 1.4 1.3 Capital investment* 333,695 310,866 217,033 226,680 248,794 Financial leverage (Times) 3.2 3.8 3.8 3.3 3.3 Depreciation* 295,808 277,582 278,792 242,149 235,033 Interest-bearing debt/total assets (%) 23.9 21.2 12.3 16.3 13.0 R&D expenditures 520,217 502,223 478,817 457,250 449,828 Panasonic Corporation 29.2 23.4 29.7 30.6 30.5 Free cash ﬂow (339,893) 355,156 594,078 353,455 124,406 shareholders’ equity/total assets (%)

*Excluding intangibles Payout ratio (%) — — 25.0 23.2 30.0

Notes: 1. The Company’s financial statements are prepared in conformity with U.S. generally accepted accounting At year-end (Millions of yen) principles (U.S. GAAP). 2. Dividends per share reflect those declared by Panasonic in each fiscal year and consist of interim dividends paid Interest-bearing debt 1,575,615 1,143,395 642,112 972,916 725,919 during the fiscal year and year-end dividends paid after the fiscal year-end. Net cash (961,988) (643,329) (47,601) 331,511 293,771 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 Total assets 6,601,055 5,397,812 5,212,994 5,956,947 5,596,982 believes that this is useful to investors in comparing the company’s financial results with those of other Japanese companies. See the Company’s annual securities report and financial announcements for the details. See the Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income (Loss) on page 70. Panasonic Corporation 1,929,786 1,264,032 1,548,152 1,823,293 1,705,056 shareholders’ equity 4. “Diluted net income (loss) attributable to Panasonic Corporation common shareholders per share” from fiscal 2012 to fiscal 2014 has been omitted because the Company did not have potential common shares that were outstanding Total equity 1,977,566 1,304,273 1,586,438 1,992,552 1,854,314 for the period. 5. Effective from the beginning of fiscal 2013, investments and depreciation expenses in molding dies are included in “Capital investment” and “Depreciation (tangible assets),” respectively. Accordingly, the amounts of “Depreciation (tangible assets)” and “Capital investment” for fiscal 2012 are changed. Per share data (Yen) 6. Payout ratios have not been presented for those fiscal years in which the Company incurred a net loss attributable Net income (loss) attributable to Panasonic Corporation. to Panasonic Corporation 7. Interest-bearing debt is equal to the sum of short-term debt, including current portion of long-term debt, and per common share: long-term debt. 8. Net cash is calculated by deducting interest-bearing debt from financial assets on hand, such as cash and cash Basic (333.96) (326.28) 52.10 77.65 83.40 equivalents and time deposits, including those of more than one year. 9. Formulas for financial ratios shown in this Annual Report are as follows: Diluted – – – 77.64 83.39 ROE (Return on equity) = Net income (loss) attributable to Panasonic Corporation / Average Panasonic Corporation shareholders’ equity at the beginning and the end of each fiscal year Dividends declared per share 10.00 0 13.00 18.00 25.00 Total asset turnover = Net Sales / Average total asset at the beginning and the end of each fiscal year Financial leverage = Average total asset at the beginning and the end of each fiscal year / Average Panasonic Panasonic Corporation Corporation shareholders’ equity at the beginning and the end of each fiscal year 834.79 546.81 669.74 788.87 734.62 shareholders’ equity per share Payout ratio = Dividends declared per share/Basic net income attributable to Panasonic Corporation common shareholders per share Panasonic Annual Report 2016

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Major Financial Indicators Financial Review Consolidated Financial Statements Stock Information Corporate Bonds/Corporate Data

