PC Panasonic Corp.

Panasonic Corporation1 (Panasonic)(NYSE:PC) today reported its consolidated financial results for the second quarter and six months ended September 30, 2008, of the current fiscal year ending March 31, 2009 (fiscal 2009). 1 As of October 1, 2008, the company changed its name from �Matsushita Electric Industrial Co., Ltd.� to �Panasonic Corporation.� Consolidated Second-quarter Results Consolidated group sales for the second quarter decreased 4% to 2,191.7 billion yen, from 2,285.8 billion yen in the same three-month period a year ago. Explaining the second quarter results, although sales gains were recorded mainly in digital AV products and white goods, total sales declined because sales of information and communication equipment were sluggish and sales of JVC (Victor Company of Japan, Ltd. and its subsidiaries)2 were included in the consolidated group sales in the previous year�s comparable period. Of the consolidated group total, domestic sales decreased 4% to 1,065.4 billion yen, from 1,109.8 billion yen a year ago. Overseas sales decreased 4% to 1,126.3 billion yen, from 1,176.0 billion yen in the second quarter of fiscal 2008. 2 Victor Company of Japan, Ltd. and its subsidiaries became associated companies under the equity method from the company�s consolidated subsidiaries from August 2007. For more information, see Note 6 of the Notes to consolidated financial statements on page 15. In the electronics industry during the second quarter under review, while there was a growing demand for flat-panel TVs related to the Beijing Olympics, severe business conditions continued in Japan and overseas, due mainly to rising prices for raw materials and energy, and price declines centered on digital products. Under these circumstances, in fiscal 2009 as the middle year of the three-year mid-term management plan GP3, Panasonic is striving to produce successful results and create a new trend for achieving goals. Aiming at getting growth back on track and strengthening profitability, Panasonic is implementing initiatives focused on four major themes: double-digit growth in overseas sales, expansion of four strategic businesses, manufacturing innovation and the �eco ideas� strategy. Regarding earnings, operating profit3 for the second quarter was down 19%, to 118.6 billion yen, from 146.1 billion yen in the same period a year ago. This decrease was due mainly to the negative effects of intensified global price competition and a stronger yen against the U.S. dollar, as well as rising prices for crude oil and other raw materials. These and other factors resulted in pre-tax income of 84.0 billion yen, down 19% from 103.7 billion yen in the same period a year ago. Net income decreased 16% to 55.5 billion yen, from 65.8 billion yen in the same quarter of the previous year. 3 For information about operating profit, see Note 2 of Notes to consolidated financial statements on page 15. Consolidated Six-month Results Combining the second quarter results with those of the first quarter, consolidated group sales for the six months ended September 30, 2008 decreased 4% to 4,343.7 billion yen, compared with 4,525.3 billion yen in the same six-month period a year ago. Explaining the six-month results, although sales gains were recorded mainly in digital AV products, total sales declined because sales of JVC were included in the consolidated group sales in the previous year�s comparable period. Domestic sales amounted to 2,110.6 billion yen, down 4% from 2,187.8 billion yen in the previous year�s six months, while overseas sales decreased 4% to 2,233.1 billion yen from 2,337.5 billion yen a year ago. For reasons similar to those given for second quarter results, the company�s operating profit for the six months increased 4% to 228.2 billion yen, from 220.0 billion yen in the comparable period a year ago. Despite the negative effects of intensified global price competition and a stronger yen against the U.S. dollar, as well as rising prices for crude oil and other raw materials, this result was due primarily to comprehensive cost reduction activities including materials costs and fixed costs, and sales gains in real terms excluding specific factors such as the effects of JVC. In other income (deductions), the company incurred less expenses associated with the implementation of early retirement programs compared with a year ago. These and other factors resulted in pre-tax