Panasonic Announces New Midterm Management Plan

Panasonic Corporation (Panasonic)(NYSE:PC) today announced its new midterm management plan that covers the next three years from April 2010 to March 2013. Panasonic President Fumio Ohtsubo unveiled the plan called GT12 (Green Transformation 2012) that is designed to fill Panasonic Group with strong growth potential. President Ohtsubo's presentation is summarized as follows:

1. Reviewing the Achievements under GP3 Plan

(1) Goals of GP3 Plan: Under the previous three-year management plan, called GP3 Plan, which was launched in April 2007, Panasonic undertook various measures to achieve steady growth with profitability, setting the three numerical targets: 10 trillion yen in sales, ROE of 10 percent and reduction of CO2 emissions in manufacturing by more than 300,000 tons compared with the levels achieved in the fiscal year ended March 2007 (fiscal 2007).

(2) Assessment: Although the company has attained its CO2 reduction goal, sales and ROE in the period fell far below its targets. In order to fulfill these two goals, Panasonic pursed double-digit growth in overseas sales for consumer and systems products. However, its sales outside Japan were 72 percent and its sales in BRICs and Vietnam were 73 percent of the targets set in the plan. The company could not achieve its sales targets in all the four ABCD strategic business areas (the A stands for appliance solutions, the B for black-box devices, the C for car electronics and the D for digital AV networks). In terms of manufacturing-oriented innovation, Panasonic managed to attain some positive results in strengthening its management structure by lowering its break-even point and reducing fixed cost.

2. GT12 New Midterm Management Plan

(1) Positioning: Panasonic is aiming to become the No. 1 Green Innovation Company in the Electronics Industry towards 2018, the 100th anniversary of its foundation. As the first step towards the goal, Panasonic will devote the next three years to making group-wide efforts in shifting its paradigm for growth and laying a foundation to be a Green Innovation Company, while integrating its contribution to the environment and business growth. By the time this plan is complete in the fiscal year ending March 2013, Panasonic Group should be a company filled with significant growth potential.

(2) Themes: The plan focuses on the two themes: shifting its paradigm for growth and building a foundation to be a Green Innovation Company. To achieve the paradigm shift for growth, the company will shift its business from existing to new fields such as energy, from Japan-centric to globally-oriented and from individual products to solutions and systems incorporating a variety of products.

To lay its foundation for a Green Innovation Company, Panasonic will increase profitability based on growth by pursing global excellence indexes. They include such multiple goals as achieving 10 trillion yen or more in sales, 10 percent or more each in operating profit and ROE, and having multiple key products that hold a top market share in the world. Panasonic will also enhance its contribution to the environment, laying a groundwork to be No. 1 in green indexes. The company aims to claim a top status with all the following factors: contribution in CO2 emission reductions and recycling resources, the size of its energy systems business and a sales ratio of No. 1 environmentally conscious products.

(3) Group Management Goals: For the fiscal year ending March 2013, the last year of GT12, Panasonic sets the following targets: 5 percent or more in operating profit ratio, 10 trillion yen in sales, a three-year accumulative total of over 800 billion yen in free cash flow, 10 percent in ROE and 50 million ton reduction in CO2 emissions*.

* Comparing CO2 emissions from production activities and those generated from the use of the company's products with the level of the fiscal year ended March 2006, assuming no remedial measures were taken until the end of the fiscal year ending March 2013.

(4) Transformation Indexes: The company has set a group of "transformation indexes" to shift the paradigm for growth mentioned above.

(5) Midterm Strategy for Panasonic Group:

i) Growth Driven by Six Key Businesses: Focusing on six key business areas, Panasonic aims to increase sales of these businesses by 1.2 trillion yen, which accounts for more than 80 percent of the total sales increase the company targets. The six business areas are energy systems, heating/refrigeration/air conditioning, network AV, healthcare, security and LED. The company will allocate 54 percent of its total capital expenditures and 67 percent of its head-office R&D investment to these businesses over the next three years, drastically shifting its management resources to growth businesses.

Energy Systems Business: Panasonic aims to generate sales of 850 billion yen from its energy systems business for the fiscal year ending March 2013 (fiscal 2013), which translates into an annual average growth rate of 16 percent for the three years.

Heating, Refrigeration and Air Conditioning Business: Panasonic aims for 670 billion yen in sales by posting an annual average growth rate of 7.4 percent for the next three years.

Network AV business: Panasonic aims for 2.15 trillion yen in sales for fiscal 2013 with an average annual growth rate of 10 percent.

