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Annual Report 200919-19, Chayamachi, Kita-ku, Osaka 530-0013, JAPAN
Telephone: +81-6-6906-2801 Facsimile: +81-6-6377-0833
URL: http://panasonic-denkois.co.jp/english/

Printed in JapanFor the Year Ended March 31

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Panasonic Electric Works Information Systems at a Glance
Our Business

Service Solution Business — System Services
1. ASP service
2. Network service
3. Outsourcing service

SystemOperation

Development ofbusiness aroundsolutions

Service Solution Business — System Solutions
Proposal of
Systems
Proposal of
Solutions

1. Solution proposal
2. Consulting
3. Package softwaredevelopment and sales

Solution
Sales

System and Communications Equipment Business
1. Sales of computers, servers,and communications equipment
2. Networking, sales andconstruction

Equipment
Sales andInstallation

Our Strengths
1 Technical capabilities that have supported Panasonic Electric Works, a leading IT firm, for nearly 50 years
2 Sales force through the channels of the Panasonic Electric Works group
3 Multivendor environment not dependent on a particular manufacturer
4 One-stop provision of solutions
5 Possession of an enormous infrastructure (networks, computers, and IDCs)
6 High productivity

Contents2
3
4
7

Panasonic Electric Works Information Systems at a Glance
Progress in Improving Profitability
Message from the President
Q&A with the President
Corporate Governance

8
9
16
31

Corporate Social Responsibility (CSR)
Management's Discussion and Analysis
Financial Section
Corporate Data

System Services Division
The division is engaged primarily in the business of operating a wide array of information systems,
which make full use of our technological capabilities and business solution skills we have nurtured
through a variety of system developments over the years, including consigned system operation.
In specific terms, the core business of the System Services Division is to operate businessapplication systems such as production, sales, inventory control systems, human resources andaccounting systems, and technical information systems. In addition to these enterprise missioncritical systems, it also provides EC/EDI services, network services, outsourcing services, and ASP
services.

63.7%% of Net Sales (2009)

System Solutions Division
The division’s main businesses include the proposals of new information system solutions,consigned system developments, and the provision of originally developed software packages.
It utilizes its own experience in information system services to propose solutions that are best
suited to customer needs. Specifically, it offers thin-client systems, originally developed software
packages, system introduction consulting, and made-to-order system development.

20.3%% of Net Sales (2009)

System and Communications Equipment Business
The division is primarily engaged in the business of selecting and providing items that are best
suited to customer specifications among a wide variety of hardware and third-party software. It
also undertakes construction works in which those systems are utilized. Specifically, the focus ofits business is on the sales of system equipment such as personal computers and network-related
communications equipment, provision of ancillary services, and telephone/LAN network construction.
It is also engaged in the sales of personal computers, servers, printers, communications equipment,
and purchased software as well as telephone discount services.

16.0%% of Net Sales (2009)

Our Target Markets
We are targeting small to medium-sized companies as our core market in proposing solutions.
We have been focusing on this particular market, because we have become aware that, in spiteof the broad range of IT needs, there are no experts within these companies who are able torealize these needs, and more often than not, these companies do not possess the necessary
technologies.
There has been a move in the late IT system investment in automation and systematizationof manual labor, shifting to “a weapon for surviving fierce competition.” To be more precise,
IT systems are seen as being indispensable to management and structural reform and toincreasing competitiveness. Needs are shifting from simple uses to exhaustive uses, and fromownership to service use. “Value-producing suggestions from on-site” are needed to be able
to respond flexibly to these changes. Surely the markets wherein the “on-site capabilities” wehave cultivated over the course of 50 years can be put to use are expanding.

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 20091

Progress in Improving Profitability
The total gross margin for the whole
company representing all threebusiness areas improved from 19.3% of
the previous year to 19.4%, posting a
new record high.

Total Gross Margin (%)
20

19
0

A New Record High

19.4
19.3

2008

2009

System Services Division
Steadily progressing
Net Sales
Rose 0.5% from the previous year to 23,788 million yen, due to stock business (system
operation services, system maintenance services, and so forth) having remained solid
throughout the year.
Gross Profit
Fell 5.1% from the previous year to 4,818 million yen due to the impactof the rapid decline in market prices.
Gross Margin
Owing to a speeding up of streamlining measures in the second half,
the range of drop over the year was limited to fall 1.2 percentage
points from the previous year, maintaining the ratio at 20.3%.

(Millions of Yen)

25,000(%)

23,66421.5

25

23,78820.3

20,00020

15,00015

10,000

10
5,087

5,000
0
Net Sales

4,818

2008

2009

Gross Profit

50Gross Margin

System Solutions Division
Efficiency in development improved greatly
Net Sales
Due to worsening economic conditions in the fourth quarter, fell 9.2% from the previous
year to 7,580 million yen.
Gross Profit
Efficiency in solutions development made a successful progress, andthe figure rose 18.9% from the previous year to 1,531 million yen.
Gross Margin
Thanks to progress in upgrading efficiency in solutions development,
the figure improved greatly, rising 4.8 percentage points from theprevious year.

(Millions of Yen)(%)

10,000

25
8,349

6,000

20.2

7,580

8,000

15

15.4

4,000
2,000
0
Net Sales

20

10
1,531

1,285

2008

2009

Gross Profit

50Gross Margin

System and Communications Equipment Business
Decline in profitability was kept to a minimum
Net Sales
Sales of system equipment and the software of other companies fell, leading to fall 15.6%
from the previous year to 5,951 million yen.
Gross Profit
Fell 22.9% from the previous year to 894 million yen, in line with thedrop in net sales.
Gross Margin
The drop was limited to 1.4 percentage points from the previous year,
holding at 15.0% thanks to progress in streamlining measures.

(Millions of Yen)(%)

10,000

25

8,000

5,951
15.0

4,000
2,000

Net Sales

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 2009

20
16.4

6,000

0

2

7,051

15
10

1,156

2008
Gross Profit

5
894

2009

0

Gross MarginMessage from the President
Making the most of “on-site capabilities,”
we contribute to the value our customers create.
Under the management policy of “Challenging the New,” Panasonic Electric Works Information Systems took measures in thefiscal year ended March 2009 related to the three themes of “achieving new records,” “creating new products,” and “change
into new personnel,” and was able to make progress in creating a strong corporate constitution prepared for the future. First,
with respect to “achieving new records,” although the setting of new financial performance record was an unattainable goal
owing to the worsening business environment from the end of 2008, we were able to maintain and better our high levelprofitability because of the staff united in further improving management efficiency. Regarding “creating new products,” in
addition to achieving the release of 30 products over the fiscal year, we were successful at making our strengths visible in
the process of placing new products on the market. Finally, with respect to “change into new personnel,” we were able todynamically move forward on taking such measures as actively exchanging human resources in order for each member ofour staff to attain further growth. Net sales and profit fell in numeric terms, to be sure, due to the effects of the harsh businessenvironment, but all told, the year was one of enormous qualitative results as discussed above.
Further worsening of the business environment for many of the industries where we have corporate customers
is expected for the fiscal year ending March 2010, and the possibilities for a dramatic improvement in the appetite forcapital investment among our customers are thought to be low. On the other hand, many companies are also expected toposition this situation as a time for runup on their next moves and starting in on bold reassessments of their operations
and management reforms. There are three kinds of IT needs in such an environment. The first kind is for streamlining
and rationalization through structural reform of system operation. The second is for business improvements achieved by
improving the efficiency of existing systems. The third is for aggregation through outsourcing system operations and similar
measures. In all cases, the IT needs are directed at carrying out
on-site reforms at each corporation, and this is an area in which theCompany is most specialized. This is because, over approximately
50 years dating back to the time when the Company was theInformation System Division of Panasonic Electric Works Co.,
Ltd., we have amassed in abundance the “on-site capabilities” forbuilding systems that can operate at maximum efficiency on thefront lines of business. We will continue to make the most of these“on-site capabilities,” and pour our energies into realizing ourmanagement vision, “Value designer—Working with customers toenvision their future and create value together.”To our shareholders and investors, your continued support isalways much appreciated.

Takeyoshi Kawamura
President

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 20093

Q&A with the President
Please tell us about the Company’s

active investments and strengthened our workforce

Q1 performance in the fiscal year ended

while taking measures to improve management

March 2009.

constitution by reducing costs and increasing

Even though sales and profits fell,

operational efficiency.

A1 we maintained profitability.