income of 203.3 billion yen, up 8% from 187.6 billion yen in the same period a year ago. Net income increased 22% to 128.5 billion yen, as compared with 105.1 billion yen in the six months of the previous year. The company�s net income per common share was 61.58 yen on a diluted basis, versus 49.32 yen in the six months of last year. Consolidated Six-month Sales Breakdown by Product Category The company�s six-month consolidated sales by product category, as compared with prior year amounts, are summarized as follows: Digital AVC Networks4 Digital AVC Networks sales increased 3% to 1,969.0 billion yen, from 1,920.2 billion yen in last year�s six months. Sales of video and audio equipment increased 14% from the previous year�s six months, due mainly to favorable sales in digital AV products such as flat-panel TVs and DVD recorders. In information and communications equipment, sluggish sales of automotive electronics led to a 6% decrease overall. Home Appliances Sales of Home Appliances increased 2% to 654.1 billion yen, compared with 641.8 billion yen in last year�s six months, due mainly to steady sales of air conditioners and refrigerators. MEW and PanaHome5 Sales of MEW and PanaHome decreased 1% to 837.2 billion yen, from 849.1 billion yen last year. At Matsushita Electric Works, Ltd. (MEW)6 and its subsidiaries, sales decreased mainly in home appliances such as health enhancing products. At PanaHome Corporation and its subsidiaries, sluggish housing market conditions led to a decrease in sales. Components and Devices Sales of Components and Devices were down 8% to 541.9 billion yen, compared with 586.0 billion yen in the same period of the previous year. Sluggish sales in general electronic components and batteries led to an overall decrease in sales. Other Sales of Other totaled 341.5 billion yen, down 2% from 347.7 billion yen in the same period a year ago, due mainly to a sales decline in factory automation equipment within this category. 4 From fiscal 2009, the name of �AVC Networks� was changed to �Digital AVC Networks.� 5 The name of �MEW and PanaHome� was as of September 30, 2008. 6 From October 1, 2008, the name of Matsushita Electric Works, Ltd. (MEW) was changed to Panasonic Electric Works, Ltd. (PEW). Consolidated Financial Condition Net cash provided by operating activities in the fiscal 2009 six months ended September 30, 2008 amounted to 136.3 billion yen. Despite an increase of inventories, this result was due mainly to cash inflows from net income and depreciation. Net cash used in investing activities amounted to 270.0 billion yen. This was due primarily to capital expenditures for tangible fixed assets, mainly consisting of manufacturing facilities for priority business areas such as plasma and liquid crystal display panels, and semiconductors. Net cash used in financing activities was 117.0 billion yen. Major factors included the repurchase of the company�s common stock and the payment of cash dividends. All these activities resulted in cash and cash equivalents of 973.1 billion yen at the end of the second quarter of fiscal 2009, down 241.7 billion yen from the end of the last fiscal year (March 31, 2008). The company�s consolidated total assets as of September 30, 2008 amounted to 7,299.4 billion yen, a decrease of 144.2 billion yen as compared with the end of the last fiscal year. Although inventories increased as a result of seasonal factors, this result was due primarily to a decrease of cash and cash equivalents. Stockholders� equity decreased 62.8 billion yen, as compared with the end of the last fiscal year, to 3,679.5 billion yen as of September 30, 2008. This was due mainly to a decrease in other comprehensive income and an increase in treasury stock on continued repurchases of the company�s own shares, despite increases in retained earnings. Interim and Year-end Dividend The Board of Directors of the company resolved today to distribute an interim (semiannual) cash dividend of 22.5 yen per common share to shareholders of record as of September 30, 2008, payable November 28, 2008. This is an increase from last year�s interim dividend of 17.5 yen. The company also plans to distribute a year-end cash dividend of 22.5 yen per common share (payable to shareholders of record as of March 31, 2009). If implemented, total dividends for fiscal 2009, including the aforementioned interim dividend of 22.5 yen per common share, will be 45.0 yen per