PEWIS̲cover 09.1.6 11:51 AM ページ 2

Annual Report 2008
For the Year Ended March 31

PEWIS̲AR08̲1118変更3̲TF 09.1.6 11:35 AM ページ h1

For the creation of new IT
values with enhanced usability.
We strive towards the creation of new values by pursuing user-friendliness andreinforcing a high-tech mindset with a challenging spirit and agility.

Our Feature
1

Technical capabilities that have supported
Panasonic Electric Works, a forerunning IT firm, for nearly 50 years

2Power for sales through the channels of thePanasonic Electric Works group

3

Multivendor environment not dependent on a particular
manufacturer

4One-stop provision of solutions

5

Possession of an enormous infrastructure (networks,
computers, and IDCs)

6

High productivity

Contents
1
2
3
6
8
9

Financial Highlights
Message from the President
Q&A with the President
Our Business at a Glance
Review of Operations
Corporate Governance

10
11
12
16

Corporate Social Responsibility (CSR)
Five-Year Summary
Management's Discussion and Analysis of Operations
Financial Section
Corporate DataPEWIS̲AR08̲1118変更3̲TF 09.1.6 11:35 AM ページ 1

Financial Highlights
50,00040,000Net sales (Millions of Yen)
42,1096,000
41,38540,22639,066

5,000
4,000

30,000Operating income (Millions of Yen)
4,610

5,014

4,877

2007

2008

3,718

3,000
20,00013,895Four-month period

10,000

1,000

0

0
2004

15

2005

2006

2007

2008

12.5

12.5

Operating margin (%)
9.6

12
9

1,329

2,000

Four-month period

8.8

11.1

Four-month period

2004

30

2005

2006

Ordinary income to total assets (%)
26.8

26.2

25.4

25

23.5

20
15

6

10

3

5

0

0
2004

3,500

2005

2,000

2007

2008

Net income (Millions of Yen)

3,000
2,500

2006

2,800

2,842

2005

2006

2007

2008

Basic net income per share (Yen)
260.42

250
200

2,107

281.65266.78195.68

150

1,500
776

1,000

72.04

100

Four-month period

Four-month period

50

500
0

0
2004

80

2004

300
3,001

8.7
Four-month period

2005

2006

2007

2008

Cash dividends per share (Yen)

35
65

60

55

2004

55

30

2005

2006

29.1

28.7
24.7
19.7

20

40

2008

ROE (%)

25

45

2007

15

20

10

10

9.3

5

Four-month period

Four-month period

0

0
2004

2005

2006

2007

2008

2004

2005

2006

2007

2008

Note: Basic net income per share and cash dividends per share are retroactively recalculated as if the stock splits occurred on December 1, 2002. Effective
January 20, 2003, the Company declared a stock split issuing 1 additional share for each outstanding share resulting in 26,640 shares issued toshareholders of record on January 20, 2003. And effective April 1, 2004, the Company declared a stock split issuing 199 additional shares for each
outstanding share resulting in 10,602,720 shares issued to shareholders of recorded on April 1, 2004.