Financial Review Please refer to the Company’s Annual Securities Report (Yukashoken Hokokusho) The Company’s consolidated financial statements are prepared in conformity with U.S. generally accepted accounting principles (U.S. GAAP). Download DATA BOOK Business Overview Operating Results (10-Year Summary) During the year ended March 31, 2016 (fiscal 2016) under review, the global economy continued to recover mildly overall, while the economic environment changes have been Key points of operating results for fiscal 2016: seen, such as changes in the monetary policies in several countries, the fall in resource (1) Sales decreased due to downsizing businesses such as prices, and geopolitical instability. While the economy has been slowed down in China and some resource-rich countries, the economy in the U.S. and Europe continued to show a TV and slow demand in solar panel and ICT-related slow recovery supported by their internal demands. In Japan, while the recovery in businesses. Profit increased due to improving profit consumption was weak, the employment situation continued to improve. structure. The Company achieved its Cross-Value Innovation 2015 (the mid-term management plan from fiscal 2014 to 2016) financial targets one year ahead of schedule in fiscal 2015 with (2) In particular, appliance and Vertical Solution business operating profit of 350.0 billion yen or more, operating profit to sales ratio of 5% or more contributed to company-wide profit expansion. and cumulative free cash flow of 600.0 billion yen or more. Panasonic set its fiscal 2016 as a year of transition to sustainable growth by shifting to generating profit from sales expansion. In particular, the Company has focused on large-scale six Business Divisions (BDs) with Air-Conditioner, Lighting, Housing Systems, Automotive Infotainment Systems, Rechargeable Battery and PanaHome, to prepare and take steps to improve net sales and operating profit and to structure and execute strategic investments. Consolidated Financial Results (Billions of yen) The Company, however, was unable to respond properly to business environment changes such as slow down of Chinese economy, and as a result, large-scale six BDs FY2015 FY2016 vs. FY2015 %/amount failed to lead corporate-wide growth. The Company was unable to increase profit through Net sales 7,715.0 7,553.7 –2% –161.3 sales expansion as originally planned. 381.9 415.7 Operating profit +9% +33.8 (5.0%) (5.5%) Net Sales Other income (deductions)* –199.4 –198.7 — +0.7 Consolidated group sales for fiscal 2016 decreased by 2% to 7,553.7 billion yen from fiscal Income before income taxes 182.5 217.0 +19% +34.5 2015 (a year ago). While sales in appliances were stable in Japan, overall sales decreased year on year due mainly to the downsizing of the TV business to focus on profitability and Net income attributable to 179.5 193.3 +8% +13.8 Panasonic Corporation slow demand in solar panel and ICT related businesses. ROE 10.6% 11.0% — +0.4%

1 USD 110 yen 120 yen Exchange 1 EUR 139 yen 133 yen rate 1 RMB 17.7 yen 18.9 yen

*Detail of other income (deductions)

FY2015 FY2016 vs. FY2015 Business restructuring –94.9 –65.8 +29.1 expenses Panasonic Annual Report 2016

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Major Financial Indicators Financial Review Consolidated Financial Statements Stock Information Corporate Bonds/Corporate Data

Download DATA BOOK Operating Profit Overview by Geographic Region (Sales by Region) Operating profit increased by 9% to 415.7 billion yen from a year ago. Panasonic secured a By geographic region excluding the effects of exchange rates, overall sales in Japan profit increase year on year mainly by improving profit structure, particularly in the appliance declined due to sluggish business in solar panels and devices for ICT applications, while and Vertical Solution businesses, offsetting the negative impact from exchange rate sales in the appliance business were favorable. movement mainly in the second half of fiscal 2016 as well as sales decrease. In the Americas, sales decreased due to the downsizing of the TV business and sluggish sales in notebook PCs, although automotive and Vertical Solutions businesses were Operating Proﬁt Analysis (Billions of yen) favorable. In Europe, sales increased due to steady results in the air-conditioner business, while the TV business was slow. FY2015 381.9 In Asia, sales decreased due to the sluggish device business offsetting favorable results Sales increase/decrease –47.0 in the appliance business.

Exchange rate effect –15.0 In China, sales hugely declined due to the slow air-conditioner business and weak device business. Fixed cost reduction +23.3 +33.8 (+9%) Streamlining/price decline/ +58.0 business structure change Sales by Region (Billions of yen) Business withdrawal/ scale-down +14.5 FY2015 FY2016 Yen basis Local currency basis FY2016 415.7 vs. FY2015 vs. FY2015 Domestic 3,692.0 3,601.8 –2% –2% Overseas 4,023.0 3,951.9 –2% –5% Americas 1,218.0 1,241.4 +2% –4% Other Income (Deductions) and Net Income attributable to Panasonic Corporation Europe 729.4 701.9 –4% +1% In Other income (deductions), the Company recorded business restructuring expenses of Asia 1,040.8 1,046.0 +1% –1% 65.8 billion yen including impairment losses, and some legal cost. Accordingly, Income China 1,034.8 962.6 –7% –13% before income taxes was 217.0 billion yen, increased by 19% from a year ago. Total 7,715.0 7,553.7 –2% –4% Net income attributable to Panasonic Corporation increased by 8% to 193.3 billion yen from a year ago due mainly to decreased provision for income taxes. Deferred tax asset of 132.8 billion yen was recorded to Panasonic Corporation (parent-alone) on a consolidated basis, since profitability improved this year and stability of profit improved by introducing the consolidated tax system in Japan. Panasonic Annual Report 2016