common share. Outlook for the Full Fiscal Year 2009 Current financial crisis originating in the United States is widespread globally and there are sharp fluctuations in exchange rates and stock prices. Under these circumstances, the company expects the outlook of the business environment for the fiscal year�s third quarter onward to be uncertain, with concerns about the weak real economy. Accordingly, the forecast for the full fiscal year 2009, ending March 31, 2009, remains unchanged at this time from the forecast announced on April 28, 2008. The company will review the outlook for the full year, and make determinations regarding a possible revision at the announcement of third quarter financial results. Panasonic Corporation, best known for its Panasonic brand products, is one of the world's leading manufacturers of electronic and electric products for consumer, business and industrial use. Panasonic�s shares are listed on the Tokyo, Osaka, Nagoya and New York stock exchanges. For more information, please visit the following web sites: Panasonic home page URL: http://panasonic.net/ Panasonic IR web site URL: http://panasonic.net/ir/ Disclaimer Regarding Forward-Looking Statements This press release includes forward-looking statements (within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934) about Panasonic and its Group companies (the Panasonic Group). To the extent that statements in this press release do not relate to historical or current facts, they constitute forward-looking statements. These forward-looking statements are based on the current assumptions and beliefs of the Panasonic Group in light of the information currently available to it, and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause the Panasonic Group's actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. Panasonic undertakes no obligation to publicly update any forward-looking statements after the date of this press release. Investors are advised to consult any further disclosures by Panasonic in its subsequent filings with the U.S. Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934. The risks, uncertainties and other factors referred to above include, but are not limited to, economic conditions, particularly consumer spending and corporate capital expenditures in the United States, Europe, Japan, China and other Asian countries; volatility in demand for electronic equipment and components from business and industrial customers, as well as consumers in many product and geographical markets; currency rate fluctuations, notably between the yen, the U.S. dollar, the euro, the Chinese yuan, Asian currencies and other currencies in which the Panasonic Group operates businesses, or in which assets and liabilities of the Panasonic Group are denominated; the ability of the Panasonic Group 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 ability of the Panasonic Group to achieve its business objectives through joint ventures and other collaborative agreements with other companies; the ability of the Panasonic Group to maintain 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 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, including property, plant and equipment and goodwill, deferred tax assets and uncertain tax positions; future changes or revisions to accounting policies or accounting rules; as well as natural disasters including earthquakes 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 Panasonic�s latest annual report on Form 20-F, which is on file with the U.S. Securities and Exchange Commission. � Panasonic Corporation Consolidated Statement of Income * (Three months ended September 30) � � � � Yen (millions) Percentage 2008 2007 2008/2007 � Net sales � 2,191,714 � 2,285,800 96 % Cost of sales (1,572,854 ) (1,637,523 ) Selling, general andadministrative expenses (500,279 ) (502,174 ) Interest income 7,547 8,653 Dividend income 888 684 Interest expense (5,558 ) (5,274 ) Expenses associated withthe implementation ofearly retirement programs ** (368 ) (14,854 ) Other Income (loss), net (37,049 ) (31,639 ) Income before income taxes 84,041 103,673 81 % � Provision for income taxes (23,765 ) (28,868 ) Minority interests (7,955 ) (6,800 ) Equity in earnings (losses) ofassociated companies 3,140 � (2,197 ) Net income � 55,461 � � 65,808 � 84 % � Net income, basic per common share 26.72 yen 30.99 yen per ADS 26.72 yen 30.99 yen Net income, diluted per common