1

PEWIS̲AR08̲1118変更3̲TF 09.1.6 11:35 AM ページ 2

Message from the President
Pressing Ahead with the “Challenging the New”
to Achieve Our 2010 Management Vision
Although the fiscal year ended March 31, 2008 presented the Company with a particularly challenging external
environment and we experienced declines in both sales and income, the strategies of emphasizing profits that wehave implemented over the past several years resulted in an operating margin of 12.5%, a new record high. The
sense of uncertainty concerning the business environment increased rapidly in the second half of the fiscal year
ended March 31, 2008, but we are by no means pessimistic. This is because when considered from a medium- tolong-term perspective, IT is not just a means of streamlining and raising the efficiency of business; it is also
increasingly adopted as a means of enhancing the effectiveness of sales and business strategies. As a result, we
expect IT investment to continue expanding for the foreseeable future. The Company will continue its strategies
of emphasizing profits and will make every effort to expand sales.
In February 2009, we will celebrate 10 years since the foundation of the Company. To make this event an
opportunity to achieve even greater progress, we have adopted the “Challenging the New” as our management
strategy for the fiscal year ending March 31, 2009. The “Challenging the New” addresses three specific topics:
achieving new records in sales and income, creating new products and changing into
new personnel. By working to achieve these goals in the fiscal year ending March 31,
2009, we will act in concert to realize the management vision for 2010: “Value
Designer-Working with customers to envision their future and create value together.”
In October 2008, Matsushita Electric Works Information Systems has changed its
name to Panasonic Electric Works Information Systems Co., Ltd. in conjunction withthe global brand value enhancement strategy of the Matsushita Group. And the
National brand formerly used by the Company has been changed to Panasonic.
The Panasonic brand has high name recognition around the world and is wellknown by foreign investors. We expect that as the Company provides services
to the overseas business sites of the Panasonic Electric Works groupcompanies, having a globally-recognized brand name will provide us withsignificant momentum.
I look forward to the continued support and guidance of ourshareholders and investors in the coming years.

Challenging the New
A new self, a new company
New company name and logo From October 1st, 2008

New name
パナソニック電工インフォメーションシステムズ株式会社

Logo

Takeyoshi Kawamura
President

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Q&A with the President
Q

What is your assessment of thefinancial results for the fiscal year
ended March 31, 2008?

Q

What specific measures are you
taking to achieve the 2010
Management Vision?

A

During the first half of the fiscal year, theA

To achieve our management vision for 2010,

Japanese economy grew at a relatively steady

which we have defined as “Value Designer-pace thanks to higher corporate capital investment

Working with customers to envision their future

fueled by the expanding world economy and risingand create value together,” we must first achieve

personal consumption supported by improved

the goals of our management policy for the fiscal

employment and income. In the second half,year ending March 31, 2009, which is entitled the

however, credit insecurity brought about by the“Challenging the New.” The “Challenging theturmoil in financial capital markets as well as highNew” addresses three specific topics: achieving

prices for commodities such as oil and falling stock

new records in sales and income, creating newmarkets led to increased uncertainty concerning

products and changing into new personnel.

future prospects for the world economy.
Despite these developments, the Company

First, with respect to setting new records insales and income, we are implementing

saw a steady level of new orders for outsourcing

organizational reforms and reinforcing our profit

services and system operation and managed tobases. Organizational reforms include theincrease sales of supply chain management (SCM)

establishment of a division that will specialize insystems, production management systems, andexternal sales and accelerate the solutions

sales and distribution management systems tobusiness by bolstering collaboration between

Panasonic Electric Works and its group companies,

manufacturing and sales as well as creating aand the sales of system services and systemdevelopment center to increase the pace of new

solutions both reached new record highs. On the

product development and improve productivity. To

other hand, in the System and Communications

reinforce our profit bases, we will acquire CMMI

Equipment Business, although sales of security

level 3, raise quality and production efficiency byrelated products increased, overall sales fell

implementing comprehensive project

because of constrained investment including IT

management, implement a “work diet” thatinvestment in response to the uncertainty

eliminates work-related waste and increases

concerning the economy.

efficiency, virtualize servers and implement

As a result, consolidated results for the fiscal
year ended March 31, 2008 were net sales of

streamlining such as a thorough review of IDC.
Next, in the area of new product development,

39,066 million yen (down 2.9% from the previous

we will actively develop the outsourcing businessyear), operating income of 4,877 million yen (downand SaaS business, cultivate new ECM business,2.7%), and net income of 2,842 million yen (downincrease support for manufacturing sites and5.3%). Both the operating margin and the ordinary

speed up development of new products throughincome margin, however, surpassed previous

horizontal deployment of data-related technologies

records thanks to the effects of our strategy ofand the use of compound merchandises. We willemphasizing profits for the past several years. In

also promote business design support solutions

addition, we saw a year-on-year increase in freethat use our business expertise and actively create

cash flows of 522 million yen.

new alliances.