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Major Financial Indicators Financial Review Consolidated Financial Statements Stock Information Corporate Bonds/Corporate Data

Percentages of sales are calculated by dividing the sales of each segment by consolidated sales before elimination and adjustments. Download DATA BOOK Segment Information Certain businesses were transferred among segments on April 1, 2015. Accordingly, the figures for segment information in fiscal 2015 have been reclassified to conform to the presentation (Segment Information) for fiscal 2016.

Appliances Eco Solutions

Sales (Years ended March 31) Segment proﬁt (Years ended March 31) Sales (Years ended March 31) Segment proﬁt (Years ended March 31)

(Billions of yen) (Billions of yen) Proﬁt/sales ratio (%) (Billions of yen) (Billions of yen) Proﬁt/sales ratio (%) 5.7 Percentage 3,000.0 120.0 3.2 4 Percentage 2,000.0 120.0 4.9 6 2,334.8 2,269.4 1,666.0 1,610.8 95.3 of sales 72.2 of sales 78.4 2,000.0 2.1 80.0 4 49.8 27% 60.0 2 19% 1,000.0 1,000.0 40.0 2

0 0 0 0 0 0 2015 2016 2015 2016 2015 2016 2015 2016

Sales in the Appliances segment decreased by 3% to 2,269.4 billion yen from a year ago Sales in the Eco Solutions segment decreased by 3% to 1,610.8 billion yen from a year ago due mainly to sales decrease in TV business as a result of downsizing marketing activities due mainly to sales decrease in residential solar photovoltaic systems in Japan. and major strategy changes, while sales in appliances were favorable in Japan in fiscal Looking at the main BDs of this segment, in the Lighting BD, sales increased, reflecting 2016. sales growth in LED lighting fixtures in Japan, mainly for the non-residential market, and Looking at the main Business Divisions (BDs) of this segment, in the Air-Conditioner sales growth in LED lighting fixtures and lamps for the Asian market. Company, sales were at the same level as a year ago, as a deterioration in market conditions In the Energy Systems BD, despite growth in the domestic mainstay business of wiring in China was offset by brisk sales in Japan for home air-conditioners and commercial devices, and so forth, and growth in sales overseas, sales declined as the growth was air-conditioners, as well as sales growth mainly in the Asia-Oceanian market. unable to absorb a decline in sales of residential solar photovoltaic systems in Japan. In the Laundry Systems and Vacuum Cleaner BD, sales increased owing to robust sales In the Housing Systems BD, despite strong sales of medium- to high-priced products of washing machines and vacuum cleaners in the domestic and Asian markets. such as sanitary products, including tankless toilets, amid the gradual recovery of In the TV BD, sales declined, mainly reflecting a major change in business strategy, such Japanese housing market, sales declined due to lower sales of popularly priced products as the withdrawal from in-house production in China and the transfer of the TV business and interior furnishing materials. unit of SANYO Electric Co., Ltd. to a Chinese manufacturer, and the deterioration of At Panasonic Ecology Systems Co., Ltd., sales were at the same level as a year ago, business conditions in Latin America. reflecting growth in sales of ventilation equipment in North America, which was offset by a In the Kitchen Appliances BD, sales were at the same level as a year ago, sales of high decline in sales of air purifiers in Japan and China, and delays in new project starts and value-added products such as rice cookers and microwave ovens were strong in the deliveries in the engineering business. Japanese market, as were sales of commercial-use equipment and Japanese products in Segment profit decreased by 16.9 billion yen to 78.4 billion yen from a year ago due to overseas markets respectively. sales decrease in residential solar photovoltaic systems, although the Company Segment profit increased by 22.4 billion yen to 72.2 billion yen from a year ago due strengthened its business structure with streamlining of material-related process and mainly to profit improvement in TVs and sales increase in appliances, offsetting the business restructuring. negative impact of exchange rate movement such as yen depreciation. Panasonic Annual Report 2016

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AVC Networks Automotive & Industrial Systems

Sales (Years ended March 31) Segment proﬁt (Years ended March 31) Sales (Years ended March 31) Segment proﬁt (Years ended March 31)