Consequently, consolidated net sales fell
4.5% from the previous year to 37,320 million yen,

Although the steep appreciation in energy and raw

operating income declined 5.0% to 4,632 million

material prices saw a turnaround, the Japaneseyen, and net income fell 2.1% to 2,783 million

economy in the fiscal year ended March 2009

yen. However, as a result of our efforts to improvedrastically worsened because the financial andmanagement efficiency, the operating margin

economic crisis that originated in the U.S. andremained almost unchanged and the Company was

Europe affected the real economy. With the trend

able to improve the net income margin.

for business enterprises to curtail capital investment
strengthened in conjunction with the deterioration

What progress was made towardQ 2 fulfilling the Management Vision forof corporate earnings, sluggishness was seen for the
first time in the information services industry market,

2010?

which until recently had remained solid thanks to theA2continuation of corporate strategic medium- and longterm IT investment. Amid this business environment,

New value is being produced arounda core of creating new products andimproving quality.

the Company adopted “Challenging the New” as its
management policy for the fiscal year ended March

We have been working since 2007 toward fulfilling2009 and took measures relating to three themes:

our mid-term management vision, “Value Designer—“achieving new records,” “creating new products,”

Working with customers to envision their futureand “change into new personnel.” Concretely, theand create value together,” but the upheaval in the

Company focused on system operation services,business environment since the latter half of 2008 has

which are less susceptible to fluctuations in the

renewed our awareness of the importance of getting

economy. Specific activities included outsourced

back to the Company’s starting point. Our starting

development such as the construction of backbone

point is “on-site,” those locations that are the front

systems for Panasonic Electric Works and its grouplines of business. We want to further strengthen ourcompanies. We also worked to expand external sales“on-site capabilities” by always getting back into theof new products, services, and solutions from thefield to address such questions as what value added

perspective of streamlining operations and reducing

are we producing for our customers and how are wecosts. Looking ahead to future growth, we also madeof help to them. Our focus is on two points.

(Millionsof Yen)Net sales(Millionsof Yen)50,000

5,000

4,610

4,000

30,0003,000
13,8952,000

Four-month period(Millionsof Yen)

5,014

15

3,500

12.5
9.6

4,877
12.5

4,632
12.4

1,000

0

0

2006

2007

2008

2009

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 2009

Net income

12

2,800
6.8

2,500
2,000

11.1

Net income margin (%)
7.5

3,000

3,001

12.5
7.3
2,842

7.5
2,783

8
7
6

5.6

1,500
9

1,329
Four-month period

10,0002005

4

Operating margin (%)

6,000
41,385 40,226
39,066 37,320

40,00020,000Operating income

5776
1,000 Four-month
period
500

0

2005

2006

2007

2008

2009

0

0

2005

2006

2007

2008

2009

Our On-Site Capabilities• Comprehensive technical and proposal capabilities for constructing systems that can solve worksite problems on thefront lines of business and work at maximum efficiency.
• Ability to adopt a close on-site contact relating to internal reforms from the perspective of the worksite and broadly
provide optimal IT, regardless of corporate scale, to generate true effects for the customer.

Everything that can potentially serve as the kind of value-added only the Company can provide such as thetechnological and development capabilities cultivated and on-site know-how accumulated over approximately
50 years going back to the Company’s days as the Information System Division of Panasonic Electric Works, ourworksite-intensive approach, and our ability to root out issues is our “on-site capabilities.”
The first is the “creation of new products
and services refined by on-site capabilities.” The

Please give us a recent concrete

Q3 example of the Company’s on-site
capabilities being well received and its
strengths reconfirmed.

Company’s on-site capabilities in the fields ofinfrastructure building and server operation were
extremely well received by our customers in thefiscal year ended March 2009, and turned into a good

A3

Proposals that make use of our own
experience as an end user are being
well received by customers.

opportunity for reaffirming our strengths. In the fiscal
year ending March 2010, we will work not only on

The installation consulting and operational support

these items but also at constantly bringing on-site

we provide for blade servers, an area that makes

needs to light and creating new products and services

use of our own experiences as an end user, canthat faithfully reflect the Company’s brightest points

be brought up here. A blade server, simply put, isand strengths.

a server that consolidates multiple servers into a

The second focus is on “improving quality.” Wesingle unit. In addition to improving operational

think the quality of IT lies in “helping and creating

efficiency, these servers can also help save space,value for customers.” The quality improvements

lower energy consumption, and reduce the amount

we have in mind is for evolution that sees system

of CO2 emissions. The Company began introducing

development shift from the developer’s perspective

these servers starting in 2004 to deal with the rapid

to a user-initiated process, and simple operation

growth in the number of servers it was operating, andservices turn into more appealing operation services.

achieved space savings through server consolidation,

Furthermore, when considering matters in light of

reduced the number of unneeded standby servers,

our focus on the Three Realities Principle (go to theand managed to both save energy and cut costs.

actual on-site location, know the actual situation andAlso, the effort to standardize infrastructure madebe realistic), our quest for ever-greater quality in the

progress and the roles of development and operations

field is connected also to our customers’ creation ofwere clarified thanks to server

value. Last year, the Company achieved the level 3 ofconsolidation. At present, we

the CMMI*, and further consolidated its ability to linkare proposing operational andthose measures taken to improve quality with being

installation solutions of thea help to its customers. We plan to develop these

optimal blade servers for ourabilities further in the fiscal year ending March 2010.

customers based on the enduser perspective the Company*CMMI is a process improvement model for software andsystem development that was developed by the Software
Engineering Institute at Carnegie Mellon University in the U.S.
It is used globally as a standard indicator of appraising systemdevelopment capabilities.

cultivated in this process, andthese efforts are being wellreceived. The very fact that

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 20095

Q&A with the President
the proposals we offer to customers make use of ourown experiences in going through and getting overthe issues faced in the field is the reason why theCompany’s on-site capabilities are rated so highly.

Please talk about your policy on

Q5 distributing profits to shareholders.
Our basic policy is to stably and actively

A5 pay dividends based on financial
performance.

In February 2009, the Company acquired

Q4 the business of M • NES, a consolidated

subsidiary of Panasonic Electric Works.
Please tell us what the purpose for that was.

The company is aware that distributing profits to all of
our shareholders is one of the most important issues.
While keeping in mind the need to increase internal
reserves for reinforcing management foundations and

It is part of our plan for strengthening
A4 external sales capabilities.

long term growth, our idea is to steadily and actively
pay dividends based on financial performance.
At present, our basic policy is to maintain stable

In implementing our plans for future growth, we are

dividend payouts of 55 yen per share each year while

making the expansion of sales to companies outside

distributing profits to the greatest extent possibleof the Panasonic Electric Works Group (externalin accordance with our consolidated financial

sales) as one of our top priorities and have been

performance, based on comprehensive consideration

working since the fiscal year ended March 31, 2009of our status of fund, financial standing, and payout

to put together a sales force specializing in externalratio. As for the allocation of internal reserves, they

sales and beefing up our sales capabilities. The

go first to increasing corporate value, and then toacquisition of M • NES’s business in February 2009 isreinforcing financial constitution as well as capitalalso a part of our plan for strengthening our external

investments with an eye toward future businesssales capabilities. By making use of their experience

growth and expansion, research and development ofand expertise in developing package software andnew technologies and new businesses, and humanproviding system solutions for external sales, andresource development. Based on this policy, thegenerating synergistic effects among products,

annual dividend for the fiscal year ended Marchcustomers, and technology, we will work to expand

2009 was 75 yen per share. This consists of a regular

our business to make use of our improved solution

dividend of 65 yen per share (the stable dividend of

proposal capabilities and server operation expertise

55 yen, plus a performance-tied dividend of 10 yen)and strive to further strengthen the external sales

and a 10 yen memorial dividend commemorating thecapabilities of the group as a whole. The Company

Company’s 10th anniversary. The payout ratio per

has been exhibiting robust

share was 28.7% on a consolidated basis.

achievements, such as therelease of a new version(Yen)of the MajorFlow workflow

80

Cash dividends per share
75
65

system in May 2009 followed
60

in September by an optional
module for linking thesystem to Cybozu Garoon

6

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 2009

55

2006

2007

40
20

2, an enterprise groupware
package popular in Japan.