share -- 30.99 yen per ADS -- 30.99 yen � (Parentheses indicate expenses, deductions or losses.) � * ** See Notes to consolidated financial statements on pages 15-16. � � Supplementary Information (Three months ended September 30) Yen (millions) 2008 2007 � Depreciation (tangible assets) � 84,868 � 71,601 Capital investment *** � 137,175 � 130,389 R&D expenditures � 134,068 � 141,013 � Number of employees (Sep. 30) 313,594 309,037 � *** These figures are calculated on an accrual basis. � Panasonic Corporation Consolidated Statement of Income * (Six months ended September 30) � � � � Yen (millions) Percentage 2008 2007 2008/2007 � Net sales � 4,343,711 � 4,525,305 96 % Cost of sales (3,098,704 ) (3,225,568 ) Selling, general andadministrative expenses (1,016,853 ) (1,079,743 ) Interest income 14,745 17,315 Dividend income 6,231 5,568 Interest expense (11,314 ) (10,580 ) Expenses associated withthe implementation ofearly retirement programs ** (593 ) (15,839 ) Other Income (loss), net (33,927 ) (28,817 ) Income before income taxes 203,296 187,641 108 % � Provision for income taxes (66,177 ) (70,864 ) Minority interests (12,104 ) (5,012 ) Equity in earnings (losses) ofassociated companies 3,477 � (6,643 ) Net income � 128,492 � � 105,122 � 122 % � Net income, basic per common share 61.58 yen 49.32 yen per ADS 61.58 yen 49.32 yen Net income, diluted per common share 61.58 yen 49.32 yen per ADS 61.58 yen 49.32 yen � (Parentheses indicate expenses, deductions or losses.) � * ** See Notes to consolidated financial statements on pages 15-16. � � Supplementary Information (Six months ended September 30) Yen (millions) 2008 2007 Depreciation (tangible assets) � 165,979 � 136,500 Capital investment *** � 239,857 � 217,162 R&D expenditures � 265,142 � 279,916 � Number of employees (Sep. 30) 313,594 309,037 � *** These figures are calculated on an accrual basis. � Panasonic Corporation Consolidated Balance Sheet ** September 30, 2008 With comparative figures for March 31, 2008 � � � � Yen (millions) Assets Sept. 30, 2008 March 31, 2008 Current assets: Cash and cash equivalents � 973,133 � 1,214,816 Time deposits 98,867 70,108 Short-term investments 17,374 47,414 Trade receivables: Notes 60,490 59,060 Accounts 1,017,179 1,046,991 Allowance for doubtful receivables (22,020 ) (20,868 ) Inventories 999,454 864,264 Other current assets 507,467 � 517,409 � Total current assets 3,651,944 � 3,799,194 � Investments and advances 777,983 842,156 Property, plant and equipment,net of accumulated depreciation 1,840,318 1,757,373 Other assets 1,029,134 � 1,044,891 � Total assets � 7,299,379 � � 7,443,614 � � Liabilities, Minority Interests and Stockholders' Equity Current liabilities: Short-term borrowings � 157,828 � 156,260 Trade payables: Notes 40,924 37,175 Accounts 887,874 903,379 Other current liabilities 1,361,630 � 1,464,145 � Total current liabilities 2,448,256 � 2,560,959 � Noncurrent liabilities: Long-term debt 262,152 232,346 Other long-term liabilities 398,292 � 393,360 � Total noncurrent liabilities 660,444 � 625,706 � � Minority interests 511,145 514,620 � Common stock 258,740 258,740 Capital surplus 1,217,901 1,217,865 Legal reserve 92,262 90,129 Retained earnings 3,033,928 2,948,065 Accumulated othercomprehensive income (loss) * (253,215 ) (173,897 ) Treasury stock (670,082 ) (598,573 ) Total stockholders' equity 3,679,534 � 3,742,329 � Total liabilities, minority interests andstockholders' equity � 7,299,379 � � 7,443,614 � � * Accumulated other comprehensive income (loss) breakdown: � Yen (millions) Sept. 30, 2008 March 31, 2008 Cumulative translation adjustments � (213,054 ) � (228,792 ) Unrealized holding gains ofavailable-for-sale securities 20,244 45,442 Unrealized gains ofderivative instruments 4,475 4,326 Pension liability adjustments (64,880 ) 5,127 � ** See Notes to consolidated financial statements on pages 15-16. � Panasonic Corporation Consolidated Sales Breakdown * (Three months ended September 30) � � � � � Yen (billions) Percentage 2008 2007 2008/2007 Digital AVC Networks Video and audio equipment � 496.4 � 445.3 111 % � Information and communicationsequipment 497.2 550.2 90 % � Subtotal 993.6 995.5 100 % � Home Appliances 311.3 301.9 103 % � MEW and PanaHome 448.1 463.4 97 % � Components and Devices 272.6 301.3 90 % � Other 166.1 178.5 93 % � JVC -- 45.2 -- � Total � 2,191.7 � 2,285.8 96 % � Domestic sales 1,065.4 1,109.8 96 % � Overseas sales 1,126.3 1,176.0 