MEW-IS AR1208 05.12.8 10:11 ページ 2

Matsushita Electric Works Information Systems Co., Ltd.

Annual Report 2005

MEW-IS AR1208 05.12.8 10:11 ページ 3

MEW-IS At a Glance
Service solution business — System services
1. ASP service
2. Network service
3. Outsourcing service

Sales (Millions of Yen)
19,735

2002
2003

20,777

2004

21,255
7,328 Four-month period

2005
0

5,000

10,00015,00020,00025,000Service solution business — System solutions
1. Solution proposal
2. Consulting
3. Package software development and sales

Sales (Millions of Yen)
2,860

2002
2003

3,880

2004

3,939
1,200 Four-month period

2005
0

1,000

2,000

3,000

4,000

System and communications equipment business
1. Sales of computers, servers,and communications equipment
2. Network and facility construction

Sales (Millions of Yen)
9,047

2002

11,705

2003

16,914

2004
2005
0

Contents

5,366 Four-month period
5,000

10,00015,00020,000Financial Highlights

1

Message from the President

2

Financial Section

6

Corporate Data

20

MEW-IS AR1208 05.12.8 10:11 ページ 4

Four-Year Summary
For the Four Month Period Ended March 31, 2005 and the Years Ended November 30, 2004, 2003 and 2002
Thousands of
U.S. Dollars

Millions of Yen
March 31,2005

November 30,
2004

November 30,
2003

November 30,
2002

March 31,2005

¥ 13,895¥ 42,109¥ 36,361¥ 31,641$ 129,860

11,82636,23031,641

27,559110,523

740

2,161

1,967

1,600

6,916

Operating income

1,329

3,718

2,753

2,482

12,421

Income before income taxes and minority interests

1,309

3,683

2,951

2,468

12,234

776

2,107

1,673

1,410

7,252

13,506

11,589

11,092

8,424

126,224

401

386

386

177

3,748

Total assets

16,11914,017

14,116

12,554

150,645

Current liabilities

6,939

5,214

6,736

6,097

64,850Long-term liabilities

636

696

988

1,360

5,944

Shareholders’ equity

8,539

8,105

6,391

5,082

79,804

3

49

32

58

28

289

1,056

1,159

894

2,701

March 31,2005

November 30,
2004

November 30,
2003

November 30,
2002

March 31,2005

¥ 72.04¥ 195.68¥ 155.14¥ 130.63$ 0.67

10.00

45.00

35.00

25.00

0.09

RESULTS OF OPERATIONS:Net sales
Cost of sales
Selling, general and administrative expenses

Net income

Financial Highlights

Financial Highlights

FINANCIAL POSITION:
Current assets
Net property and equipment

OTHER STATISTICS:
Research and development costs
Depreciation and amortization

Yen

U.S. Dollars

PER SHARE OF COMMON STOCK:Net income
Cash dividends

Note: 1. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have beentranslated at the rate of ¥107 to $1, the approximate rate of exchange at March 31, 2005.
2. Net income per share of common stock and cash dividends per share of common stock are retroactively recalculated reflecting stock splits of 1 additional
share for each outstanding share and 199 additional shares for each outstanding share, effective on January 20, 2003 and April 1, 2004, respectively.

Matsushita Electric Works Information Systems Co., Ltd.

Annual Report 2005

1

MEW-IS AR1208 05.12.8 10:12 ページ 5

Message from the President

Message from the
President

Message from the President
Business Performance during theTransitional Fiscal Period
MEW-IS has changed its accounting period from afiscal year ending November 30 to one that ends
on March 31. This takes place in conjunction with
our parent company, Matsushita Electric Works,
Ltd. (MEW), becoming a consolidated subsidiary of
Matsushita Electric Industrial Co., Ltd. (MEI), andthe change in its fiscal year to a period ending
March 31, which is the fiscal year of the Matsushitagroup as a whole. As a result of this change, thecurrent consolidated fiscal year will be the fourmonth period from December 1, 2004 throughMarch 31, 2005.

Profile of the new president:

Takeyoshi Kawamura

The domestic economy has gained modest
upward momentum during the current
consolidated fiscal year. This is attributed to1948

Born in Osaka

1970

Joined Matsushita Electric Works, Ltd.

1999

Appointed president of Matsushita Electric
Software Co., Ltd.

2001

Appointed general manager of the Home
Appliances and Electrical Machinery BusinessGroup, Matsushita Electric Works, Ltd.

2002

2003

Matsushita Electric Works Information Devices
Division is spun off and Kawamura is appointed
executive officer and general manager of theHome Appliance and Fire Prevention Systems
Business Group of the new company

continued strength in exports and broad-based
improvement in corporate earnings—against a
backdrop of robust economies in the United States
and China—as well as an increase in capital
investment and an upturn in consumer spending
and employment. However, high prices for oil andraw materials have emerged as causes forconcern, and indications have appeared that thebusiness climate has come to a temporary lull from

Appointed managing executive director andgeneral manager of the Home Appliance and Fire
Prevention Systems Business Groupits mild upswing.