55

10Four-month period

0

2005

2008

2009

Corporate Governance
The Company has created optimal corporate governanceWith regard to compliance, all directors, executive

structures from the perspectives of “execution”

officers and employees perform their work activities fairlyand “supervision” in accordance with the Articles ofand in good faith in accordance with the provisions ofIncorporation and the internal regulations adopted by

the Corporate Ethics Regulations and the basic principles

the Board of Directors with the objective of maximizing

described in the Panasonic Action Guidelines and acorporate value.

brochure entitled Our Code of Ethical Conduct. We also

Our corporate governance employs an auditing

use a corporate ethics reporting hotline for the earlysystem. Three auditors, including two outside auditors,

detection of legal violations and improper conduct.

hold monthly auditor's meetings and attend board

The Corporate Ethics Committee, chaired by themeetings to monitor and supervise the execution ofpresident and the director in charge of corporate ethics

directors' duties.

promote ethics-related activities companywide. In

The board of directors meeting, which consists ofaddition, appropriate organizations have been establishedseven directors including two outside directors, is heldand persons responsible for ethics have been appointed

regularly every month. At the meeting, directors reportat business sites, programs such as one for corporate

on significant operating policies, decisions on substantive

ethics leaders have been established, and other corporate

matters, and the status of the business and operations

ethics activities are conducted at work sites.

of the company, as well as statutory matters. Three

For the year ended March 31, 2009, compensation

auditors, of whom two are outside auditors, also attend.

paid to the directors was 94.000 million yen (including

The Company has one outside director and one

10.000 million yen paid to the three outside directors).

auditor appointed by its parent company, but the Board

Of this total amount, 79.000 million yen was for base payof Directors is able to make management decisions(including 10.000 million yen paid to the three outside

independently from the parent company. To enhance

directors) and 15.000 million yen was for bonuses (noobjectivity in management decision making, the Company

bonuses were paid to outside directors).

has one outside director and one outside auditor
independent of the parent company.

General Meeting of Shareholders
Appointment and Dismissal

Appointment and Dismissal
Audit

Board of Directors

Accounting Audit

Board of auditors
AssistanceAppointment and Dismissal
Appointment
and Dismissal

Executive Directors(Executive Divisions)

President
OrdersExecutive Officers
Operational Headquarters
Sales Headquarters
Technological Development Headquarters
Corporate Division

Cooperation

Auditors room

Appointment
and Dismissal
Cooperation

Accounting Auditors

Internal Audit DivisionInternal
Audit

Business Strategy Meeting
Business Review Meeting
Company-wide Committee

Control

Corporate Ethics Committee
Information Security Management Committee
Other Committees

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 20097

Corporate Social Responsibility (CSR)
The second objective is contribution to the society. We

Environmentally-conscious management leads to thecompetitiveness of a company and ultimately to thecontribute by proposing resource-and energy-conserving

transparency of management and the clarification ofplans and system designs, and by offering product services

responsibility. Transparency of management and thethat can significantly assist customers to fulfill theirclarification of responsibility lead to the credibility ofcorporate social responsibility (CSR) as an IT company.

the company in society, which in turn enhances its
corporate value. Based on this idea, we have set out

In concrete terms, we are offering sales of used PC

to achieve two objectives on the theme of becoming

application software, industrial waste management ASP

a company with social significance. The first objective

services, sales of thin-client terminals, and vehicle traffic

relates to undertaking environmental, social, andcontrol services, while working internally on promoting

economic initiatives within the company with the aim

recycling and resource-and energy-conservation.

of becoming a sustainable company that contributes tothe realization of a sustainable society through a well-

In addition, as disaster countermeasures, we arebalanced business management. Among them, since

contributing to the society by enhancing our disasterthe Company places special focus on compliance, werecovery system and through such services as theare implementing training for every employee using“Mimamori Net,” which provides regular informatione-learning and promoting the raising of consciousness

about the condition of elderly people living alone via

toward compliance in a grass-roots manner.

e-mail and holding pandemic countermeasure solutions
seminars for corporations.

Contribute to the society through our products

Environment-conscious
data center

Environmentally-friendly

Backup center

Recycling of personal computers

DeskWave for PC

Industrial waste management

Industrial waste management system (electronic manifestation)

Promotion of energy conservation
Thin client

DeskWave

Security measures
Network security

Location
Remote facility surveillance service

IC card solution

ONMITSUManaged fire wall

Security diagnosis

LoketanPush e-mailDisaster prevention measures
Disaster recovery

8

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 2009

IDC service

METRONET

Backup center

Management’s Discussion and Analysis
Business Conditions
Consolidated net sales for the fiscal year ended

with the previous year. The ratio of net income
to net sales rose 0.2 percentage point to 7.5%.
Net income per share for the fiscal year justMarch 31, 2009, amounted to 37,320 million

ended fell in tandem with the decrease in net

yen, down 4.5% from the previous year.

income for that period, declining 2.1% (5.65 yen)

Cost of sales amounted to 30,077 million

compared with the previous year to 261.13 yen.

yen, a 4.7% decrease from the previous year.

Return on equity (ROE) declined 2.9 percentage

The cost of sales ratio stood at 80.6%, a 0.1

points to 16.8%.

percentage point improvement from 80.7%
the previous year, the result of efforts madeto expand external sales of new products,
new services, and new solutions from theperspectives of “streamlining” and “costStatus by Division

reduction.” Selling, general, and administrative

The Group engages in the information service(SG&A) expenses declined 1.4% to 2,611 million

businesses, with specific activities including

yen, but an SG&A ratio rose 0.2 percentage

the provision of system development, system

point from 6.8% to 7.0% owing to active

operation, and communication services, along

investments and personnel increases aimed

with sales of system equipment. Business-

at future business expansion. As a result,

specific segment information is not offered as

consolidated operating income fell 5.0% to

the Group engages in a single area of business.

4,632 million yen. The operating margin fell 0.1

Business results by product segments forpercentage point to 12.4%, but still remained at

the fiscal year ended March 31, 2009, are asa high level.

follows.

Turning to other income (expense) - net, theGroup posted a 102 million yen income, versus
the previous year’s 30 million yen expense. Thisis due to the fact that write-downs of investment
securities which we saw during the previous
year did not occur this year, and the interest

Total Assets

,61
18

2005

2006

2007

2008

2009

16

9
,11

of 2,783 million yen, a 2.1% decrease compared

,21

5,000

23

the Group recorded a consolidated net income

5

10,000,18

As a result of the above-mentioned factors,

21

15,000,30

20,000minority interests fell 2.3% to 4,734 million yen.

21

As a result, income before income taxes and0

25,000

7

1(Millions of Yen)

income rose compared with the previous year.

0(Four-month period)

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 20099

Management’s Discussion and Analysis
Service Solutions Division

System and Communications Equipment Division(a) System Services Division

Due to the sluggishness in the sales of system

Owing to bullish conditions throughout theequipment installed in conjunction with systemfiscal year in system operations and systemconstruction and in the sales of software ofmaintenance service businesses, net sales roseother companies, net sales fell 15.6% from the

0.5% from the previous year to 23,788 million

previous year to 5,951 million yen and the gross

yen while the gross margin fell 1.2 percentage

margin fell 1.4 percentage points to 15.0%.

points to 20.3%.
(b) System Solutions Division
System development in conjunction with thename change by Panasonic Electric Works andFinancial Position

its group companies in October 2008 was one

As of the end of the fiscal year ended Marchfactor behind the increase in sales. However,31, 2009, totals assets rose 2,026 million yen

external system development experienced

compared with the end of the previous year tosluggish growth in the first half, and the recovery

23,211 million yen. This was mainly due to an

net sales staged in the second half did not bringincrease in property and equipment.

net sales up to the level of the previous year.

Current assets decreased by 117 million yen

Furthermore, orders for system construction

to 18,635 million yen. The primary factors behindand other projects from Panasonic Electric

this were a 256 million yen decrease in cash andWorks and its group companies fell in the fourth

deposits and a 1,042 million yen decrease inquarter, with the result that net sales declined

accounts receivable-trade, even though deposits

9.2% from the previous year to 7,580 million

paid increased by 1,126 million yen.

yen, while the gross margin rose 4.8 percentage
points to 20.2%.