(Billions of yen) (Billions of yen) Proﬁt/sales ratio (%) (Billions of yen) (Billions of yen) Proﬁt/sales ratio (%) 116.4 Percentage 1,500.0 90.0 9 Percentage 3,000.0 2,796.8 2,708.6 120.0 102.7 6 1,154.3 1,169.8 6.4 74.7 of sales 51.8 of sales 1,000.0 60.0 4.5 6 2,000.0 80.0 4 14% 32% 4.2 3.8 500.0 30.0 3 1,000.0 40.0 2

0 0 0 0 0 0 2015 2016 2015 2016 2015 2016 2015 2016

Sales in the AVC Networks segment increased by 1% to 1,169.8 billion yen from a year ago. Sales in the Automotive & Industrial Systems segment decreased by 3% to 2,708.6 billion In fiscal 2016, sales decrease from last year’s business restructuring was offset by sales yen from a year ago. increase in Vertical Solution Business and Visual and Imaging Business and positive impact Amid efforts to shift the focus to the automotive and industrial fields during the fiscal from yen depreciation. year under review, robust automobile sales in North America helped drive sales to car and Looking at the main businesses of this segment, the Vertical Solution Business, auto parts manufacturers. However, impacted by the decrease in demand from ICT-related including the Avionics BD, saw sales increase, mainly reflecting growth in sales of aircraft businesses, overall revenue declined. in-flight entertainment systems supported by strong demand for aircraft, along with the Looking at the main businesses of this segment, in the Automotive Business, despite the positive impact from the yen depreciation. impact of a slump in vehicle sales in Japan, sales increased supported by a favorable In the Visual and Imaging Business, despite a decrease in digital camera sales due to a market in North America supporting sales growth in networked display-audio systems, contraction in the market for popularly-priced products such as compact cameras, sales automotive camera modules and switches, etc. increased as the decline was offset by growth in sales of high value-added products In the Energy Business, despite strong growth in sales of dry batteries, micro batteries, among digital cameras, such as mirrorless cameras, while high brightness projector models and others, and a continuing shift in lithium-ion batteries to industrial-sector applications performed strongly, and sales growth in the Integrated Security Business outpaced market such as automotive batteries and energy storage, sales declined due to the strong impact growth in Japan and in North America. of a decline in demand for ICT, such as notebook PCs. In the Mobility Business, sales declined due to the significant impact of a decline in the In the Industrial Business, despite strong growth in sales of automotive devices such as sales volume of rugged PCs in the mainstay markets of North America. car relays, sales declined due to the withdrawal from the circuit board business, etc. in the In the Communication Business, sales declined mainly reflecting a decline in sales previous year, the contraction of the optical disk drives business, and the decline in associated with the worldwide contraction in the market for fixed-phones and a decline in demand for ICT. sales of private branch exchanges (PBXs) due to a contraction in the market for In the Factory Solutions Business, despite growth in sales of mounting equipment for conventional analogue PBXs and the impact of a deterioration in the foreign exchange auto parts manufacturers and industrial motors, sales were at the same level as a year ago rates in emerging countries. due to the impact of the economic slowdown in China. Segment profit increased by 22.9 billion yen to 74.7 billion yen from a year ago, due to Segment profit decreased by 13.7 billion yen to 102.7 billion yen from a year ago due sales increase in the Vertical Solution Business and restructuring benefit from the previous years. mainly to sales decrease in the Energy and Industrial Businesses and upfront investment towards future growth mainly for automotive and storage battery businesses. Panasonic Annual Report 2016