April 1, 2005

Appointed advisor to Matsushita Electric Works
Information Systems Co., Ltd.

information and communications services industry

June 21, 2005

Assumed the presidency of the company

environments including systems integration (SI) are

In the midst of these developments, thefinds itself in a situation where market
improving thanks to a smooth increase incorporate IT investment, on the one hand, while
hardware investment remains as deflated as ever.

2

Matsushita Electric Works Information Systems Co., Ltd.

Annual Report 2005

In this environment, the MEW-IS Group has

growth in sales of system operation businesshad strong sales in service solutions business due

stimulated by outsourcing orders received fromto growth in sales of system architecture orders

new customers and increase in maintenancesold to MEW through the collaborative support ofservice sales and the number of ASP customers.

MEI and sales management packages (MetaForce)With sales of its MetaForce and Harvest self-

for the distribution industry as a result of having

developed software packages for the distribution

promoted solution proposal services that maximize

industry holding strong, and thanks to e-

the collective strength of our IT business. Alongprocurement system-related orders sold andwith growth in IT investments, system andsystem architecture orders from MEW sold throughcommunication equipment business continued

the collaborative support of MEI, the System

brisk sales of thin-client terminals, software

Solutions Division recorded consolidated net sales

peripheral equipment, information-relatedof 1.2 billion yen. This corresponds to 8.6% of total

construction and systems introduction support.

sales.

Moreover, in terms of sales component by

Consolidated net sales for the System andcustomer, while the volume of our sales to MEW is

Communications Equipment Business were 5,366

holding virtually unchanged, most of the growth inmillion yen, indicating a synergism with Systemsales, is accounted for by external sales, and the

Solutions sales and reflecting robust sales of thin-proportion of external sales overall is over 50% asclient terminals to customers other than MEW,

a result. We take pride in this being the proof of thesoftware peripheral equipment-related products,

competitiveness our company has acquired.

information-related construction, and system

Consequently, the results for the current
consolidated fiscal year are 13,895 million yen in

Message from the President

MEW-IS AR1208 05.12.8 10:12 ページ 6

introduction support. This corresponds to 38.6%
of total sales.

consolidated net sales, 1,329 million yen inconsolidated operating income, and 776 million
yen in consolidated net income for the current

Improving Corporate Governance andComplianceyear. In addition, our 9.6% operating income ratio
and current-period net income margin of 5.6 %We regard corporate governance as one of thetogether marked their largest-ever increases.

most important issues of management, and are
striving for transparency, fairness, and speed inmanagement by providing an in-house organization

Segment Performanceand an internal control system and risk
management system based on a policy of

The current operating performance for each

improving the management efficiency andindividual division is as follows.

emphasizing the shareholder.

Although return profits by cost down toEvery executive and employee is addressing

existing outsourcing customers had a negative

thoroughness in compliance based on corporate

impact, consolidated net sales for the Service

ethics and the spirit of abiding with the law. To be

Solutions Division of System Services Businessmore precise, we are distributing to all staff

were 7,328 million yen, which corresponds tomembers a brochure entitled “Our Code of Ethical

52.7% of total sales. This is largely due to the

Conduct” that describes a code of behavior for the

Matsushita Electric Works Information Systems Co., Ltd.

Annual Report 2005

3

Message from the President

MEW-IS AR1208 05.12.8 10:12 ページ 7

company and its employees. We are also

expected to continue for hardware-related

instituting a Compliance Program, establishing a

products, the upswing in corporate earnings will

Corporate Ethics Committee, and working on

progress and IT investment will continue to rise.

enlightenment of all personnel through e-learning.

We believe that the promotion and practical

Additionally, we received a Privacy Markapplication of “management reforms andCertification that is given to the enterprises that

restructuring” in a company will be the mainstream

properly handles the protection of personalof the IT business in the future, and for that we will

information, and in March, 2005 we acquired theneed a track record as a systems integrator with

Information Security Management System (ISMS)

the collective strength to offer services ranging

Certification given to the enterprises whosefrom consulting to systems architecture, hardware

organizational ISMS had been properly put into

introduction, and overall operations. The shifteffect.

toward broadband communications, centering

MEW-IS regards information control to bearound the Internet, will also accelerate and further

matter of utmost importance in management, andprogress toward a ubiquitous network society is

has set up the Information Security Management

expected to be made.

Committee, which is under the direct control of the

In anticipation of these conditions, we are

President of the company, to play a central role inpromoting “Stability, Security, Comfort — CS Gets

promoting and maintaining thorough internal

Them” as our management policy for the year

information management within the MEW-IS

2005. By taking advantage of our priorGroup. The committee also promotes activities for

performance, accumulated know-how, andin-house enlightenment, training, and awareness-

powerful infrastructure, we will be responding toraising with respect to information management.

the IT strategy the customer is truly demanding byproactively providing a total solution or a one-stop

Business Strategies for Next Year andfor the Future

solution that is the advantage of an all-around IT
company. We will also implement cost reductions
by promoting rationalization and thus pursuing

The economic climate that will surround our4sustained growth.

company during the coming fiscal year is expected

Specifically, while expanding sales of Thin-to be one that reflects the robust business climate