Property and equipment amounted to 2,643
million yen, an increase of 1,504 million yen.
This was due to increases of 648 million yen in

EquityResearch and Development Costs(Millions of Yen)

(Millions of Yen)

17

15

75

70

39

10

50
39

40

8,5

10,000

80
60

,98

5

15,000

13

,34

6

,55

2

,60

4

20,000

30
5,000

10
0

0
2005

(Four-month period)

10

21

20

2006

2007

2008

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 2009

2009

13
3
2005

(Four-month period)

2006

2007

2008

2009

buildings, 1,014 million yen in tools, furniture andCash Flows from Operating Activities

fixtures, and 301 million yen for construction inFunds generated from operating activities

progress.

increased 1,014 million yen to 3,864 million yen

Total liabilities decreased 26 million yen tofrom the end of the previous year. This was due

5,607 million yen. The main factors behind thisto factors including a 1,035 million yen decrease

were a 106 million yen increase in accounts

in accounts receivable, an 889 million yen

payable-other, a 108 million yen decrease inincrease in depreciation and amortization, and aaccounts payable-trade, and a 214 million yen

109 million yen decrease in accounts payable.

decrease in reserves for bonuses.
Total equity as of the end of the fiscal year

Cash Flows from Investing Activities

amounted to 17,604 million yen, a 2,052 million

Funds used in investing activities amounted

yen increase from the previous year. This wasto 3,866 million yen. This was due to factors

mainly due to a 2,089 million yen increase inincluding increases in deposits paid totaling 6,700

retained earnings owing to appropriations of net

million yen, purchases of property and equipment

income on the fiscal year. As a result, the equity

totaling 1,577 million yen, and payment for

ratio stood at 75.7%, up 2.4 points from thebusiness acquisition totaling 215 million yen.

73.3% recorded the previous year.
Cash Flows from Financing Activities
Funds used in financing activities amounted to
710 million yen owing to the dividend payment,

Cash Flows

which amounted to 693 million yen.

Cash and cash equivalents (hereinafter referredFree Cash Flows

to as “funds”) at the end of the fiscal year ended

Due to the aforementioned operating andMarch 31, 2009, decreased by 711 million yen

investing activities, free cash flows amounted tofrom the end of the previous year to 3,968

a cash outflow of 1 million yen, compared withmillion yen.

inflow of 927 million yen the previous year.

Capital Expenditure

Cash Flows 2009

(Millions of Yen)

(Millions of Yen)

3,000

4,000

Operating activities

3,864

Investing activities
Financing activities

2,581

2,500

Net increase in cash and cash equivalents

2,000
2,000
1,500

0
1,066

1,000
500

574
213

-710

-712

-2,000363

0-4,0002005(Four-month period)

2006

2007

2008

2009

-3,866

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 200911

Management’s Discussion and Analysis
Risk Factors

investments or sales initiatives for a particular(1) Risks Related to Economic Conditions

competitors in terms of quantity, quality, and(a) Fluctuations in the Economic Environment

speed. Furthermore, competitors may have

Demand for the Group’s products and services

greater financial, technological, and marketing

may be affected by general economic trends

resources than the Group.

product or service may fail in comparison to

mainly in Japan. Economic downturns andresulting declines in demand in the Japanese(b) Price Competition

market may thus adversely affect the Group’s

The Group is subject to intense pricefinancial condition, operating results, and cash

competition in the information services industry,flows.

and this may make it difficult for the Group to
determine prices for products and services(b) Interest Rate Fluctuations

to secure adequate profits. This downward

Interest rate fluctuations may affect operatingpressure on prices may have a serious effect on

expense, interest expense, and interest income,securing the Group’s profits, and may become

as well as the value of financial assets andespecially noticeable in cases of decreased

liabilities, and may have an adverse impact on

demand for products and services. Prices of

the Group’s business, performance, and financial

many of the Group’s products and services are

position.

expected to continue declining in the fiscal year
ending March 31, 2010.

(c) Stock Price Falls

12

The Group holds Japanese stocks as investment(c) Competition in New Technologies

securities, and decreases in their market value

The Group may lose the ability to compete in

may necessitate the recognition of valuation

new markets if it fails to correctly predict andlosses in these stocks. Furthermore, a decline

develop the new technologies, new products,

in the valuation difference on available-for-saleand new services for meeting future market

securities may reduce net assets.

needs.

(2) Risks Related to the Group’s Business Activities(d) Securing Capable Human Resources(a) Competitive Environment

The Group’s future success depends largely

The Group faces different types of competitors

on its ability to retain skilled employees inin the information services industry, ranging

the technical and management fields. The

from large international companies to relatively

Group expects that it will be necessary to hiresmall, rapidly growing companies. The Group

more personnel in the information services

actively makes investments and takes initiatives

business field, but industry demand for skilledin strategic products and services. However,

employees in the field in question exceeds thePanasonic Electric Works Information Systems Co., Ltd.
Annual Report 2009

supply, making competition for attracting andmay adversely affect the Group’s businesses.

retaining these employees intense. Because of

Moreover, although the Group and suppliers

this severe competition for skilled employees,

decide purchase prices by contract, purchase

the Group may be unable to retain its existing

prices may increase significantly due to changes

personnel or attract additional employees.

in demand or for other reasons. Furthermore,

If this should happen, the Group’s business,some products and services are only available

performance, and financial position could befrom a limited number of suppliers. If the Groupadversely affected.

is unable to procure such products and services,
its businesses, performance, and financial status(e) Business Alliances with Other Companies, etc.

may be adversely affected.

The Group develops its business by forming
alliances with or strategic investments in other(g) Capital Status and Financial Conditions ofcompanies, and the strategic importance ofCustomers

partnering with third parties is increasing. In

Some of the Group’s customers purchasesome cases, such partnerships are crucial toproducts and services from the Group on

achieve the Group’s goal of introducing new

payment terms that do not provide for

products and services, but the Group may not

immediate payment. If customers for whom

be able to successfully collaborate or achieve

the Group has substantial accounts receivable

expected synergies with its partners. In addition,encounter financial difficulties and are unable

these partners may change their businessto make payments on time, the Group’s

strategies and it may become difficult for thebusinesses, performance, and financial status

Group to maintain these business partnerships.

may be adversely affected.

If any of the foregoing should happen, the Group’sbusinesses, performance, and financial status(3) Risks Related to Future Plans, etc.

could be adversely affected.

On April 23, 2009, the Group announced its
earnings forecasts and details of key measures(f) Procurement of Raw Materials, etc., and Purchasefor the fiscal year ending March 31, 2010.

PricesHowever, the Group may fail to achieve all of the

The Group’s operations depend on obtaining

goals announced and/or the expected results.

high-quality products, services, and the like ina timely manner and in the necessary quantity,(4) Risks Related to Legal Restrictions and Litigation

and we therefore select reliable suppliers.

(a) Direct or Indirect Costs Related to ProductHowever, it may be difficult to change or

Liability or Warranty Claims Due to Defects inincrease suppliers, or switch to other products,

Products or Services

services, and the like if the supply from suppliers

The Group pays due attention to ensuring theis interrupted or industry demand increases. Thisquality of its products and services. However,Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 200913

Management’s Discussion and Analysis
the occurrence of defects in products or services

upheld, the Group may cease to be able to use

could make the Group liable for damages,

specific technologies, products, and/or services,

including indirect damages, caused by the defector be able to supply specific technologies,

not completely covered by liability insurance

products, and/or services, and may be liable forand the Group could incur significant expenses.

significant damages.

Moreover, negative publicity concerningthese problems could impair the Group’s(c) Changes in Account Standards and Tax Systems

corporate image, and the Group’s businesses,

The Group’s business, performance, andperformance, and financial status may befinancial status may be adversely affected byadversely affected.

the unforeseen application of new accounting
standards and tax systems. Furthermore,(b) Intellectual Property Right Protection

differences in views with tax authorities on the

The Group works to secure a competitive edge

Group’s tax returns could result in the Groupfor its businesses by protecting intellectual

being liable for more taxes than expected.

property rights (IPR) related to the technologies,
products, and services it develops. However,(d) Information Leaks

rights may not be granted to provide adequate

In the normal course of business, the Group

protection based on IPR.

obtains information (including personal

Furthermore, the Group may be unable touse or be forced to use on disadvantageous

relating to privacy and credit worthiness. The

terms the technologies, products, and services

Group pays due attention to safeguardingof third parties protected by IPR when needed.

the confidentiality of this information and has

As of March 31, 2009, the Group was using

implemented the greatest possible measures

the IPR of third parties under license from third

to prevent information leaks. However, theparties for some of its products and services.