96 % � (Six months ended September 30) � Yen (billions) Percentage 2008 2007 2008/2007 Digital AVC Networks Video and audio equipment � 962.7 � 847.7 114 % � Information and communicationsequipment 1,006.3 1,072.5 94 % � Subtotal 1,969.0 1,920.2 103 % � Home Appliances 654.1 641.8 102 % � MEW and PanaHome 837.2 849.1 99 % � Components and Devices 541.9 586.0 92 % � Other 341.5 347.7 98 % � JVC -- 180.5 -- � Total � 4,343.7 � 4,525.3 96 % � Domestic sales 2,110.6 2,187.8 96 % � Overseas sales 2,233.1 2,337.5 96 % � * See Notes to consolidated financial statements on pages 15-16. � Panasonic Corporation Consolidated Sales Breakdown * (Six months ended September 30) � � � � � � � � � [Overseas Sales by Region] Yen (billions) Percentage 2008 2007 2008/2007 � North and South America � 584.6 � 658.0 89% Europe 575.4 604.9 95% Asia and China 1,073.1 1,074.6 100% Total � 2,233.1 � 2,337.5 96% � � [Domestic/Overseas Sales Breakdown] � Domestic sales Overseas sales Yen (billions) Percentage Yen (billions) Percentage 2008 2008/2007 2008 2008/2007 Digital AVC Networks Video and audioequipment � 257.7 114% � 705.0 113% � Information andcommunicationsequipment 481.4 95% 524.9 93% � Subtotal 739.1 101% 1,229.9 104% � Home Appliances 340.6 102% 313.5 101% � MEW and PanaHome 662.2 96% 175.0 111% � Components and Devices 181.3 93% 360.6 92% � Other 187.4 99% 154.1 97% � Total � 2,110.6 96% � 2,233.1 96% � * See Notes to consolidated financial statements on pages 15-16. � Panasonic Corporation Consolidated Information by Business Segment * (Six months ended September 30) � � � � By Business Segment: � Yen (billions) Percentage [Sales] 2008 2007 2008/2007 � Digital AVC Networks � 2,102.9 � 2,059.6 102 % Home Appliances 685.5 667.0 103 % MEW and PanaHome 928.7 937.2 99 % Components and Devices 670.2 712.3 94 % Other 598.6 542.3 110 % JVC -- � 183.1 � -- Subtotal 4,985.9 5,101.5 98 % Eliminations (642.2 ) (576.2 ) -- Consolidated total � 4,343.7 � � 4,525.3 � 96 % � [Segment Profit]** � Digital AVC Networks � 102.8 � 110.1 93 % Home Appliances 46.9 37.3 126 % MEW and PanaHome 35.8 41.1 87 % Components and Devices 49.0 49.5 99 % Other 28.8 34.9 82 % JVC -- � (9.7 ) -- Subtotal 263.3 263.2 100 % Corporate and eliminations (35.1 ) (43.2 ) -- Consolidated total � 228.2 � � 220.0 � 104 % � � * ** See Notes to consolidated financial statements on pages 15-16. � [For Reference] Panasonic Corporation Consolidated Information by Business Field (unreviewed) * (Six months ended September 30, 2008) � By Business Field**: Yen (billions) [Sales] 2008 � Digital AVC Networks Solution � 2,102.9 Solutions for the Environment and Comfortable Living 1,614.2 Devices and Industry Solution 1,268.8 � Subtotal 4,985.9 Eliminations (642.2 ) Consolidated total � 4,343.7 � � � [Business Field Profit]*** � Digital AVC Networks Solution � 102.8 Solutions for the Environment and Comfortable Living 82.7 Devices and Industry Solution 77.8 � Subtotal 263.3 Corporate and eliminations (35.1 ) Consolidated total � 228.2 � � * *** See Notes to consolidated financial statements on pages 15-16. ** For definition of business fields of the Group, see Note 9 ofNotes to consolidated financial statements on page 16. � Panasonic Corporation Consolidated Statement of Cash Flows * (Six months ended September 30) � � � � � Yen (millions) Cash flows from operating activities: 2008 2007 Net income � 128,492 � 105,122 Adjustments to reconcile net income tonet cash provided by operating activities: Depreciation and amortization 185,160 155,982 Net (gain) loss on sale of investments (5,836 ) (2,446 ) Minority interests 12,104 5,012 (Increase) decrease in trade receivables 25,203 (16,878 ) (Increase) decrease in inventories (135,804 ) (84,362 ) Increase (decrease) in trade payables 26,216 10,416 Increase (decrease) in retirementand severance benefits (54,997 ) (62,747 ) Other (44,274 ) 71,590 � Net cash provided by operating activities � 136,264 � � 181,689 � � Cash flows from investing activities: (Increase) decrease in short-term investments -- 697 Proceeds from disposition of investmentsand advances 83,944 88,063 Increase in investments and advances (25,579 ) (92,141 ) Capital expenditures (271,773 ) (219,019 ) Proceeds from sale of fixed assets 14,331 123,335 (Increase) decrease in time deposits (47,548 ) 188,187 Purchase of shares of a newly consolidated subsidiary -- (50,465 ) Other (23,342 ) (23,140 ) Net cash provided by (used