Client Solutions, which are superior in terms ofin the United States and China, while the economy

security, and Distribution Industry Solutions

will begin to show signs of growing slowly out ofcentered around our own software (MetaForce) as

the doldrums, and a modest economic recovery

well as the EAI*1 System, which organicallywill continue in capital investment, consumer

incorporates information systems inside andspending, and employment conditions. Amid

outside a company, we will be pursuing a larger

concerns about the effects of high-priced oil andmarket for four solutions that are matched to

raw materials, however, there will be a lingeringsocietal trends. In specific terms, we aresense of uncertainty depend on trends in thecommitted to providing high value-added services

global economy.

that include: a) CRM*2 Solutions for achieving

In the information and communications

improvements in customer satisfaction, such asservices industry, while a deflationary situation is

the “Easy Call Center”; b) Housing Solution, aimed

Matsushita Electric Works Information Systems Co., Ltd.

Annual Report 2005

at housing firms and builders; c) CSR*3 Solutions,That is a society that precisely fits the ideals of “thewhich are focused on corporate social

creation of new IT values with enhanced usability”

responsibilities; and d) Mimamori Solutions, whichand “the pursuit of user-friendliness” that wetake into consideration the safety and healthuphold. Although we are a young company in our

aspects of children and the elderly. As anformative years, we will be guiding this company

innovation, we are also looking at engineering-toward further breakthroughs while synchronizing

based solutions that promote improved efficiency

the growth of the company with the growth ofin product development and design.

individual employees. For that reason, enhancing
the quality of our human resources will be our top*1 EAI (enterprise application integration):priority. We are building a corporate culture that

Organically incorporating computer systems for multipleemphasizes a sense of individual challenge andservices to provide efficient integration of data andprofessionalism and are committed to structuralprocesses.

development. We are also promoting the efficient*2 CRM (customer relationship management):

use of management resources from top-to-bottom

A business model that provides goods and services

and the optimization of the entire structure for thesuited to each customer's needs by using IT technology

sake of solution proposals.

to individually analyze a customer’s tastes and attributes.

Message from the President

MEW-IS AR1208 05.12.8 10:12 ページ 8

Moreover, in regard to our medium-term*3 CSR (corporate social responsibility):

management plan ” NEXT-3” we began in 2004,

Rewarding the stakeholders that surround thewith the shift in accounting period and changes incompany—including the consumers, customers, andthe business environment, the plan will be

local communities—through various corporate activities.

undergoing some fine tuning. With an eye to evermore rapid progress, we are now formulating a

The outlook for the entire fiscal year from April 1,

new five-year management plan which will start in2005 until March 31, 2006 is for consolidated net

2006.

sales of 45,500 million yen, a consolidated

I trust that we may receive even greater

operating income of 4,000 million yen, and a

support and encouragement on the part of all ourconsolidated net income of 2,300 million yen.

shareholders and investors.

To Our Shareholders
I assumed the office of President on June 21,
2005. Having inherited the line that former
president Masahiro Hamada has laid down, I

Takeyoshi Kawamura
President

intend to redouble my efforts for the sake ofdeveloping the company.
Our information-oriented society is increasingly
evolving into a ubiquitous network society in whichanyone can enjoy an advanced computing
environment—whenever and wherever they wish.

Matsushita Electric Works Information Systems Co., Ltd.

Annual Report 20055

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2005/12/03

Matsushita Electric Works Information Systems Co., Ltd. and Subsidiary

Consolidated Balance Sheets
March 31, 2005 and November 30, 2004

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

ASSETS

March 31,

November 30,

March 31,

2005

2004

2005

CURRENT ASSETS:
Cash and deposits (Note 3)

¥

1,958

¥

3,263

18,299Accounts receivable - Trade (Note 11)

7,739

Inventories (Note 4)

1,024

470

9,570

Deposits paid (Note 11)

2,328

2,423

21,757

Deferred tax assets (Note 8)

272

135

2,542

Other current assets

185

251

1,729

13,506

11,589126,224

173

166

1,617

593

560

5,542

Total current assets

5,047

$

72,327PROPERTY AND EQUIPMENT:
Buildings
Tools, furniture and fixtures
Construction in progress

6

1

56

Total
Accumulated depreciation

772

727

7,215

(371)

(341 )(3,467)

401

386

3,748

318

18

2,972

22

57

206

Net property and equipment
INVESTMENTS AND OTHER ASSETS:
Investment securities
Investment in associated company

1

1

9

Software

Long-term loans

962

1,107

8,991

Deferred tax assets (Note 8)

683

676

6,383

Other assets

248

194

2,318

Allowance for doubtful receivables

(22)

(11)

(206)

2,212

2,042

20,673¥ 16,119¥ 14,017$ 150,645

Total investments and other assets
TOTAL
See notes to consolidated financial statements.

6

Matsushita Electric Works Information Systems Co., Ltd.