Group cannot rule out the possibility that such

However, in the future the Group may not be

information may be leaked due to an accident

able to obtain the necessary licenses from thirdor other inevitable cause. Such a leakage ofparties or may be able to obtain licenses only

information may result in the Group being held

under disadvantageous terms.

liable for damages to affected parties and may

Litigation may also be necessary to defend

impair the Group’s corporate image. Moreover,the Group against IPR infringement claims

there is a risk that the Group’s trade secrets

brought by third parties or to enforce the Group’s

may be misused by external parties. In such a

IPR. The Group may incur significant expenses

case, the Group’s businesses, performance, andand use significant management resources

financial status may be adversely affected.

for such lawsuits. Furthermore, if third party’s
claims that the Group infringed on IPR are

14

information) about customers and the like

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 2009(e) Losses Due to Other Legal Restrictions, etc.

as a result of such events may result in serious

The Group is subject to governmental

damage to Group facilities, and the Group may

regulations in Japan and other countries andhave to stop operations at certain facilities andregions in which it conducts its business. These

delay the provision of products and services.

include government approvals required for

The Group may incur considerable expenses

conducting business and investments, laws

for restoring damaged facilities, which could

and regulations governing national security,

adversely affect the Group’s businesses,

and export/import laws and regulations, as well

performance, and financial position.

as commercial, antitrust, intellectual property,
financial transactions, worker protection,(6) Other Risks

subcontractor protection, and business(a) Pension Liabilities

taxation laws and regulations. Tighter laws and

The Group has contributory, funded benefit

regulations or stricter interpretations of thempension plans covering substantially all

than in the past by authorities could place

employees in Japan who meet eligibility

restrictions on the Group’s businesses or result

requirements. Revisions to experience

in increased expenses for complying with them.

assumptions and pension asset performance

The Group has taken measures to ensure it

could result in an increase in unrecognizedis ready to handle a compliance violation or otheractuarial losses, leading to an increase in future

emergency such as establishing an emergency

net periodic benefit costs of these pension

contact network and organizational bodies

plans.

responsible for responses. However, the Group’s
corporate image could be impaired and the(b) Fixed Asset Impairment

Group’s businesses, performance, and financial

The Group has many fixed assets, such as

status could be adversely affected if its response

property and equipment. All Group companies

is inadequate.

periodically review the recorded value of fixed
assets on the balance sheet to determine if(5) Risks Related to Disasters or Unpredictable Events

future cash flows to be derived from these(a) Effects of Disasters or Unpredictable Events

assets will be sufficient to recover the residual

The headquarters and major bases of the Groupvalues in accordance with accounting standards

are located in Japan. The occurrence of a natural

governing the impairment of fixed assets. If

disaster such as an earthquake, flood, somethese assets cannot generate sufficient cash

other unexpected event such as a fire, war orflows, impairment losses may have to be

terrorist attack, infectious disease outbreak,recognized.

industrial accident, malicious computer virus,
a breakdown or malfunction in the Group’s
information system or communications network

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 200915

Panasonic Electric Works Information Systems Co., Ltd. and Subsidiaries

Consolidated Balance Sheets
March 31, 2009 and 2008

Thousands of
U.S. Dollars(Note 1)Millions of Yen

ASSETS

2009

CURRENT ASSETS:
Cash and deposits (Note 3)
Accounts receivable - Trade (Note 13)
Inventories (Note 4)
Deposits paid (Notes 3 and 13)
Deferred tax assets (Note 10)
Other current assets (Note 13)
Allowance for doubtful receivables¥

Total current assets
PROPERTY AND EQUIPMENT:
Buildings
Tools, furniture and fixtures
Lease assets
Construction in progress
Total
Accumulated depreciation
Net property and equipment
INVESTMENTS AND OTHER ASSETS:
Investment securities (Note 5)
Goodwill (Note 6)
Software
Long-term deposits paid
Prepaid pension cost (Note 8)
Deferred tax assets (Note 10)
Other assets
Allowance for doubtful receivables
Total investments and other assets
TOTAL
See notes to consolidated financial statements.

16

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 2009

¥

516
6,769
619
10,165
272
295
(1)

2008

¥

773
7,810
525
9,039
349
258

2009

$

5,265
69,071
6,316
103,724
2,776
3,012
(10)

18,63518,754

190,154

888
2,711
132
465
4,196
(1,553)

240
1,697
164
2,101
(962)

9,061
27,663
1,347
4,745
42,816(15,847)

2,643

1,139

26,969

251
77
501
221
358
345
207
(27)

205
4
337
147
125
385
109
(20)

2,561
786
5,112
2,255
3,653
3,520
2,113
(276)

1,933

1,292

19,724

23,211¥

21,185$

236,847

Thousands of
U.S. Dollars(Note 1)Millions of Yen

LIABILITIES AND EQUITYCURRENT LIABILITIES:
Accounts payable - Trade (Note 13)
Accounts payable - Other (Note 13)
Income taxes payable
Consumption taxes payable
Deposits received (Note 7)
Other current liabilities

2009

¥

Total current liabilities
LONG-TERM LIABILITIES:
Deposits received (Note 7)
Other
Total long-term liabilities

2008

2,091
1,818
842
21
2
696

¥

2009

2,199
1,711
901
50
3
674

$

21,337
18,551
8,592
214
20
7,102

5,470

5,538

55,816

50
87

40
55

510
888

137

95

1,398

1,040
871
15,704(42)(0)
17,573
31

1,040
871
13,614(3)(0)
15,52230

10,612
8,888
160,245(428)(0)
179,317316

17,604

15,552

179,633

COMMITMENTS (Note 12)
EQUITY (Notes 9 and 14):
Common stock
authorized 40,000,000 shares; issued 10,656,000 shares
Capital surplus
Retained earnings
Unrealized loss on available-for-sale securities
Treasury stock - at cost 63 shares in 2009 and 2008
Total
Minority interests
Total equity
TOTAL

¥

23,211¥

21,185$

236,847

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 200917

Panasonic Electric Works Information Systems Co., Ltd. and Subsidiaries

Consolidated Statements of Income
Years Ended March 31, 2009 and 2008

Thousands of
U.S. Dollars(Note 1)Millions of Yen

2009
NET SALES (Note 13)

¥

2008

37,320¥2009

39,066$COST OF SALES (Notes 11 and 13)

30,07731,543306,908

Gross profit

7,243

7,523

73,908SELLING, GENERAL AND ADMINISTRATIVE EXPENSES(Notes 11 and 13)

2,611

2,646

26,643

4,632

4,877

47,265

93
(6)

949
(61)

15

69
(3)
54
(153)
3

102

(30)

1,041

INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS

4,734

4,847

48,306

INCOME TAXES (Note 10):
Current
Deferred

1,755
195

1,898
101

17,908
1,990

Total income taxes

1,950

1,999

19,898MINORITY INTERESTS IN NET INCOME

1

6

10

Operating income
OTHER INCOME (EXPENSES):Interest income
Interest expense
Receipt of cancellation fee of operating system
Write-down of investment securities
Other - net
Other income (expense) - net

NET INCOME

¥

2,783

¥

2,842

153

$

Yen

PER SHARE OF COMMON STOCK (Notes 2.m and 14):
Basic net income
Cash dividends
See notes to consolidated financial statements.

18

380,816

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 2009¥

261.1375.00

28,398

U.S. Dollars¥

266.78
65.00

$

2.66
0.77

Panasonic Electric Works Information Systems Co., Ltd. and Subsidiaries

Consolidated Statements of Changes in Equity
Years Ended March 31, 2009 and 2008

Millions of Yen
Number of Sharesof Common Stock
IssuedBALANCE, APRIL 1, 2007

CommonStock

10,656,000 ¥ 1,040 ¥CapitalSurplusRetained
Earnings

Unrealized Loss on
Available-for-sale
Securities

TreasuryStock871 ¥ 11,411

Minority
Interests

Total¥ 13,322 ¥Total
Equity24 ¥ 13,346

Net income

2,842

2,842

2,842

Cash dividends, ¥60 per share

(639)

(639)

(639)

(0)

(0)

Purchase of treasury stock¥

Net changes in the year
BALANCE, MARCH 31, 2008¥

10,656,000

1,040

871

13,614

(0)

(3)

(3)

(0)

(3)

6

3

15,52230

15,552

Net income

2,783

2,783

2,783

Cash dividends, ¥65 per share

(693)

(693)

(693)

Net changes in the year
BALANCE, MARCH 31, 2009(39)
10,656,000 ¥ 1,040 ¥871 ¥ 15,704 ¥(42) ¥(39)(0) ¥ 17,573 ¥

1

(38)

31 ¥ 17,604

Thousands of U.S. Dollars (Note 1)
CommonStock

BALANCE, MARCH 31, 2008

CapitalSurplusRetained
Earnings

Unrealized Loss on
Available-for-sale
Securities$ 10,612 $ 8,888 $ 138,918 $(31) $