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Other Net cash used in financing activities amounted to 308.0 Cash and cash equivalents* (Billions of yen) Sales (Years ended March 31) Segment proﬁt (Years ended March 31) billion yen, compared with an inflow of 257.6 billion yen a year ago due mainly to redemption of 240.0 billion yen 2,000.0 (Billions of yen) (Billions of yen) Proﬁt/sales ratio (%) straight bonds as total this year, while issuing 400.0 billion 1,280.4 Percentage 1,000.0 30.0 2.4 3 1,014.3 764.5 yen straight bonds as total a year ago. 1,000.0 of sales 661.4 1.9 20.0 16.1 2 Taking exchange rate movement into consideration, 8% 500.0 14.6 cash and cash equivalents totaled 1,014.3 billion yen as of 0 10.0 1 March 31, 2016, decreased by 266.1 billion yen compared 2015 2016 0 0 0 with the end of the fiscal 2015. 2015 2016 2015 2016 Total assets* Sales in the Other segment decreased by 13% to 661.4 billion yen from a year ago. In fiscal Assets, Liabilities and Equity (Billions of yen) The Company’s consolidated total assets as of March 31, 5,956.9 2016, while sales in PanaHome Corporation increased due to favorable sales in high 6,000.0 5,597.0 value-added products such as Zero-Eco products that outperform conventional products, 2016 decreased by 360.0 billion yen to 5,597.0 billion yen 4,000.0 urban residential properties such as multistory houses, and rental apartment housing, and from March 31, 2015 due mainly to decrease in cash and promotion of remodeling business for previously-built PanaHome residences, conventional cash equivalents by redemption of straight bonds and 2,000.0 wooden houses, and condominiums, overall sales decreased due mainly to business decrease in account receivables in addition to yen 0 2015 2016 transfers. appreciation, while deferred tax assets were recorded. Segment profit increased by 1.5 billion yen to 16.1 billion yen from a year ago due mainly The Company’s consolidated total liabilities as of March to profit improvement in PanaHome Corporation following streamlining of material and 31, 2016 decreased by 221.7 billion yen to 3,742.7 billion Liabilities* (Billions of yen) construction costs. yen from March 31, 2015 due mainly to redemption of 3,964.4 straight bonds, while retirement and severance benefit 4,000.0 3,742.7 increased due to its discount rate decrease. Financial Conditions Download DATA BOOK Panasonic Corporation shareholders’ equity decreased 2,000.0 (10-Year Summary) by 118.2 billion yen, compared with March 31, 2015, to

1,705.1 billion yen due mainly to a significant decrease in 0 2015 2016 Cash Flows Free Cash Flows accumulated other comprehensive income by worsening Net cash provided by operating activities for fiscal 2016 (Years ended March 31) (Billions of yen) the cumulative translation adjustments due to yen amounted to 398.7 billion yen and net cash used in appreciation and worsening pension liability adjustments 400.0 353.5 Panasonic Corporation investing activities amounted to 274.3 billion yen. Free due to its discount rate decrease, while net income shareholders’ equity* (Billions of yen) cash flow (net cash provided by operating activities plus attributable to Panasonic Corporation was recorded. 200.0 124.4 net cash provided by investing activities) decreased by Adding noncontrolling interests to Panasonic 2,000.0 1,823.3 1,705.1 Corporation shareholders’ equity, total equity was 1,854.3 229.1 billion yen from a year ago to an inflow of 124.4 0 billion yen. This result is due mainly to the acquisition of 2015 2016 billion yen. 1,000.0 shares of subsidiaries and associated companies as its strategic investment and increase 0 in capital expenditures. In addition, the large-scale proceeds from business transfers and 2015 2016 the disposals of investments in equity and property, plant and equipment were recorded a year ago. * As of March 31 Panasonic Annual Report 2016