in) investing activities � (269,967 ) � 15,517 � � Cash flows from financing activities: Increase (decrease) in short-term borrowings (8,479 ) (21,546 ) Increase (decrease) in deposits andadvances from employees (37 ) (44 ) Increase (decrease) in long-term debt 13,029 (20,613 ) Dividends paid (36,769 ) (32,194 ) Dividends paid to minority interests (13,270 ) (10,783 ) (Increase) decrease in treasury stock (71,473 ) (61,629 ) Proceeds from issuance of shares by subsidiaries -- � 39,866 � Net cash used in financing activities � (116,999 ) � (106,943 ) � Effect of exchange rate changes on cashand cash equivalents 9,019 � (10,944 ) Effect of changes in consolidated subsidiaries -- (93,441 ) Net increase (decrease) in cash and cash equivalents (241,683 ) (14,122 ) Cash and cash equivalents at beginning of period 1,214,816 � 1,236,639 � Cash and cash equivalents at end of period � 973,133 � � 1,222,517 � � � * See Notes to consolidated financial statements on pages 15-16. � Notes to consolidated financial statements: 1. The company's consolidated financial statements are prepared in conformity with U.S. generally accepted accounting principles (U.S. GAAP). 2. In order to be consistent with generally accepted financial reporting practices in Japan, operating profit is presented as net sales less cost of sales and selling, general and administrative expenses. The company believes that this is useful to investors in comparing the company's financial results with those of other Japanese companies. Please refer to the accompanying consolidated statement of income and Note 5 for U.S. GAAP reconciliation. 3. The company changed the measurement date to March 31 for those postretirement benefit plans with a December 31 measurement date in conformity with the provisions regarding the change in the measurement date of postretirement benefit plan of SFAS No. 158, �Employers� Accounting for Defined Benefit Pension and Other Postretirement Plans � an amendment of FASB Statement No. 87, 88, 106, and 132(R).� With the change in the measurement date, beginning fiscal 2009 balance of �retained earnings� and pension liability adjustments of �accumulated other comprehensive income (loss)� has been reduced by 3,727 million yen and 73,571 million yen, respectively. 4. Comprehensive income was reported as a gain of 122,745 million yen for the six months ended September 30, 2008. Comprehensive income includes net income and increases (decreases) in accumulated other comprehensive income (loss) for this period. 5. Under U.S. GAAP, expenses associated with the implementation of early retirement programs at certain domestic and overseas companies are included as part of operating profit in the statement of income. 6. Victor Company of Japan, Ltd. (JVC) issued and allocated new shares of common stock to third parties on August 10, 2007 for a cash consideration of 35 billion yen. As a result, the company�s shareholding in JVC decreased from 52.4% to 36.8%. JVC and its subsidiaries became associated companies under the equity method from consolidated subsidiaries from August 2007. JVC and Kenwood Corporation integrated management by establishing JVC KENWOOD Holdings, Inc. (JVC KENWOOD HD) as of October 1, 2008 through a share transfer. The company has 24.4% of total issued shares of JVC KENWOOD HD. JVC KENWOOD HD and its subsidiaries became associated companies under the equity method from October 1, 2008. 7. Regarding consolidated segment profit, expenses for basic research and administrative expenses at the corporate headquarters level are treated as unallocatable expenses for each business segment, and are included in Corporate and eliminations. 8. The company's business segments are classified according to a business domain-based management system, which focuses on global consolidated management by each business domain, in order to ensure consistency of its internal management structure and disclosure. The company has changed the transaction between Global Procurement Service Company and other segments since April 1, 2008. Accordingly, segment information for Other and Corporate and eliminations of fiscal 2008 has been reclassified to conform to the presentation for fiscal 2009. Principal internal divisional companies or units and subsidiaries operating in respective segments as of September 30, 2008 are as follows: Digital AVC Networks Panasonic AVC Networks Company, Panasonic Communications Co., Ltd., Panasonic Mobile Communications Co., Ltd., Panasonic Automotive Systems Company, Panasonic System Solutions Company, Panasonic Shikoku Electronics Co., Ltd. Home Appliances Matsushita Home Appliances Company, Lighting Company, Matsushita Ecology Systems Co., Ltd. MEW and PanaHome Matsushita Electric Works, Ltd., PanaHome Corporation Components and Devices Semiconductor Company, Matsushita Battery Industrial Co., Ltd., Panasonic Electronic Devices Co., Ltd., Motor Company Other Panasonic Factory Solutions Co., Ltd., Matsushita Welding Systems Co., Ltd. From fiscal 2009, the name of �AVC Networks� was changed to �Digital AVC Networks.