Treasury
Stock

Total

Minority
Interests

Total
Equity(0) $ 158,387$ 306 $ 158,693

Net income

28,39828,39828,398Cash dividends, ¥65 per share(7,071)(7,071)(7,071)

Net changes in the year
BALANCE, MARCH 31, 2009(397)
$ 10,612 $ 8,888 $ 160,245 $(428) $

(397)(0) $ 179,317 $

10

(387)

316 $ 179,633

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 200919

Panasonic Electric Works Information Systems Co., Ltd. and Subsidiaries

Consolidated Statements of Cash Flows
Years Ended March 31, 2009 and 2008

Thousands of
U.S. Dollars(Note 1)Millions of Yen

2009
OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:
Depreciation and amortization
Increase in allowance for doubtful receivables
Decrease in liability for retirement benefits
Interest income
Interest expense
Write-down of investment securities
Changes in assets and liabilities:
Decrease in accounts receivable
Decrease (increase) in inventories
Increase in other current assets
Increase in prepaid pension cost
Decrease in accounts payable
Decrease in other current liabilities
Increase (decrease) in other long-term liabilities
Other - net
Total adjustments
Interest received
Interest paid
Income taxes paid
Net cash provided by operating activities

¥

4,734

¥

889
7

INVESTING ACTIVITIES:
Increase in deposits paid
Decrease in deposits paid
Purchases of property and equipment
Purchases of software
Purchases of investment securities
Payment for purchase of V-internet Operations, Inc. net of cash acquired
Payment for business acquisition
Other - net
Net cash used in investing activities

2009

4,847

$

614

48,306
9,071
71

(96)
6

(113)
(69)
3
153

(980)
61

1,035
(51)
(8)
(233)
(109)
(563)
(32)
23
868
106
(6)
(1,838)
3,864

1,793
24
(37)
(125)
(1,399)
(653)
1
12
204
60
(3)
(2,260)2,848

10,561(520)(82)(2,378)(1,112)(5,745)
(327)
237
8,857
1,082
(61)
(18,755)
39,429(6,700)
5,100(1,577)
(277)
(121)

(6,000)
5,100
(713)
(175)
(52)
(49)

(68,367)
52,041(16,092)(2,827)(1,235)(215)(76)(3,866)(32)(1,921)(2,194)(775)(39,449)

FINANCING ACTIVITIES:
Repayment of lease obligations
Dividends paid
Net cash used in financing activities

(17)
(693)
(710)

(639)
(639)

(174)
(7,071)(7,245)NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

(712)

288

(7,265)

CASH AND CASH EQUIVALENTS NEWLY CONSOLIDATED SUBSIDIARY, BEGINNING OF YEAR

1

CASH AND CASH EQUIVALENTS, END OF YEAR (Note 3)
ADDITIONAL CASH FLOWS INFORMATION:
Assets acquired and liabilities assumed in acquisition:
Assets acquired
Liabilities assumed
Cash paid for the capital
Goodwill
See notes to consolidated financial statements.

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 2009

10

4,679

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

20

2008

4,391

47,745

¥

3,968

¥

4,679

$

40,490

¥

137
51

¥

190
61
133
4

$

1,398
520

Panasonic Electric Works Information Systems Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements
Years Ended March 31, 2009 and 2008

All significant intercompany balances and transactions
have been eliminated in consolidation. All material
unrealized profit included in assets resulting fromtransactions within the Group is eliminated.

1. BASIS OF PRESENTING CONSOLIDATEDFINANCIAL STATEMENTS
Panasonic Electric Works Information Systems Co.,
Ltd. (the “Company”) was incorporated on February 22,
1999 as a subsidiary of Panasonic Electric Works Co.,
Ltd. (the “Parent”). The Company is 64% owned by
the Parent at March 31, 2009 and 2008, respectively.
The principle business of the Company is to provide
integration service for information systems; maintenanceof computer systems; design, development, sales, lease,rental of computer software; information network service
and sales of related equipment.

b.

Cash Equivalents - Cash equivalents are shortterm investments that are readily convertible into cash
and that are exposed to insignificant risk of changes
in value. Cash equivalents include deposits paid, allof which mature or become due within three monthsof the date of acquisition.

c.

Inventories - Prior to April 1, 2008, merchandiseand supplies are stated at the lower of cost,
determined by the moving-average method, ormarket. Work in process inventories are stated atcost determined by the specific identification method.

The accompanying consolidated financial statements
have been prepared in accordance with the provisions
set forth in the Japanese Financial Instruments andExchange Act and its related accounting regulations,and in conformity with accounting principles generally
accepted in Japan (“Japanese GAAP”), which are
different in certain respects as to application anddisclosure requirements of International Financial
Reporting Standards.

In July 2006, the Accounting Standards Boardof Japan (the “ASBJ”) issued ASBJ Statement
No. 9, “Accounting Standard for Measurement of
Inventories”. This standard requires that inventories
held for sale in the ordinary course of business bemeasured at the lower of cost or net selling value,
which is defined as the selling price less additional
estimated manufacturing costs and estimated direct
selling expenses. The replacement cost may be usedin place of the net selling value, if appropriate. The
standard also requires that inventories held for trading
purposes be measured at the market price. The
standard was effective for fiscal years beginning on
or after April 1, 2008 with early adoption permitted.

In preparing these consolidated financial statements,
certain reclassifications and rearrangements have been
made to the consolidated financial statements issued
domestically in order to present them in a form which ismore familiar to readers outside Japan.
The consolidated financial statements are stated inJapanese yen, the currency of the country in which theCompany is incorporated and operates. The translationsof Japanese yen amounts into U.S. dollar amounts areincluded solely for the convenience of readers outside
Japan and have been made at the rate of ¥98 to $1, theapproximate rate of exchange at March 31, 2009. Suchtranslations should not be construed as representations
that the Japanese yen amounts could be converted into
U.S. dollars at that or any other rate.

The Company applied this new accounting standard
for measurement of inventories effective April 1, 2008.
There was no effect of this change on income.

d.

Investment Securities - Available-for-salesecurities, which are not classified as either trading
securities or held-to-maturity debt securities, arereported at fair value, with unrealized gains andlosses, net of applicable taxes, reported in a separate
component of equity.

e.

Property and Equipment - Property andequipment are stated at cost. Depreciation ofproperty and equipment of the Group are computed
substantially by the declining-balance method at rates
based on the estimated useful lives of the assets,
while the straight-line method is applied to buildings
and lease assets. The range of useful lives is from 8
to 15 years for buildings and from 3 to 10 years fortools, furniture and fixtures.

f.

Long-lived Assets - The Group reviews its long-

2. SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIESa.

Consolidation - The consolidated financial
statements as of March 31, 2009 include theaccounts of the Company and its 3 subsidiaries (2subsidiaries in 2008) (together, the “Group”).
Under the control or influence concept, the Company
consolidates entities that it, directly or indirectly, isable to exercise control over operations.
Goodwill represents the excess of the cost of an
acquisition over the fair value of the net assets of theacquired subsidiary at the date of acquisition and isbeing amortized on a straight-line basis over five years.

lived assets for impairment whenever events orchanges in circumstance indicate the carrying amountof an asset or asset group may not be recoverable.

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 200921

An impairment loss is recognized if the carrying
amount of an asset or asset group exceeds the sumof the undiscounted future cash flows expected toresult from the continued use and eventual dispositionof the asset or asset group. The impairment loss
is measured as the amount by which the carrying
amount of the asset exceeds its recoverable amount,which is the higher of the discounted cash flows fromthe continued use and eventual disposition of theasset or the net selling price at disposition.

g.

k.

Software Revenue Recognition - On March
30, 2006, the ASBJ issued Practical Issues Task
Force (“PITF”) No. 17, “Practical Solution on Revenue
Recognition of Software”. The Group adopted thistask force in the year ended March 31, 2007.

l.

Income Taxes - The provision for income taxes iscomputed based on the pretax income included in
the consolidated statements of income. The asset
and liability approach is used to recognize deferred
tax assets and liabilities for the expected future tax
consequences of temporary differences between
the carrying amounts and the tax bases of assets
and liabilities. Deferred taxes are measured byapplying currently enacted tax laws to the temporary
differences.

m.

Per Share Information - Basic net income per

Software - Software to be sold is amortized by thestraight-line method over the estimated economic lifeof the software, 3 years. Software for internal use isamortized by the straight-line method over its usefullife, 5 years.

h.

i.