Annual Report 2005

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2005/12/03

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

LIABILITIES AND SHAREHOLDERS' EQUITYMarch 31,

November 30,

March 31,

2005

2004

2005

CURRENT LIABILITIES:
Accounts payable - Trade (Note 11)
Accounts payable - Other (Note 11)
Income taxes payable

¥

4,513

¥

2,598

$

42,1781,108964

10,355

688

780

6,430

Consumption taxes payable

35

187

327

Deposits received (Note 5)

86

69

804

Other current liabilities

509

616

4,756

6,939

5,214

64,850Liability for retirement benefits (Note 6)

564

632

5,271

Deposits received (Note 5)

72

64

673

636

696

5,944

5

2

47

1,040

1,040

9,720

Capital surplus

871

871

8,140

Retained earnings

6,628

6,194

61,944

8,539

8,105

79,804¥ 16,119¥ 14,017$ 150,645

Total current liabilities
LONG-TERM LIABILITIES:

Total long-term liabilities
MINORITY INTERESTSCOMMITMENTS (Note 10)
SHAREHOLDERS' EQUITY (Notes 7 and 12):
Common stock
authorized - 40,000,000 shares;
issued 10,656,000 shares

Total shareholders' equity
TOTAL

Matsushita Electric Works Information Systems Co., Ltd.

Annual Report 20057

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2005/12/03

Matsushita Electric Works Information Systems Co., Ltd. and Subsidiary

Consolidated Statements of Income
Four Month Period Ended March 31, 2005 and the Year Ended November 30, 2004

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

March 31,2005

November 30,
2004

March 31,2005

¥ 13,895¥ 42,109$ 129,860

COST OF SALES (Notes 9 and 11)

11,82636,230110,523

Gross profit

2,069

5,879

19,337

740

2,161

6,916

1,329

3,718

12,421OTHER INCOME (EXPENSES):Interest income
Interest expense
Gain on sales of software
Equity in losses of associated company
Write-down of investment securities
Other - net

1
(3)
－
(34)
－
16

3
(19)
19
(26)
(14)
2

9
(28)
－
(318)
－
150

Other expenses - net

(20)

(35)

(187)

INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS

1,309

3,683

12,234

INCOME TAXES (Note 8):
Current
Deferred

674
(143)

1,474
102

6,299
(1,336)

531

1,576

4,963

2

0

19

NET SALES (Note 11)

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Notes 9 and 11)
Operating income

Total income taxes
MINORITY INTERESTSNET INCOME

¥

776

¥

2,107

Yen

PER SHARE OF COMMON STOCK (Notes 2.k and 12):Net income
Cash dividends

8

See notes to consolidated financial statements.
Matsushita Electric Works Information Systems Co., Ltd.

Annual Report 2005

¥ 72.04
10.00

$

7,252

U.S. Dollars¥ 195.68
45.00

$

0.67
0.09

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2005/12/03

Matsushita Electric Works Information Systems Co., Ltd. and Subsidiary

Consolidated Statements of Shareholders' Equity
Four Month Period Ended March 31, 2005 and the Year Ended November 30, 2004

Millions of Yen

BALANCE, NOVEMBER 30, 2003

IssuedNumber of
Shares ofCommon Stock

CommonStockCapitalSurplusRetained
Earnings

53,280¥ 1,040¥ 871¥ 4,480

Net income

2,107Cash dividends, ¥35 per share(373)

Bonuses to directors(20)

Shares issued upon stock split (Note 7)
BALANCE, NOVEMBER 30, 2004

10,602,720
10,656,000

1,040

871

6,194

Net income

776

Cash dividends, ¥30 per share(320)

Bonuses to directors(22)

BALANCE, MARCH 31, 2005

10,656,000¥ 1,040¥ 871¥ 6,628

Thousands of U.S. Dollars (Note 1)
CommonCapitalRetained
Stock
Surplus
Earnings

BALANCE, NOVEMBER 30, 2004

$ 9,720$ 8,140$ 57,888

Net income

7,252

Cash dividends, $0.28 per share(2,991)

Bonuses to directors
BALANCE, MARCH 31, 2005

(205)
$ 9,720$ 8,140$ 61,944

See notes to consolidated financial statements.

Matsushita Electric Works Information Systems Co., Ltd.

Annual Report 20059

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2005/12/03

Matsushita Electric Works Information Systems Co., Ltd. and Subsidiary

Consolidated Statements of Cash Flows
Four Month Period Ended March 31, 2005 and the Year Ended November 30, 2004

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

March 31,2005

November 30,
2004

March 31,2005

¥ 1,309¥ 3,683$ 12,234

289
11
(68)
－
(1)
3
－
34

1,056
11
(251)
(19)
(3)
19
14
26

2,701
103
(636)
－
(9)
28
－
318

(2,692)
(554)
67
1,915
(158)
8
(22)
(1,168)
1
(3)
(782)

570
314
(74)
(803)
(653)
(41)
(44)
122
3
(19)
(1,517)(25,159)(5,178)626
17,897(1,477)75(205)(10,916)9(28)(7,308)

(643)

2,272

(6,009)

－
－
(39)
(101)
－
(300)
0

(1,200)
1,200
(95)
(488)
19
(14)
(2)

－
－
(364)
(944)
－
(2,804)
0

(440)

(580)