3

PEWIS̲AR08̲1118変更3̲TF 09.1.6 11:35 AM ページ 4

Q&A with the President
In the third area, empowering personnel, we

been able to achieve these high levels of businessare making bold moves towards the creation of aefficiency.

work environment completely unlike the current

The first reason is our business model itself.

environment through active job rotation, the “workThe system integration process is generally

diet” I mentioned earlier and reinforcement ofdivided into four stages: planning, design,

training programs. This will lead to thedevelopment and operation. Of these four stages,

development of human resources who can serve

the Company places particular emphasis on

as the drivers of corporate growth.

planning and operation, which have high added
value, and makes skillful use of collaboration withbusiness partners in the design and development
stages, which tend to entail high personnel

Q

A

What are the reasons behind thecompany's high productivity andbusiness efficiency?

expenses. This method has functioned well andAmong all SI companies in Japan, we have theon internal human resources. Our main business is

has contributed to our high business efficiency.
The second reason is the importance we placethird highest ordinary income per employee andthe solution business, which requires considerable

the fourth highest ratio of ordinary income to total

consulting capabilities, and consequently theassets. There are two main reasons why we havecapabilities of individual personnel are directly

2010 Management Vision"Value designer" for our customers
Working with customers to envision their future and create value together
Experience in thePanasonic Electric Works Group

Ubiquitous society

Optimal IT

Our role

Know-how(Actual ability)

Selection of optimal IT regardless ofwhether it is old or new

FusionExperience and businessknow-how that supported
Panasonic Electric Works with IT

Customers

Creation of Value together

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PEWIS̲AR08̲1118変更3̲TF 09.1.6 11:35 AM ページ 5

Q&A with the President

linked to our competitiveness as a company. As I
said earlier, one of our priority topics for the year
ending March 2009 is empowering personnel, but
we have long sought to nurture personnel who are
well-balanced in an overall perspective including
technical skills, planning abilities, communication
capabilities and human skills. The continuous andunstinted investments that we have made in theseareas are also factors behind our high productivity.

Ranking of FY2007 Solution provider results in Japan
Productivity (Ordinary Income per Employee)
Company Name

Ordinary Income
per Employee

1

MOSHI MOSHI HOTLINE, INC.

¥ 12.05 million

2

Nomura Research Institute, Ltd.

¥ 9.72 million

3

Matsushita Electric Works Information Systems*¥ 9.04 million

4

CYBERNET SYSTEMS CO., LTD.

¥ 6.86 million

5

Daiwa Institute of Research Ltd.

¥ 6.79 million

6

OBIC Co., Ltd.

¥ 6.16 million

7

Zentek Technology Japan, Inc.

¥ 4.97 million

8

Kanematsu Electronics Ltd.

¥ 4.46 million

9

ITFOR Inc.

¥ 4.16 million

10

ITOCHU Techno-Solutions Corporation¥ 4.13 million

Average ordinary income per person among 163 companies surveyed¥ 1.92 million

Ranking

Source: NIKKEI SOLUTION BUSINESS 2008.7.30
The Company has changed its name to Panasonic Electric Works Information Systems in October 2008.

*

Please tell us about the company's
policy on shareholder returns.

A

Our fundamental policy is to provide stable

and continuous returns to shareholders and tocarry out an active dividend policy based on
consolidated financial results, keeping in mind theneed for adequate internal reserves to reinforce
our management foundations and expand
business in the future. We will maintain the annual

Business Efficiency (Ratio of Ordinary Income to Total Assets)
RankingCompany Name

Ratio of Ordinary Income
to Total Assets

dividend of 55 yen per share for the time being andplan to distribute profits at the highest possible

1

FUJITSU HOKURIKU SYSTEMS LTD.