Retirement Benefits - The Company has a noncontributory, funded pension plan together with the
Parent and certain other domestic consolidated
subsidiaries of the Parent covering substantially all of
their employees. The liability for retirement benefits is
accounted for based on projected benefit obligations
and plan assets at the balance sheet date.

share is computed by dividing net income available
to common shareholders by the weighted-average
number of common shares outstanding for the year.

Leases - In March 2007, the ASBJ issued ASBJ
Statement No. 13, “Accounting Standard for Lease
Transactions”, which revised the previous accounting
standard for lease transactions issued in June
1993. The revised accounting standard for leasetransactions was effective for fiscal years beginningon or after April 1, 2008 with early adoption permitted
for fiscal years beginning on or after April 1, 2007.

Cash dividends per share presented in theaccompanying consolidated statements of income are
dividends applicable to the respective years including
dividends to be paid after the end of the year.

Under the previous accounting standard, financeleases that deemed to transfer ownership of theleased property to the lessee were capitalized.
However, other finance leases were permitted tobe accounted for as operating lease transactions if
certain “as if capitalized” information is disclosed in
the note to the lessee’s financial statements. The
revised accounting standard requires that all financelease transactions be capitalized to recognize leaseassets and lease obligations in the balance sheet. In
addition, the revised accounting standard permits
leases which existed at the transition date and do
not transfer ownership of the leased property to thelessee to continue to be accounted for as operatinglease transactions.
The Company applied the revised accounting
standard effective April 1, 2008. In addition, theCompany accounted for leases which existed at
the transition date and do not transfer ownership ofthe leased property to the lessee as operating leasetransactions. The effect of this change to income
was immaterial.
All other leases are accounted for as operatingleases.

j.

Bonuses to Directors and Corporate
Auditors - Bonuses to directors and corporate
auditors are accrued at the year end to which suchbonuses are attributable.

22

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 2009

Diluted net income per share is not presented as no
securities with a dilutive effect have been issued.

The weighted-average number of common shares usedin the basis net income per share computation was
10,655,937 shares for 2009 and 2008, respectively.

n.

New Accounting Pronouncements
Construction Contracts - Under the current
Japanese GAAP, either the completed-contract
method or the percentage-of-completion method ispermitted to account for construction contracts. In
December 2007, the ASBJ issued a new accounting
standard for construction contracts. Under thisnew accounting standard, the construction revenue
and construction costs should be recognized by thepercentage-of-completion method, if the outcomeof a construction contract can be estimated reliably.
When total construction revenue, total construction
costs and the stage of completion of the contract atthe balance sheet date can be reliably measured, theoutcome of a construction contract can be estimatedreliably. If the outcome of a construction contract
cannot be reliably estimated, the completed-contract
method shall be applied. When it is probable that
total construction costs will exceed total construction
revenue, an estimated loss on the contract shouldbe immediately recognized by providing for loss on
construction contracts. This standard is applicable
to construction contracts and software development
contracts and effective for fiscal years beginning on
or after April 1, 2009 with early adoption permitted forfiscal years beginning on or before March 31, 2009
but after December 27, 2007.

3. RECONCILIATION TO CASH AND CASH EQUIVALENTS
The reconciliation of cash and deposits in the consolidated balance sheets to cash and cash equivalents in the consolidated
statements of cash flows at March 31, 2009 and 2008 were as follows:

Thousands of
U.S. Dollars

Millions of Yen

2009

2008

2009

Cash and deposits
Deposits paid with original maturities of within 3 months
Time deposits over 3 months

¥

516
3,462
(10)

¥

773
3,916
(10)

$

5,265
35,327(102)

Cash and cash equivalents

¥

3,968

¥

4,679

$

40,4904. INVENTORIESInventories at March 31, 2009 and 2008 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2009

2008

2009

MerchandiseWork in process
Supplies

¥

160
457
2

¥

226
297
2

$

1,633
4,663
20

Total

¥

619

¥

525

$

6,316

5. INVESTMENT SECURITIESInvestment securities as of March 31, 2009 and 2008 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2009
Non-current:
Marketable equity securities
Unquoted equity securities
Investment in unconsolidated subsidiary
Total

2008

2009

¥

251

¥

196
8
1

$

2,561

¥

251

¥

205

$

2,561

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 200923

The carrying amounts and aggregate fair values of investment securities at March 31, 2009 and 2008 were as follows:

Millions of Yen

Thousands of U.S. Dollars

Unrealized
Losses

Cost

Fair Value

Unrealized
Losses

Cost

Fair Value

March 31, 2009
Securities classified as:
Available-for-sale:
Equity securities

¥

321

¥

(70)

¥

251

¥

200

¥

(4)

¥

196

$

3,276

$

(715)

$

2,561

March 31, 2008
Securities classified as:
Available-for-sale:
Equity securities

6. GOODWILL
Goodwill at March 31, 2009 and 2008 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2009
Goodwill on business acquisition
Consolidation goodwill

¥

Total

¥

2008

2009

74
3

¥

4

77

¥

4

$

755
31

$

786

Goodwill on business acquisition and consolidation goodwill are being amortized on a straight-line basis over five years.

7. DEPOSITS RECEIVED
Deposits received at March 31, 2009 and 2008 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2009

2008

2009

Welfare pension
Other
Total
Less current portion

¥

50
2
52
(2)

¥

40
3
43
(3)

$

510
20
530
(20)

Long-term debt, less current portion

¥

50

¥

40

$

510

Interest rates applicable to the welfare pension were 6.7% and 6.5% at March 31, 2009 and 2008, respectively.

24

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 2009

Annual maturities of deposits received at March 31, 2009, were as follows:

Thousands of
U.S. Dollars

Millions of Yen

Year Ending March 31

2010
2011
2012
2013
2014
2015 and thereafter

¥

2
2
2
2
2
42

$

20
20
20
20
20
430

Total

¥

52

$

530

8. RETIREMENT BENEFITSThe Company has severance payment plans for employees.
Under most circumstances, employees terminating their employment are entitled to retirement benefits determined based onprincipally accumulated points allocated to them each year according to their age and job evaluation and interest points over
the accumulated points. Such retirement benefits are made in the form of annuity payments from the non-contributory funded
defined benefit pension plan. Employees are entitled to larger payments if the termination is involuntary, by retirement at the
mandatory retirement age, by death, or by voluntary retirement at certain specific ages prior to the mandatory retirement age.
The liability for employees’ retirement benefits at March 31, 2009 and 2008 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2009

2008

2009

Projected benefit obligation
Fair value of plan assets
Unfunded benefit obligations
Unrecognized actuarial gain
Unrecognized prior service cost

¥

3,379
(2,336)
1,043(1,568)
167

¥

3,256
(2,556)700(1,010)185$

34,480(23,837)
10,643(16,000)
1,704

Net liability (asset)

¥

(358)

¥

(125)

$

(3,653)The components of net periodic benefit costs for the years ended March 31, 2009 and 2008 are as follows:

Thousands of
U.S. Dollars

Millions of Yen

2009

2008

2009

Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost
Recognized actuarial loss

¥

197
81
(77)
(18)
85

¥

185
75
(74)
(18)
55

$

2,010
827
(786)
(184)
868

Net periodic benefit costs

¥

268

¥

223

$

2,735

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 200925

Assumptions used for the years ended March 31, 2009 and 2008 are set forth as follows:

Discount rate
Expected rate of return on plan assets
Amortization period of prior service cost
Recognition period of actuarial gain/loss

2009

2008

2.5%
3.0%
7years15years

2.5%
3.0%
7years15years

9. EQUITY
Since May 1, 2006, Japanese companies have been subject to the Companies Act of Japan (the “Companies Act”). The
significant provisions in the Companies Act that affect financial and accounting matters are summarized below:(a)Dividends

Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend
upon resolution at the shareholders meeting. For companies that meet certain criteria such as; (1) having the Board of Directors, (2)having independent auditors, (3) having the Board of Corporate Auditors, and (4) the term of service of the directors is prescribedas one year rather than two years of normal term by its articles of incorporation, the Board of Directors may declare dividends(except for dividends in kind) at any time during the fiscal year if the company has prescribed so in its articles of incorporation.
The Companies Act permits companies to distribute dividends-in-kind (non-cash assets) to shareholders subject to a certain
limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles ofincorporation of the company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends
or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but theamount of net assets after dividends must be maintained at no less than ¥3 million.
(b)

Increases/decreases and transfer of common stock, reserve and surplus

The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a componentof retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged
upon the payment of such dividends until the total of aggregate amount of legal reserve and additional paid-in capital equals
25% of the common stock. Under the Companies Act, the total amount of additional paid-in capital and legal reserve may bereversed without limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in capital, othercapital surplus and retained earnings can be transferred among the accounts under certain conditions upon resolution of theshareholders.
(c)Treasury stock and treasury stock acquisition rights

The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolutionof the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to theshareholders which is determined by specific formula. Under the Companies Act, stock acquisition rights are presented as aseparate component of equity. The Companies Act also provides that companies can purchase both treasury stock acquisitionrights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted
directly from stock acquisition rights.