(4,112)

(317)

(371)

(2,963)NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS(1,400)1,321(13,084)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

4,480

3,159

41,869CASH AND CASH EQUIVALENTS, END OF PERIOD (Note 3)¥ 3,080¥ 4,480$ 28,785

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
Gain on sales of software
Interest income
Interest expense
Write-down of investment securities
Equity in losses of associated company
Changes in assets and liabilities:
Decrease (increase) in accounts receivable
Decrease (increase) in inventories
Decrease (increase) in other current assets
Increase (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 (used in) operating activities
INVESTING ACTIVITIES:
Increase in deposits paid
Decrease in deposits paid
Purchases of property and equipment
Purchases of software
Proceeds from sales of software
Purchases of investment securities
Other - net
Net cash used in investing activities
FINANCING ACTIVITIES - Dividends Paid

See notes to consolidated financial statements.

10

Matsushita Electric Works Information Systems Co., Ltd.

Annual Report 2005

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2005/12/03

Matsushita Electric Works Information Systems Co., Ltd. and Subsidiary

Notes to Consolidated Financial Statements
Four Month Period Ended March 31, 2005 and the Year Ended November 30, 2004

1. BASIS OF PRESENTING CONSOLIDATEDFINANCIAL STATEMENTS
Matsushita Electric Works Information Systems Co., Ltd.
(the "Company") was incorporated on February 22, 1999
as a subsidiary of Matsushita Electric Works, Ltd. (the"Parent"). The Company is 64% owned by the Parent at
March 31, 2005 and November 30, 2004, 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 machines.
The accompanying consolidated financial statements
have been prepared in accordance with the provisions set
forth in the Japanese Securities and Exchange Law and its
related accounting regulations, and in conformity withaccounting principles generally accepted in Japan, which
are different in certain respects as to application anddisclosure requirements of International Financial
Reporting Standards.
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.
Certain reclassifications have been made in 2004 financial
statements to conform to the classifications used in 2005.
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 ¥107 to $1, theapproximate rate of exchange at March 31, 2005. 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 changed its fiscal year end from November
30 to March 31 in accordance with the resolution at thegeneral shareholders' meeting held on February 16, 2005.
The change conforms the Company's fiscal year to thefiscal year end of the Parent and Matsushita ElectricIndustrial Co., Ltd. (MEI) so that the Company can
respond to the Parent's and MEI's consolidation
requirements. Accordingly, fiscal 2005 included only fourmonths of operations whereas fiscal 2004 included twelve
months.

2. SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIESa.

Consolidation - The consolidated financial

statements as of March 31, 2005 and November 30,
2004 include the accounts of the Company and its
subsidiary (together, the "Group").
Under the control or influence concept, the Company
consolidates entities that it, directly or indirectly, isable to exercise control over operations. If theGroup has the ability to exercise significant influence
over an investee, the investment is accounted forusing the equity method.
All significant intercompany balances andtransactions have been eliminated in consolidation.
All material unrealized profit included in assets
resulting from transactions within the Group iseliminated.

b.

Cash Equivalents - Cash equivalents arec.

Inventories - Merchandise and supplies are statedat the lower of cost, determined by themoving-average method, or market. Work inprocess inventories are stated at cost determined by
the specific identification method.

d.

Investment Securities - Investment securities aree.

Property and Equipment - Property andf.

Software - Software to be sold is amortized by theg.

Retirement Benefits - The Group has ah.

Leases - All leases are accounted for as operating

short-term investments that are readily convertible
into cash and that are exposed to insignificant risk ofchanges in value. Cash equivalents include
deposits paid, all of which mature or become due
within three months of the date of acquisition.

non-marketable available-for-sale securities andstated at cost determined by the moving-averagemethod. For other than temporary declines in fairvalue, investment securities are reduced to net
realizable value by a charge to income.

equipment are stated at cost. Depreciation ofproperty and equipment of the Company iscomputed substantially by the declining-balancemethod at rates based on the estimated useful livesof the assets, while the straight-line method isapplied to buildings. The range of useful lives isfrom 8 to 18 years for buildings and from 2 to 20
years for tools, furniture and fixtures.

straight-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.

non-contributory funded pension plan together with
the Parent and certain domestic consolidated
subsidiaries of the Parent and unfunded retirement
benefit plans covering substantially all of theiremployees. The liability for retirement benefits is
accounted for based on projected benefit obligations
and plan assets at the balance sheet date.

leases. Under Japanese accounting standards forleases, finance leases that deem to transfer
ownership of the leased property to the lessee are to
be capitalized, while other finance leases are
permitted to be accounted for as operating leasetransactions if certain "as if capitalized" information isdisclosed in the notes to the lessee's financial
Matsushita Electric Works Information Systems Co., Ltd.

Annual Report 200511

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statements.

i.

Income Taxes - Deferred income taxes arej.

Appropriations of Retained Earnings -k.

Per Share Information - Net income per share isand 2004.

l.

recorded to reflect the impact of temporary
differences between assets and liabilities recognized
for financial reporting purposes and such amounts
recognized for tax purposes. These deferred taxes
are measured by applying currently enacted tax laws
to the temporary differences.