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Consolidated Balance Sheets March 31, 2015 and 2016 (Millions of yen) (Millions of yen) 2015 2016 2015 2016 Assets Liabilities and Equity Current assets: Current liabilities: Cash and cash equivalents ...... 1,280,408 1,014,264 Short-term debt, including current portion of long-term debt...... 260,531 21,728 Trade payables: Time deposits...... 18,470 146 Related companies...... 55,500 56,699 Trade receivables: Notes...... 236,958 230,049 Related companies...... 14,673 16,345 Accounts...... 690,847 655,496 Notes...... 78,916 54,348 Total trade payables...... 983,305 942,244 Accounts...... 923,452 775,055 Accrued income taxes...... 39,733 41,869 Allowance for doubtful receivables ...... (24,947) (22,196) Accrued payroll...... 206,686 197,179 Net trade receivables ...... 992,094 823,552 Other accrued expenses...... 887,585 835,479 Deposits and advances from customers...... Inventories...... 762,670 756,448 79,277 84,651 Employees’ deposits ...... 584 81 Other current assets ...... 359,098 459,949 Other current liabilities...... 275,099 257,669 Total current assets ...... 3,412,740 3,054,359 Total current liabilities...... 2,732,800 2,380,900 Noncurrent liabilities: Long-term debt ...... 712,385 704,191 Investments and advances: Retirement and severance beneﬁts...... 332,661 470,175 Associated companies ...... 175,824 198,525 Other liabilities...... 186,549 187,402 Other investments and advances ...... 137,845 145,974 Total noncurrent liabilities...... 1,231,595 1,361,768 Equity: Total investments and advances...... 313,669 344,499 Panasonic Corporation shareholders’ equity: Common stock: Authorized—4,950,000,000 shares Property, plant and equipment: Issued —2,453,053,497 shares...... 258,740 258,740 Land...... 268,658 252,661 Capital surplus...... 984,111 979,895 Buildings...... 1,422,561 1,396,046 Retained earnings...... 1,021,241 1,165,282 Machinery and equipment...... 2,776,617 2,659,483 Accumulated other comprehensive income (loss): Cumulative translation adjustments ...... 11,858 (138,921) Construction in progress...... 54,358 74,360 Unrealized holding gains of available-for-sale securities ...... 14,285 20,205 4,522,194 4,382,550 Unrealized gains of derivative instruments...... 3,135 1,646 Less accumulated depreciation...... 3,147,363 3,081,375 Pension liability adjustments...... (222,529) (351,258) Net property, plant and equipment...... 1,374,831 1,301,175 Total accumulated other comprehensive loss...... (193,251) (468,328) Treasury stock, at cost: 132,057,190 shares as of March 31, 2016 and Other assets: 141,789,018 shares as of March 31, 2015...... (247,548) (230,533) Total Panasonic Corporation shareholders’ equity...... Goodwill ...... 457,103 461,992 1,823,293 1,705,056 Noncontrolling interests...... 169,259 149,258 Intangible assets...... 172,898 155,700 Other assets...... 225,706 279,257 Total equity...... 1,992,552 1,854,314 Total other assets ...... 855,707 896,949 Commitments and contingent liabilities ...... 5,956,947 5,596,982 5,956,947 5,596,982 Panasonic Annual Report 2016

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Consolidated Statements of Income and Consolidated Statements of Comprehensive Income (Loss) Years ended March 31, 2015 and 2016

Consolidated Statements of Income (Millions of yen) Consolidated Statements of Comprehensive Income (Loss) (Millions of yen) 2015 2016 2015 2016 Revenues, costs and expenses: Net income...... 196,366 215,066 Net sales: Other comprehensive income (loss), net of tax: Related companies...... 150,832 134,122 Translation adjustments ...... 193,690 (163,824) Other...... 7,564,205 7,419,595 Unrealized holding gains Total net sales...... 7,715,037 7,553,717 of available-for-sale securities...... 8,351 5,781 Unrealized gains (losses) of derivative instruments ...... 3,445 (1,545) Cost of sales...... (5,527,213) (5,339,999) Pension liability adjustments ...... 68,027 (132,036) Selling, general and administrative expenses ...... (1,805,911) (1,798,009) 273,513 (291,624) Interest income...... 14,975 18,937 Comprehensive income (loss)...... 469,879 (76,558) Dividends received...... 1,466 1,574 Less comprehensive income attributable Other income...... 95,784 19,704 to noncontrolling interests...... 31,946 5,263 Interest expense...... (17,566) (17,007) Comprehensive income (loss) Impairment losses of long-lived assets...... (40,032) (36,690) attributable to Panasonic Corporation ...... 437,933 (81,821) Goodwill impairment...... (16,001) (11,999) Other deductions...... (238,083) (173,180) Income before income taxes...... 182,456 217,048

Provision for income taxes: Current...... 106,107 115,465 Deferred...... (108,088) (100,928) (1,981) 14,537

Equity in earnings of associated companies...... 11,929 12,555 Net income...... 196,366 215,066

Less net income attributable to noncontrolling interests...... 16,881 21,810 Net income attributable to Panasonic Corporation...... 179,485 193,256

(Yen) 2015 2016 Net income attributable to Panasonic Corporation common shareholders per share: Basic...... 77.65 83.40 Diluted...... 77.64 83.39 Panasonic Annual Report 2016