26

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 2009

10. INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in the aggregate,
resulted in normal effective statutory tax rates of approximately 40.4% for the years ended March 31, 2009 and 2008.
The tax effects of significant temporary differences, which resulted in deferred tax assets and liabilities at March 31, 2009 and2008, are as follows:

Thousands of
U.S. Dollars

Millions of Yen

2009
Deferred tax assets:
Accrued enterprise taxes
Depreciation
Accrued bonus to employees
Others
Total

¥

¥

64
333
83
282
762

Deferred tax liabilities:
Prepaid pension cost¥

Net deferred tax assets

¥

2008

¥

2009

¥

69
339
175
202
785

$

$

653
3,398
847
2,878
7,776

145

¥

51

$

1,480

617

¥

734

$

6,296

Because the differences between the normal effective statutory tax rates and the actual effective tax rates for the years ended
March 31, 2009 and 2008 are not material, the tax reconciliations are not disclosed.

11. RESEARCH AND DEVELOPMENT COSTS
Research and development costs included in cost of sales and selling, general and administrative expenses were ¥21 million ($214
thousand) and ¥39 million for the years ended March 31, 2009 and 2008, respectively.

12. LEASESAs discussed in Note 2.i, the Company continues to account for leases which existed at the transition date and do not transfer
ownership of the leased property to the lessee as operating lease transactions. Pro forma information of such leases existing at
the transition date, such as acquisition cost, accumulated depreciation, obligations under finance leases, depreciation expense,
interest expense, on a “as if capitalized” basis for the year ended March 31, 2009 was as follows.
The Group leases certain computer equipment and other assets.
Total lease payments under finance leases for the years ended March 31, 2009 and 2008 were ¥1,280 million ($13,061 thousand)and ¥1,968 million, respectively.

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 200927

Pro forma information of leased property under finance leases that do not transfer ownership of the leased property to the lessee
on an “as if capitalized” basis for the years ended March 31, 2009 and 2008 was as follows:

Millions of Yen
2009
Tools,
Furniture
andFixtures2008

Software

Total

Tools,
Furniture
andFixtures

SoftwareTotal

Acquisition cost
Accumulated depreciation

¥

3,296
(2,128)

¥

25
(17)

¥

3,321
(2,145)¥ 5,057¥ (2,642)

¥
¥

53
(35)

¥ 5,110¥ (2,677)

Net leased property

¥

1,168

¥

8

¥

1,176

¥

¥

18

¥

2,415

2,433

Thousands of U.S. Dollars
2009
Tools,
Furniture
andFixtures

SoftwareTotal

Acquisition cost
Accumulated depreciation$ 33,633(21,715)

$

255
(173)

$ 33,888(21,888)

Net leased property$ 11,918$82$ 12,000

Obligations under finance leases:

Thousands of
U.S. Dollars

Millions of Yen

2009

2008

2009

Due within one year
Due after one year

¥

722
543

¥

1,298
1,270

$

7,367
5,541

Total

¥

1,265

¥

2,568

$

12,908Depreciation expense and interest expense under finance leases:

Thousands of
U.S. Dollars

Millions of Yen

2009

2008

2009

Depreciation expense
Interest expense

¥

1,187
44

¥

1,851
42

$

12,112
449

Total

¥

1,231

¥

1,893

$

12,561

Depreciation expense and interest expense, which are not reflected in the accompanying statements of income, are computed by
the straight-line method and the interest method, respectively.

28

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 2009

The minimum rental commitments under noncancellable operating leases at March 31, 2009 were as follows:

Millionsof YenThousands of
U.S. Dollars

Due within one year
Due after one year

¥

242
505

$

2,469
5,153

Total

¥

747

$

7,622

13. RELATED PARTY TRANSACTIONS
Balances at March 31, 2009 and 2008 and transactions for the years ended March 31, 2009 and 2008 with the Parent, itsconsolidated subsidiaries and its associated companies were as follows:

Thousands of
U.S. Dollars

Millions of Yen

2009
Sales
Purchases
Lease and rental expense

¥

2008

24,184101
641¥

25,323
14
849

2009
$

Thousands of
U.S. Dollars

Millions of Yen

2009
Accounts receivable
Other current assets
Accounts payable
Deposits paid

¥

4,102
34
153
9,991

2008
¥

246,776
1,031
6,541

5,378
24
132
8,983

2009
$

41,857347
1,561
101,949

14. SUBSEQUENT EVENT
Appropriation of Retained Earnings
The following appropriation of retained earnings at March 31, 2009 was resolved at the Board of Directors meeting held on May
21, 2009:

Millionsof YenYear-end cash dividends, ¥42.50 ($0.43) per share¥

453

Thousands of
U.S. Dollars

$

4,622

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 2009

29

30

Panasonic Electric Works Information Systems Co., Ltd.
Annual Report 2009

Corporate Data

Board of Directors,
Auditors and Officers
As of June 17,2009

The Company and Consolidated Subsidiaries As of March 31, 2009

President:
Takeyoshi Kawamura
Vice President:
Kazuhiro Maegawa
Directors:
Akira Hisano
Hisashi Kurono
Hiroyuki Maruoka
Shinichi Hasegawa *1
Tamaki Fujimoto *1

Panasonic Electric Works Information Systems Co., Ltd.
Head office:19-19, Chayamachi, Kita-ku,
Osaka 530-0013, JAPAN
Telephone: +81-6-6906-2801
Facsimile: +81-6-6377-0833
URL: http://panasonic-denkois.co.jp/english/
February 22, 1999
1,040 million yen
611(consolidated)Tokyo Stock Exchange, First Section

Auditors:
Takayuki Takeda *2
Kuniaki Watanabe *2
Makoto Ishii

Establishment:
Paid-in capital:
Number of employees:
Stock listing:Shares of common stock
issued and outstanding: 10,656,000 shares
Number of shareholders: 5,949

Executive Officers:
Keisuke Tanaka
Hajime Onishi
Takashi Maeda
Mitsuru Maekawa*1 outside director*2 external auditor

Major Shareholders
Shareholder

Panasonic Electric Works, Ltd.

Number ofshares(thousands)

Percentage ofvoting rights (%)

6,787

63.69

Japan Trustee Services Bank, Ltd. (Trust Account)

256

2.40

Employee Stock Ownership Association

222

2.08

Japan Trustee Services Bank, Ltd. (Trust Account 4G)

200

1.88

The Master Trust Bank of Japan, Ltd. (Trust Account)

117

1.10

FUJITSU LIMITED

36

0.33

IBM Japan, Ltd.

36

0.33

Oki Electric Industry Co., Ltd.

36

0.33

Meiji Yasuda Life Insurance Company Account 51

33

0.31

BNY FOR GCM CLIENT ACCOUNTS JP REC ITIC

29

0.27

Disclaimer
Annual Report 2009 is intended to provide information about the business performance and strategy of the Company and its subsidiaries. It is notintended and should not be construed as an inducement to purchase or sell stock in the Company or its subsidiaries. Statements in this documentthat are not historical or current facts are forward-looking statements based on current assumptions and beliefs of management. Many factors that
the Company is unable to predict with accuracy could cause the Company’s actual results, performance, achievements or financial position to bematerially different from those expressed or implied by such forward-looking statements. The Company undertakes no obligation to update any
forward-looking statements to reflect facts, circumstances or events that have occurred or changed after such statements have been made, andshall in no event be liable for any damages arising out of the use or interpretation of this material.

wiWe

Annual Report 200919-19, Chayamachi, Kita-ku, Osaka 530-0013, JAPAN
Telephone: +81-6-6906-2801 Facsimile: +81-6-6377-0833
URL: http://panasonic-denkois.co.jp/english/

Printed in JapanFor the Year Ended March 31

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