New Accounting Pronouncements - In August

2002, the Business Accounting Council issued aStatement of Opinion, "Accounting for Impairment of
Fixed Assets", and in October 2003 the AccountingStandards Board of Japan (ASB) issued ASB
Guidance No. 6 "Guidance for Accounting Standard
for Impairment of Fixed Assets". These newpronouncements are effective for fiscal years
beginning on or after April 1, 2005 with early
adoption permitted for fiscal years ending on or after
March 31, 2004.

Appropriations of retained earnings are reflected in
the consolidated financial statements for thefollowing year upon stockholders' approval.

The new accounting standard requires an entity toreview its long-lived assets for impairment whenever
events or changes in circumstances indicate that thecarrying amount of an asset or asset group may not
be recoverable. An impairment loss would berecognized if the carrying amount of an asset or
asset group exceeds the sum of the undiscounted
future cash flows expected to result from thecontinued use and eventual disposition of the asset
or asset group. The impairment loss would bemeasured 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.

computed by dividing net income available tocommon stockholders by the weighted-average
number of common shares outstanding for the year.
Diluted net income is not presented as no securities
with a dilutive effect have been issued.
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 theyear.
Net income per share and cash dividends per share
were retroactively recalculated as if the stock split(see Note 7) occurred on December 1, 2003. The
weighted-average number of common shares usedin the computation was 10,656,000 shares for 2005

The Company is currently in the process ofassessing the effect of adoption of thesepronouncements.

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, 2005 and November 30, 2004, were as follows:
Thousands of
U.S. Dollars(Note 1)Millions of Yen

March 31,2005

November 30,
2004

March 31,2005

Cash and deposits
Deposits paid with original maturities of within 3 months¥ 1,958
1,122¥ 3,263
1,217$ 18,299
10,486

Cash and cash equivalents¥ 3,080¥ 4,480$ 28,785

4. INVENTORIESInventories at March 31, 2005 and November 30, 2004 consisted of the following:Thousands of
U.S. Dollars(Note 1)Millions of Yen

March 31,2005

12

November 30,
2004

March 31,2005

MerchandiseWork in process
Supplies

¥

377
644
3

¥ 264
203
3

$ 3,523
6,019
28

Total

¥ 1,024¥ 470$ 9,570

Matsushita Electric Works Information Systems Co., Ltd.

Annual Report 2005

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5. DEPOSITS RECEIVED
Deposits received at March 31, 2005 and November 30, 2004 consisted of the following:Thousands of
U.S. Dollars(Note 1)Millions of Yen

March 31,2005

November 30,
2004

March 31,2005

Less current portion

¥ 120
38
158
(86)

¥ 109
24
133
(69)

$ 1,121
356
1,477
(804)

Long-term debt, less current portion

¥ 72

¥ 64

$ 673

Savings for house
Other
Total

Interest rates applicable to the savings for house were 6.0% at March 31, 2005 and November 30, 2004.
Annual maturities of deposits received at March 31, 2005, were as follows:
Millionsof YenThousands of
U.S. Dollars

Year Ending March 31
2006
2007
2008
2009
2010
2011 and thereafter

¥ 86
46
1
1
1
23

$

Total

¥ 158

$ 1,477

804
430
9
9
9
216

6. RETIREMENT BENEFITSThe Group has severance payment plans for employees.
Under most circumstances, employees terminating their employment are entitled to retirement benefits determinedbased on the rate of pay at the time of termination, years of service and certain other factors. Such retirement
benefits are made in the form of a lump-sum severance payment from the Company or from the subsidiary andannuity 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.
Effective June 16, 2004, the Group amended its severance payment plans by introducing a "point-based" system,
under which severance benefits are calculated based on accumulated points allocated to employees each year
according to their age and job evaluation and interest points over the accumulated points.

Matsushita Electric Works Information Systems Co., Ltd.

Annual Report 200513

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The liability for employees' retirement benefits at March 31, 2005 and November 30, 2004 consisted of the following:Thousands of
U.S. Dollars(Note 1)Millions of Yen

March 31,2005

November 30,
2004

March 31,
2005

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

¥ 2,676(1,636)
1,040
(713)
237

¥ 2,612(1,507)
1,105
(716)
243

$ 25,009(15,289)
9,720(6,664)2,215

Net liability¥¥$ 5,271

564

632

The components of net periodic benefit costs for the four month period ended March 31, 2005 and the year ended
November 30, 2004 are as follows:
Thousands of
U.S. Dollars(Note 1)Millions of Yen

March 31,2005

November 30,
2004

March 31,2005

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

¥ 54
22
(15)
(6)
17

¥ 182
70
(48)
22
7

$ 505
205
(140)
(56)
159

Net periodic benefit costs

¥ 72

¥ 233

$ 673

Assumptions used for the four month period ended March 31, 2005 and the year ended November 30, 2004 are set
forth as follows:

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

14

Matsushita Electric Works Information Systems Co., Ltd.