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Consolidated Statements of Equity Years ended March 31, 2015 and 2016 (Millions of yen) (Millions of yen) 2015 2016 2015 2016 Common stock: Treasury stock: Balance at beginning of period...... 258,740 258,740 Balance at beginning of period ...... (247,132) (247,548) Balance at end of period...... 258,740 258,740 Sale of treasury stock ...... 10 17,130 Repurchase of common stock ...... (426) (115) Capital surplus: Balance at end of period...... (247,548) (230,533) Balance at beginning of period...... 1,109,501 984,111 Equity transactions with noncontrolling interests and others...... (125,390) (4,216) Noncontrolling interests: Balance at end of period ...... 984,111 979,895 Balance at beginning of period...... 38,286 169,259 Cash dividends paid to noncontrolling interests ...... (22,244) (18,077) Retained earnings: Net income (loss) attributable to noncontrolling interests...... 16,881 21,810 Balance at beginning of period ...... 878,742 1,021,241 Other comprehensive income (loss), net of tax ...... 15,065 (16,547) Sale of treasury stock...... (1) (2,893) Equity transactions with noncontrolling interests and others...... 121,271 (7,187) Cash dividends to Panasonic Corporation stockholders...... (36,985) (46,322) Balance at end of period ...... 169,259 149,258 Net income attributable to Panasonic Corporation ...... 179,485 193,256 Balance at end of period ...... 1,021,241 1,165,282

Accumulated other comprehensive income (loss): Balance at beginning of period...... (451,699) (193,251) Other comprehensive income (loss), net of tax ...... 258,448 (275,077) Balance at end of period...... (193,251) (468,328) Panasonic Annual Report 2016

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Consolidated Statements of Cash Flows Years ended March 31, 2015 and 2016 (Millions of yen) (Millions of yen) 2015 2016 2015 2016 Cash flows from operating activities: Cash flows from financing activities: Net income...... 196,366 215,066 Decrease in short-term debt with maturities Adjustments to reconcile net income (loss) to net cash of three months or less, net ...... (28,379) 5,136 provided by operating activities: Proceeds from short-term debt with maturities longer Depreciation and amortization ...... 286,528 274,761 than three months ...... 15,106 5,733 Net gains on sale of investments ...... (8,261) (1,215) Repayments of short-term debt with maturities longer Provision for doubtful receivables...... 5,918 6,549 than three months...... (16,958) (7,478) Deferred income taxes...... (108,088) (100,928) Proceeds from long-term debt...... 402,248 157 Write-down of investment securities...... 1,023 979 Repayments of long-term debt...... (46,031) (251,729) Impairment losses on long-lived assets and goodwill...... 56,033 48,689 Dividends paid to Panasonic Corporation shareholders ...... (36,985) (46,322) Cash effects of changes in, excluding acquisition: Dividends paid to noncontrolling interests...... (22,244) (18,077) Trade receivables...... 68,901 123,149 Repurchase of common stock ...... (426) (115) Inventories...... 5,993 (30,015) Sale of treasury stock ...... 9 8 Other current assets...... 15,885 (29,376) Purchase of noncontrolling interests...... (4,157) (405) Trade payables ...... 6,509 (18,660) Other, net ...... (4,568) 5,061 Accrued income taxes...... (4,757) 2,759 Accrued expenses and other current liabilities...... 52,106 (36,117) Net cash provided by (used in) financing activities...... 257,615 (308,031) Retirement and severance benefits...... (40,634) (41,397) Deposits and advances from customers...... 2,232 5,769 Effect of exchange rate changes on cash and cash equivalents...... 76,871 (82,519) Other, net ...... (44,291) (21,333) Net increase (decrease) in cash and cash equivalents ...... 687,941 (266,144) Net cash provided by operating activities...... 491,463 398,680 Cash and cash equivalents at beginning of year...... 592,467 1,280,408 Cash flows from investing activities: Proceeds from disposals of investments and advances ...... 43,625 9,623 Cash and cash equivalents at end of year...... 1,280,408 1,014,264 Increase in investments and advances...... (19,647) (30,720) Capital expenditures...... (224,162) (241,836) Proceeds from disposals of property, plant and equipment...... 80,168 27,566 (Increase) decrease in time deposits, net ...... (18,470) 18,324 Proceeds from sale of consolidated subsidiaries...... 31,700 1,997 Purchase of shares of newly consolidated subsidiaries, net of acquired companies' cash and cash equivalents ...... (6,340) (31,356) Other, net ...... (24,882) (27,872)

Net cash used in investing activities...... (138,008) (274,274) Panasonic Annual Report 2016

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Download DATA BOOK Stock Information (As of March 31, 2016) (Stock and Corporate Data) Storck Chart

Share Data Company Stock Price and Trading Volume (Years ended March 31) Tokyo Stock Exchange monthly basis