Next-generation Key Businesses: Panasonic will build up its healthcare, security and LED (excluding LED backlight TV) businesses, aiming to generate combined sales of 1 trillion yen in fiscal 2016 ending March 2016. For fiscal 2013, the company targets 540 billion yen in sales from these three businesses.

ii) Expanding Overseas Business Focusing on Emerging Markets: By shifting its business from Japan-centric to globally-oriented, Panasonic will increase its overseas consumer and systems product sales ratio from 48 percent in fiscal 2010 to 55 percent in fiscal 2013. It aims to increase sales of consumer electronics equipment by 330 billion yen in the emerging markets including BRICs + Vietnam and MINTS + B countries (Mexico, Indonesia, Nigeria, Turkey, Saudi Arabia and the Balkans), targeting high-volume segments in each market.

iii) Reinforcing Systems and Equipment Business: As electronics products are increasingly commoditized, Panasonic will shift its business paradigm to solutions business and change its business structure by fully utilizing the company's comprehensive capabilities. In fiscal 2013, it aims to generate 2.6 trillion yen from its systems and equipment business and increase overseas sales ratio in the business to 39 percent over the next three years.

Under the direction of Corporate Division for Promoting Systems and Equipment Business, Panasonic will work out on its idea of "comprehensive solutions" that enables development, planning and maintenance of a solution package dedicated to each of the seven major markets, including educational facilities, hotels, medical facilities, transportation and airports, offices and factories, retail and distribution facilities and homes.

iv) Collaboration with SANYO: Through collaboration with SANYO in business and strengthening of its management structure, Panasonic strives to generate over 80 billion yen in operating profit as a fruit of synergy between the two companies by March 2013. Panasonic has set up Strategic Working Committee for Group Collaboration on April 1, 2010 to maximize the synergies. For example, in the appliances business, they will introduce collaboration products and consolidate their business strategies by integrating their product development processes and streamlining their bases. They will also consolidate material procurement, which is expected to cut the procurement cost. Sharing of infrastructure and expertise, including overseas warehouses and offices, will reduce the related cost. The two companies will unify their group visions. For example, the group companies will share Panasonic's Eco Ideas.

(6) Management Innovation for Supporting Group Strategy:

i) Initiatives on Environmental Contribution: Panasonic will vigorously push forward its efforts in reducing CO2 emissions. In addition to CO2 reductions in its production activities, the company will reduce those emitted from the use of its products, aiming to peak out in fiscal 2019 as a result of its group-wide efforts. Indirect reductions, such as those through supply of devices including rechargeable batteries, will also play a significant role in achieving the goal.

At the same time, the company will maximize recycling-oriented manufacturing and seek zero waste from its production activities in fiscal 2019. For fiscal 2013, Panasonic will expand the use of recycled resources and bring up its ratio against the total resources used to over 12 percent. In factories, the company will pursue achieving zero CO2 emissions and lift the ratio of resources recycled at plants to over 99 percent. Panasonic will adopt 3Rs (reuse, reduce and recycle) in its product development and strengthen the development of its recycling technologies.

ii) Strengthening Capability to Generate New Businesses: Panasonic's internal business domain companies will lead Panasonic's efforts in boosting its ability to develop new businesses by investing 230 billion yen in new businesses with an aim of generating total sales of over 1.1 trillion yen over the next three years. The head office will make strategic investments exceeding 77 billion yen over the same period. On April 1, 2010, the company set up Innovation Promotion Center under Corporate R&D Group to accelerate the efforts.

iii) Global Human Resources Development: Globalization of human resources is one of the challenges in the management innovation. Panasonic will increase foreign members on the management boards of its business domain companies, set up global human resource meetings and create a system for nurturing foreign executives. The company will establish "Corporate Global Engineer Trainee System" and reinforce its "Working in Japan Program."

iv) Cash Flow-Oriented Management: Panasonic aims to generate 800 billion yen or more in free cash flow over the next three years. The company will carry out business portfolio strategy dividing its business into four categories to make its best investment decision, leveraging its growth capability and profitability. The four categories are the businesses to support next generation, the six key businesses, the businesses to be revitalized and the businesses to be withdrawn.

The company will also improve cash flow generation capability at operating sites in its Midterm Enhanced Cash Flow Management Project. It will maximize investment return by increasing monitoring of large-scale investments, and improve working capital by developing its theoretical inventories applied throughout all the group companies. Further, Panasonic will centralize procurement and strengthen design VE (value engineering) to cut cost and instill cost management culture into company DNA to improve marginal profit ratio.

About Panasonic

Panasonic Corporation is a worldwide leader in the development and manufacture of electronic products for a wide range of consumer, business, and industrial needs. Based in Osaka, Japan, the company recorded consolidated net sales of 7.42 trillion yen (US$79.4 billion) for the year ended March 31, 2010. The company's shares are listed on the Tokyo, Osaka, Nagoya and New York (NYSE:PC) stock exchanges. For more information on the company and the Panasonic brand, visit the company's website at http://panasonic.net.

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 and its other filings.

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, Asia and other 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 possibility of the Panasonic Group incurring additional costs of raising funds, because of changes in the fund raising environment; the ability of the Panasonic Group to respond to 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 on the alliances or mergers and acquisitions including the acquisition of SANYO Electric Co., Ltd.; 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, prevalence of infectious diseases throughout the world 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.