26.3%

2

MOSHI MOSHI HOTLINE, INC.

24.7%

3

YAMATO SYSTEM DEVELOPMENT CO., LTD.

24.2%

4

Matsushita Electric Works Information Systems*

23.6%

5

Canon IT Solutions Inc.

23.1%

6

Daiwa Institute of Research Ltd.

23.0%

ended March 2008, we paid an interim dividend of

7

Future Architect, Inc.

22.5%

32.5 yen per share and maintained this level

8

FUJITSU FSAS INC.

21.6%

despite decreases in both sales and income at the9

Hitachi Distribution Software Co., Ltd.

19.7%

end of the fiscal year, paying a 32.5 yen per share10

NSD CO., LTD.

18.7%

year-end dividend, for a total annual dividend of 65

9.5%

yen per share. As a result, our dividend payout

Average Ratio of Ordinary Income to Total Assets among 163 companies surveyed

Source: NIKKEI SOLUTION BUSINESS 2008.7.30
The Company has changed its name to Panasonic Electric Works Information Systems in October 2008.

*

Q

rate based on consolidated results, taking into
consideration our capital status, financial standing,
dividend payout ratio and other factors.
In accordance with this policy, in the fiscal year

ratio rose 4.9 points to 24.4%.

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PEWIS̲AR08̲1118変更3̲TF 09.1.6 11:36 AM ページ 6

Our Business at a Glance

Service solution business — System services
SystemOperation

1. ASP service
2. Network service
3. Outsourcing service

Development ofbusiness aroundsolutions

Proposal of
Systems
Proposal of
Solutions

Service solution business — System solutions
Solution
Sales

Equipment
Sales andInstallation

6

1. Solution proposal
2. Consulting
3. Package software development and sales

System and communications equipment business
1. Sales of computers, servers,and communications equipment
2. Network and facility constructionPEWIS̲AR08̲1118変更3̲TF 09.1.6 11:36 AM ページ 7

Our Business at a Glance
Our Target Markets
We are targeting small to medium-sized companies as our core market in the proposing of solutions. We have been focusing on this particular market
because we have become aware that, in spite of the broadening range of IT needs, there are no experts within these companies who are able to realize
these needs, and more often than not, these companies do not possess the necessary technologies.
In the past several years small to medium-sized companies have been promoting the implementation of IT, while the IT movement is expanding in local
municipalities. In addition, the priority IT issues that face domestic companies are the questions of how to reduce operation and management costs andhow to respond to technological innovations and changes. It can be said, therefore that our target markets really are entering a period of growth.

System services division
The division is engaged primarily in the business of providing a wide array of
information systems, which make full use of our technological capabilities andbusiness 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 provision ofservices such as manufacturing, sales, inventory control systems, human resources
and accounting systems, and technical information systems. In addition to theseenterprise information systems, it also provides EC/EDI services, network services,
outsourcing services, and ASP services.

60.6%% of Net Sales (2008)

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

21.4%% of Net Sales (2008)

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 from among a wide variety of
hardware and third-party software. It also undertakes construction works in whichthose systems are utilized. Specifically, the focus of its business is on the sales ofsystems equipment in 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 discountservices.

18.0 %% of Net Sales (2008)

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PEWIS̲AR08̲1118変更3̲TF 09.1.6 11:36 AM ページ 8

Review of Operations

Performance in the Year Through March 2008
System services division
The “stock business,” an area where we can expect stable sales, reported
steady performance in businesses such as system operation, maintenanceand outsourcing services. As demand to respond to the Japanese version of
the American Sarbanes-Oxley Act increased, we acquired new customers.
New orders for outsourcing services increased and system operation andmaintenance service sales grew at a steady pace. This led to a 0.6%
increase in net sales, which were 23,664 million yen.