� 9. In a new phase of further growth, Panasonic has been accelerating initiatives to achieve global excellence. From fiscal 2009 onward, in order to further clarify its business fields for investors, Panasonic discloses three new business fields of the group which consist of five segments as shown below. Sales and profits by business fields are calculated as the simple total of business segments making up each business field. Digital AVC Networks Solution Digital AVC Networks Solutions for the Environment and Comfortable Living Home Appliances, MEW and PanaHome Devices and Industry Solution Components and Devices, Other 10. Number of consolidated companies: 537 (including parent company) 11. Number of companies reflected by the equity method: 137 � � � � � � � � � Supplemental Consolidated Financial Data for Fiscal 2009 Second Quarter and Six Months ended September 30, 2008 � 1. Sales breakdown yen (billions) Fiscal 2009 Second Quarter Total Domestic Overseas � � � 09/08 � Localcurrencybasis 09/08 � � � 09/08 � � � 09/08 � Localcurrencybasis 09/08 Video and Audio Equipment � 496.4 � 111% � 116% � 125.9 � 112% � 370.5 � 111% � 117% Information andCommunications Equipment � 497.2 � 90% � 94% � 232.7 � 91% � 264.5 � 90% � 96% � Digital AVC Networks � 993.6 � 100% � 104% � 358.6 � 97% � 635.0 � 101% � 107% � Home Appliances � 311.3 � 103% � 106% � 167.4 � 105% � 143.9 � 101% � 107% � MEW and PanaHome � 448.1 � 97% � 98% � 357.7 � 95% � 90.4 � 106% � 113% � Components and Devices � 272.6 � 90% � 93% � 89.2 � 90% � 183.4 � 91% � 95% � Other � 166.1 � 93% � 94% � 92.5 � 100% � 73.6 � 86% � 89% � Total � 2,191.7 � 96% � 99% � 1,065.4 � 96% � 1,126.3 � 96% � 101% yen (billions) Fiscal 2009 Six Months ended September 30, 2008 � Total � Domestic � Overseas � � � 09/08 � Localcurrencybasis 09/08 � � � 09/08 � � � 09/08 � Localcurrencybasis 09/08 Video and Audio Equipment � 962.7 � 114% � 119% � 257.7 � 114% � 705.0 � 113% � 120% Information andCommunications Equipment � 1,006.3 � 94% � 98% � 481.4 � 95% � 524.9 � 93% � 101% Digital AVC Networks � 1,969.0 � 103% � 107% � 739.1 � 101% � 1,229.9 � 104% � 111% Home Appliances � 654.1 � 102% � 106% � 340.6 � 102% � 313.5 � 101% � 109% MEW and PanaHome � 837.2 � 99% � 100% � 662.2 � 96% � 175.0 � 111% � 120% Components and Devices � 541.9 � 92% � 97% � 181.3 � 93% � 360.6 � 92% � 98% Other � 341.5 � 98% � 100% � 187.4 � 99% � 154.1 � 97% � 101% Total � 4,343.7 � 96% � 99% � 2,110.6 � 96% � 2,233.1 � 96% � 102% Note: The name of "AVC Networks" was changed to "Digital AVC Networks" from fiscal 2009. The name of "MEW and PanaHome" was as of September 30, 2008. � � � � � � 2. Overseas Sales by Region yen (billions) Fiscal 2009 Second Quarter Fiscal 2009 Six Months ended September 30, 2008 � � � � 09/08 � Localcurrencybasis 09/08 � � � 09/08 � Localcurrencybasis 09/08 North and South America � 298.2 � 90% � 98% � 584.6 � 89% � 99% Europe � 281.7 � 97% � 101% � 575.4 � 95% � 98% Asia � 273.4 � 92% � 99% � 540.8 � 93% � 101% China � 273.0 � 106% � 108% � 532.3 � 108% � 112% Total � 1,126.3 � 96% � 101% � 2,233.1 � 96% � 102% � � � � 3. Sales by Products yen (billions) Product Category � Products Fiscal 2009 Second Quarter � Six Months ended September 30 � � Sales 09/08 � Sales � 09/08 Digital AVC Networks � VCRs � 24.5 � 86% � 49.3 � 88% � Digital cameras � 62.7 � 95% � 127.7 � 102% TVs � 295.8 � 124% � 565.5 � 125% Plasma TVs � 168.9 � 115% � 318.4 � 116% � LCD TVs � 102.9 � 164% � 198.8 � 166% � DVD recorders � 32.6 � 115% � 64.3 � 114% � Audio equipment � 26.5 � 76% � 52.3 � 81% � Information equipment � 335.9 � 89% � 660.4 � 91% Communicationsequipment � 161.3 � 94% � 345.9 � 100% � Mobilecommunicationsequipment � 74.8 � 97% � 179.0 � 109% Home Appliances � Air conditioners � 62.8 � 108% � 163.4 � 