Annual Report 2005

March 31,2005

November 30,
2004

2.5%
3.0%
7years15years

2.5%
3.0%
7years15yearsak9229-00_松下電工ｲﾝﾌｫﾒｰｼｮﾝｼｽﾃﾑｽﾞ様ｱﾆｭｱﾙﾚﾎﾟｰﾄ 1-2.doc

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7. SHAREHOLDERS' EQUITY
Japanese companies are subject to the Japanese Commercial Code (the "Code").
The Code requires that all shares of common stock are recorded with no par value and at least 50% of the issue
price of new shares is required to be recorded as common stock and the remaining net proceeds as additional
paid-in capital, which is included in capital surplus. The Code permits Japanese companies, upon approval of theBoard of Directors, to issue shares to existing shareholders without consideration as a stock split. Such issuanceof shares generally does not give rise to changes within the shareholders' accounts.
Effective April 1, 2004, the Company declared a stock split issuing 199 additional shares for each outstanding shareresulting in 10,602,720 shares issued to shareholders of record on April 1, 2004.
The Code also provides that an amount at least equal to 10% of the aggregate amount of cash dividends andcertain other appropriations of retained earnings associated with cash outlays applicable to each period shall beappropriated as a legal reserve (a component of retained earnings) until such reserve and additional paid-in capitalequals 25% of common stock. The amount of total additional paid-in capital and legal reserve that exceeds 25% of
the common stock may be available for dividends by resolution of the shareholders. In addition, the Code permits
the transfer of a portion of additional paid-in capital and legal reserve to the common stock by resolution of theBoard of Directors.
The Code allows Japanese companies to repurchase treasury stock and dispose of such treasury stock byresolution of the Board of Directors. The repurchased amount of treasury stock cannot exceed the amountavailable for future dividend plus amount of common stock, additional paid-in capital or legal reserve to be reducedin the case where such reduction was resolved at the shareholders meeting.
In addition to the provision that requires an appropriation for a legal reserve in connection with the cash payment,
the Code imposes certain limitations on the amount of retained earnings available for dividends. The amount ofretained earnings available for dividends under the Code was ¥6,686 million ($62,486 thousand) as of March 31,
2005, based on the amount recorded in the parent company's general books of account.
Dividends are approved by the shareholders at a meeting held subsequent to the fiscal year to which the dividends
are applicable. Semiannual interim dividends may also be paid upon resolution of the Board of Directors, subject
to certain limitations imposed by the Code.

Matsushita Electric Works Information Systems Co., Ltd.

Annual Report 200515

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8. INCOME TAXESThe Company is subject to Japanese national and local income taxes which, in the aggregate, resulted in normal
effective statutory tax rates of approximately 40.4% and 41.9% for the four month period ended March 31, 2005 andthe year ended November 30, 2004, respectively.
The tax effects of significant temporary differences, which resulted in deferred tax assets and liabilities at March 31,
2005 and November 30, 2004, were as follows:

Millions of Yen

Thousands of
U.S. Dollars(Note 1)March 31,2005

November 30,
2004

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

¥ 53
454
178
155
115
¥ 955

¥ 67
447
183
－
118
¥ 815

$ 495
4,243
1,664
1,449
1,074
$ 8,925

Deferred tax liabilities:
Accrued labor insurance

¥ －

¥

$

Net deferred tax assets

¥ 955

¥ 811

4

March 31,2005－

$ 8,925

For the four month period ended March 31, 2005 and the year ended November 30, 2004, because the differences
between the normal effective statutory tax rates and the actual effective tax rates are not material, the tax
reconciliations are not disclosed.
9. RESEARCH AND DEVELOPMENT COSTS
Research and development costs included in cost of sales and selling, general and administrative expenses were
¥3 million ($28 thousand) and ¥49 million for the four month period ended March 31, 2005 and the year ended
November 30, 2004, respectively.

16

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10. LEASESThe Group leases certain computer equipment and other assets.
Total lease payments under finance leases for the four month period ended March 31, 2005 and the year ended
November 30, 2004 were ¥1,013 million ($9,467 thousand) and ¥2,741 million, respectively.
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 four month period ended March 31, 2005 and the year ended
November 30, 2004 was as follows:
Millions of Yen

Tools,
Furniture
andFixtures

March 31, 2005

Software

Total

Tools,
Furniture
andFixtures

November 30, 2004

SoftwareTotal

Acquisition cost
Accumulated depreciation¥ 9,106(4,467)

¥ 850
(435)

¥ 9,956(4,902)¥ 10,013(5,739)

¥ 883
(450)

¥ 10,896(6,189)Net leased property¥ 4,639¥ 415¥ 5,054¥ 4,274¥ 433¥ 4,707

Thousands of U.S. Dollars

Tools,
Furniture
andFixtures

March 31, 2005

SoftwareTotal

Acquisition cost
Accumulated depreciation$ 85,103(41,748)$ 7,944(4,065)$ 93,047(45,813)

Net leased property$ 43,355$ 3,879$ 47,234

Obligations under finance leases:
Thousands of
U.S. Dollars(Note 1)Millions of Yen

March 31,2005

November 30,
2004

March 31,2005

Due within one year
Due after one year

¥ 2,366
2,944¥ 2,270
2,664$ 22,112
27,514

Total¥ 5,310¥ 4,934$ 49,626

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Annual Report 200517

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Depreciation expense and interest expense under finance leases:
Thousands of
U.S. Dollars(Note 1)Millions of Yen

March 31,2005

November 30,
2004

March 31,2005

Depreciation expense
Interest expense¥ 1,00037¥ 2,646111$ 9,346
346

Total¥ 1,037¥ 2,757$ 9,692

Depreciation expense and interest expense, which are not reflected in the accompanying statements of income, arecomputed by the straight-line method and the interest method, respectively.
11.