Number of Shares Issued Stock Exchange Listings Stock Price (Yen) 2,453,053,497 shares Tokyo, Nagoya 2,000 (Including 132,057,190 shares held Transfer Agent for Common Stock by Panasonic) Sumitomo Mitsui Trust Bank, Limited 1,000 Number of Shareholders 5-33, Kitahama, 4-chome, Chuo-ku, Osaka-shi, 514,129 persons Osaka 540-8639, Japan 0 Phone: +81-3-3323-7111 Trading Volume (Millions of shares) Distribution Depositary for American Depositary Receipts 1,500 by Type of Shareholders (ADRs) 1,000 Stock Exchange: U.S. Over-the-Counter Treasury Stock Japanese 500 5.4% Financial (OTC) Market Institutions, etc. ADR Ratio: 1 ADR = 1 Share 0 April March April March April March April March April March 30.6% Symbol: PCRFY Stock Transfer Handling Office 2012 2013 2014 2015 2016 Individuals 2,453,053 and Others JPMorgan Service Center High (Yen) 1,070 781 1,408 1,614.0 1,853.5 25.9% thousand shares P.O. Box 64504 Low (Yen) 582 376 594 1,030.0 799.0 Overseas St. Paul, MN 55164-0504, U.S.A. Period-End (Yen) 761 654 1,173 1,577.0 1,033.5 Other Investors, Corporations etc. Tel: +1-800-990-1135 (U.S.: toll free) 6.9% 31.2% +1-651-453-2128 (International) Investor Relations Ofﬁces Major Shareholders Japan U.S.

Share ownership Percentage of Osaka Panasonic Corporation of North America Name (in thousands of shares) total issued shares (%) Panasonic Corporation Two Riverfront Plaza, Corporate Planning Department, Newark, NJ 07102-5490 Japan Trustee Services Bank, Ltd. (trust account) 145,055 5.91 Investor Relations Phone: +1-201-348-7000 The Master Trust Bank of Japan, Ltd. (trust account) 121,847 4.96 1006 Oaza Kadoma, Kadoma-shi STATE STREET BANK AND TRUST COMPANY 81,294 3.31 Osaka 571-8501, Japan Nippon Life Insurance Company 69,056 2.81 Phone: +81-6-6908-1121 Panasonic Corporation Employee Shareholding Association 43,197 1.76 Sumitomo Life Insurance Company 37,408 1.52 Tokyo STATE STREET BANK WEST CLIENT – TREATY 505234 33,095 1.34 Panasonic Corporation Corporate Planning Department, THE BANK OF NEW YORK MELLON SA/NV 10 31,725 1.29 Investor Relations Japan Trustee Services Bank, Ltd. (trust account 7) 30,291 1.23 1-5-1 Higashi-Shimbashi, Minato-ku Matsushita Real Estate Co., Ltd. 29,121 1.18 Tokyo 105-8301, Japan Phone: +81-3-3437-1121 Notes: 1. Amounts less than one thousand have been discarded. 2. The number of treasury stock is 132,057 thousand shares. Panasonic Annual Report 2016

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Corporate Bonds / Corporate Data (As of March 31, 2016) IR and Sustainability Websites Corporate Bonds IR Unsecured Straight Bonds in Japan Please refer to Panasonic’s IR site for information on the Company including financial results and presentation materials. Series Years Coupon rate Aggregate principal Maturity date (per annum) amount of issue

8th 10 2.050% 100 billion yen March 20, 2019

11th 7 1.081% 150 billion yen March 20, 2018

12th 5 0.387% 220 billion yen March 19, 2020

13th 7 0.568% 80 billion yen March 18, 2022

14th 10 0.934% 100 billion yen March 19, 2025

4th* 10 1.593% 30 billion yen June 20, 2019

* Originally issued by former Panasonic Electric Works. Panasonic succeeded corporate bonds of former Panasonic Electric Works on January 1, 2012.

Download DATA BOOK http://www.panasonic.com/global/corporate/ir.html Corporate Data (Stock and Corporate Data)

Company Name Stated Capital Sustainability Panasonic Corporation 258,740 million yen Please refer to the “Sustainability” section of the Company’s website for more (TSE Securities Code: 6752) information regarding environmental and social initiatives. Consolidated Companies Founded (including parent company) 475 companies March 1918 (Incorporated in December 1935) Associated Companies Head Office Location under the Equity Method 1006, Oaza Kadoma, Kadoma-shi, Osaka 94 companies 571-8501, Japan Number of Employees 249,520 persons

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