103% � Refrigerators � 32.1 � 100% � 63.2 � 103% Components and Devices � General components � 103.2 � 88% � 208.8 � 90% � Semiconductors * � 121.8 � 103% � 244.0 � 106% � Batteries � 80.4 � 95% � 152.4 � 95% Other � FA equipment � 45.9 � 73% � 102.5 � 89% * Information for semiconductors is on a production basis. Note: The name of "AVC Networks" was changed to "Digital AVC Networks" from fiscal 2009. � � � � � � � � � � 4. Segment Information � yen (billions) Fiscal 2009 Second Quarter Fiscal 2009 Six Months ended September 30 � � Sales � 09/08 � Segment Profit � % of sales � 09/08 � Sales � 09/08 � Segment Profit � % of sales � 09/08 Digital AVC Networks � 1,056.5 � 99% � 47.8 � 4.5% � 67% � 2,102.9 � 102% � 102.8 � 4.9% � 93% Home Appliances � 333.4 � 105% � 15.4 � 4.6% � 80% � 685.5 � 103% � 46.9 � 6.8% � 126% MEW and PanaHome � 495.9 � 98% � 25.3 � 5.1% � 81% � 928.7 � 99% � 35.8 � 3.9% � 87% Components and Devices � 335.7 � 92% � 29.5 � 8.8% � 95% � 670.2 � 94% � 49.0 � 7.3% � 99% Other � 309.2 � 110% � 14.9 � 4.8% � 70% � 598.6 � 110% � 28.8 � 4.8% � 82% Total � 2,530.7 � 98% � 132.9 � 5.3% � 78% � 4,985.9 � 98% � 263.3 � 5.3% � 100% Corporate and eliminations � -339.0 � - � -14.3 � - � - � -642.2 � - � -35.1 � - � - Consolidated total � 2,191.7 � 96% � 118.6 � 5.4% � 81% � 4,343.7 � 96% � 228.2 � 5.3% � 104% Note: The name of "AVC Networks" was changed to "Digital AVC Networks" from fiscal 2009. The name of "MEW and PanaHome" was as of September 30, 2008. � � � � � � � 5. Financial data for the primary domain companies (Business domain company basis) � � Fiscal 2009 Second Quarter � yen (billions) Sales Domain company profit Capital Investment � � � � 09/08 � � � 09/08 � % of Sales � � � 09-08 Panasonic AVC Networks Company � 553.1 � 115% � 21.5 � 65% � 3.9% � 59.2 � +7.9 Panasonic Mobile Communications Co., Ltd. � 90.4 � 93% � 6.4 � 256% � 7.1% � 1.5 � +0.5 Panasonic Electronic Devices Co., Ltd. � 120.5 � 92% � 8.1 � 71% � 6.7% � 9.7 � +1.5 Factory Automation Business � 51.1 � 75% � 5.8 � 49% � 11.4% � 0.6 � -1.1 � Fiscal 2009 Six Months ended September 30, 2008 � yen (billions) Sales Domain company profit Capital Investment � � � � 09/08 � � � 09/08 � % of Sales � � � 09-08 Panasonic AVC Networks Company � 1,083.0 � 115% � 35.9 � 76% � 3.3% � 96.6 � +19.6 Panasonic Mobile Communications Co., Ltd. � 209.2 � 102% � 21.3 � 2367% � 10.2% � 2.0 � +0.5 Panasonic Electronic Devices Co., Ltd. � 245.4 � 94% � 17.1 � 83% � 7.0% � 19.0 � +1.5 Factory Automation Business � 112.0 � 89% � 15.3 � 70% � 13.7% � 1.0 � -1.5 * These figures are calculated on an accrual basis. Note: The name of "Panasonic AVC Networks Company" was as of September 30, 2008. � � 6. Capital Investment by segments * � yen (billions) Six Months endedSeptember 30, 2008 � � � � 09-08 Digital AVC Networks � 122.0 � � +21.9 � Home Appliances � 25.5 � � +2.9 � MEW and PanaHome � 19.9 � � +1.1 � Components and Devices ** � 58.4 � � -8.7 � Other � 14.1 � � +8.5 � JVC � - � � -3.0 � Total � 239.9 � � +22.7 � * These figures are calculated on an accrual basis. Note: The name of "AVC Networks" was changed to"Digital AVC Networks" from fiscal 2009. The name of "MEW and PanaHome" was as of September 30, 2008. � � � � � 7. Foreign Currency Exchange Rates � � � � Fiscal 2008 Fiscal 2009 � � Second Quarter � Six Months endedSeptember 30 � Full Year � Second Quarter � Six Months endedSeptember 30 U.S. Dollars � �118 � �118 � �115 � �104 � �104 Euro � �160 � �159 � �160 � �160 � �159 � � � � Fiscal 2008 Fiscal 2009 � � Second Quarter � Six Months endedSeptember 30 � Full Year � Second Quarter � Six Months endedSeptember 30 U.S. Dollars � �118 � �119 � �114 � �108 � �106 Euro � �162 � �162 � �162 � �162 � �163 * � � � (billions) Fiscal 2008 Fiscal 2009 � � Second Quarter � Six Months endedSeptember 30 � Full Year � Second Quarter � Six Months endedSeptember 30 U.S. Dollars � US$0.6 � US$1.2 � US$2.5 � US$1.0 � US$1.5 Euro � �0.3 � �0.6 � �1.2 � �0.4 � �0.8 * These figures are based on the net foreign exchange exposure of the company. � 8. Number of Employees � (persons) � � End of September 2007 � End of March 2008 � End of June 2008 � End of September 2008 Domestic � 136,663 � 135,563 � 134,950 � 134,481 Overseas � 172,374 � 170,265 � 175,631 � 179,113 Total � 309,037 � 305,828 � 310,581 � 313,594 � � � � Quarterly segment information for the past two years is shown on the company's website (http://panasonic.net/ir/).