RELATED PARTY TRANSACTIONS
Balances at March 31, 2005 and November 30, 2004 and transactions for the four month period ended March 31,
2005 and the year ended November 30, 2004 with the Parent, its consolidated subsidiaries and its associatedcompanies and the entity over which the Company has the ability to exercise significant influence were as follows:

Millions of Yen

Sales
Purchases
Lease and rental expense

March 31,2005

November 30,
2004

March 31,2005

¥ 7,825995
458¥ 22,242
248
855$ 73,131
9,299
4,280

Millions of Yen

Accounts receivable
Accounts payable
Deposit paid

12.

Thousands of
U.S. Dollars(Note 1)Thousands of
U.S. Dollars(Note 1)March 31,2005

November 30,
2004

March 31,2005

¥ 3,451907
2,321¥ 3,135
142
2,416$ 32,252
8,477
21,692

SUBSEQUENT EVENT
Appropriation
The following appropriations of retained earnings at March 31, 2005 were approved at the Company's shareholders
meeting held on June 21, 2005:

Year-end cash dividends, ¥10 ($0.09) per share
Bonuses to directors

18

Matsushita Electric Works Information Systems Co., Ltd.

Annual Report 2005

Millionsof YenThousands of
U.S. Dollars

¥ 107
8

$ 1,00075

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19

MEW-IS AR1208 05.12.8 10:12 ページ 9

Corporate Data

Corporate Data

Corporate Data
Matsushita Electric Works Information Systems and Consolidated Subsidiaries
As of March 31, 2005

Matsushita Electric Works Information Systems Co., Ltd.

Board of Directors

Head office:President:
Takeyoshi Kawamura

16th Fl., Applause Tower
19-19, Chayamachi, Kita-ku,
Osaka 530-0013, JAPAN

Executive Managing Directors /Member of the Board:
Yasuhiko Nose
Mitsuo Mizuno

Telephone: +81-6-6906-2801
Facsimile: +81-6-6377-0833
URL: http://www.naisis.co.jp/english/
Establishment:

February 22, 1999

Paid-in capital:

1,040 million yen

Number of employees:

427

Stock listing:Tokyo Stock Exchange, First Section

Managing Director / Member of the Board:
Suehiro Kanaya
Directors / Member of the Board:
Takashi Yamamura
Tsutomu Toda
Kazuhiro Tanetani
Makoto Ishii
Toshihiro Ono

Shares of common stock
issued and outstanding: 10,656,000 shares**Effective April 1, 2004, a 200-for-one share split
was implemented.

Statutory Auditors:
Tatsuji Shinkai
Kuniaki Watanabe
Masayoshi Hikoso

Number of shareholders: 6,680

Major Shareholders
Shareholder

Matsushita Electric Works, Ltd.

20

Number ofsharesPercentage ofvoting rights (%)

6,787,200

63.69

MEW-IS Employee Stock Ownership Association

283,200

2.65

Japan Securities Finance Co., Ltd.

191,300

1.79

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

136,900

1.28

Japan Trustee Services Bank, Ltd. (Trust Account)

56,9000.53

Trust & Custody Services Bank, Ltd. (Trust Account B)

41,2000.38

Mizuho Trust & Banking Co., Ltd. (Trust Account Z)

40,5000.38

FUJITSU LIMITED

36,0000.33

IBM Japan, Ltd.

36,0000.33

Oki Electric Industry Co., Ltd.

36,0000.33

Matsushita Electric Works Information Systems Co., Ltd.

Annual Report 2005

MEW-IS AR1208 05.12.8 10:12 ページ 10

Disclaimer
Annual Report 2005 is intended to provide information about the business performance and strategy of Matsushita Electric Works Information Systems Co.,
Ltd. and its affiliate. It is not intended and should not be construed as an inducement to purchase or sell stock in the Company or its affiliate. Statements inthis document that are not historical or current facts are forward-looking statements based on current assumptions and beliefs of management. Many factorsthat 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 forwardlooking statements to reflect facts, circumstances or events that have occurred or changed after such statements have been made, and shall in no event beliable for any damages arising out of the use or interpretation of this material.

MEW-IS AR1208 05.12.8 10:11 ページ 1

Matsushita Electric Works Information Systems Co., Ltd.
16th Fl., Applause Tower 19-19, Chayamachi, Kita-ku, Osaka 530-0013, JAPAN
Telephone: +81-6-6906-2801 Facsimile: +81-6-6377-0833
URL: http://www.naisis.co.jp/english/