Net Sales (Millions of Yen)
25,00022,672

23,519 23,664

21,25520,00015,000
7,328

10,000Four-month
period

5,000
0
2004

2005

2006

2007

2008

Performance in the Year Through March 2008
System solutions division
Orders for system construction from Panasonic Electric Works grew steadily.
Although orders for systems from the group companies fell, the launch of the“eSmileCall” call center package and the “Electronic Document / Electronic
Contract Solutions” designed to support to comply with the Japanese versionof the Sarbanes-Oxley Act and other efforts to increase sales of new products
and services outside the corporate group resulted in net sales of 8,349 million
yen, up 6.7% from the previous year.

Net Sales (Millions of Yen)
10,000
7,827

8,000

8,349

6,301
6,000
4,000

3,938
1,200

2,000

Four-month
period

0
2004

2005

2006

2007

2008

Performance in the Year Through March 2008
System and communications equipment business
Interest in information security rose throughout the society, and the Company
worked to enhance and increase security-related products and expand sales.
This led to higher sales of security products, but thin-client projects fell
because of slowing replacement of PCs in customers of educational fields
such as national universities. As a result, sales fell 20.6% from the previous
year to 7,051 million yen.

Net Sales (Millions of Yen)
20,00016,91415,00012,411
10,000

8,878
5,366

7,051

Four-month
period

5,000

0
2004

8

2005

2006

2007

2008

PEWIS̲AR08̲1118変更3̲TF 09.1.6 11:36 AM ページ 9

Corporate Governance
The Company has created optimal corporate
governance structures from the perspectives of“execution” and “supervision” in accordance with the
Articles of Incorporation and the internal regulations
adopted by the Board of Directors with the objectiveof maximizing corporate value.
Our corporate governance employs an auditing
system. Three auditors, including two outside
auditors, hold monthly auditor's meetings and attend
board meetings to monitor and supervise theexecution of directors' duties.
The board of directors meeting, which consists ofseven directors including two outside directors, is held
regularly every month. At the meeting, directors
report on significant operating policies, decisions on
substantive matters, and the status of the businessand operations of the company, as well as statutory
matters. Three auditors, of whom two are outside
auditors, also attend.
The Company has one outside director and one
auditor appointed by its parent company, but theBoard of Directors is able to make management
decisions independently from the parent company. To
enhance objectivity in management decision making,
the Company has one outside director and one
outside auditor independent of the parent company.

With regard to compliance, all directors, executive
officers and employees perform their work activities
fairly and in good faith in accordance with theprovisions of the Corporate Ethics Regulations and thebasic principles described in the Panasonic Action
Guidelines and a brochure entitled Our Code of EthicalConduct. We also use a corporate ethics reporting
hotline for the early detection of legal violations andimproper conduct.
The Corporate Ethics Committee, chaired by thepresident, and the director in charge of corporate
ethics promote ethics-related activities companywide.
In addition, appropriate organizations have been
established and persons responsible for ethics havebeen appointed at business sites, programs such as
one for corporate ethics leaders have been
established, and other corporate ethics activities are
conducted at work sites.
For the year ended March 31, 2008,
compensation paid to the directors was 118.220
million yen (including 10.050 million yen paid to thetwo outside directors). Of this total amount, 94.170
million yen was for base pay (including 10.050 million
yen paid to the two outside directors) and 24.050
million yen was for bonuses (no bonuses were paid to
the two outside directors).

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

Operational Headquarters

President
OrdersExecutive Officers

Cooperation

Auditors room

Appointment
and Dismissal
Cooperation

Accounting Auditors

Internal Audit DivisionInternal
Audit

Business Strategy Meeting
Business Review Meeting
Company-wide Committee

Headquarters Staff
Control

Corporate Ethics Committee
Information Security Management Committee
Other Committees

9

PEWIS̲AR08̲1118変更3̲TF 09.1.6 11:36 AM ページ 10

Corporate Social Responsibility (CSR)
Environmentally-conscious management is tied to theWe will contribute by proposing resource-and energy-

competitiveness of a company and ultimately to theconserving plans and system designs, and by offeringtransparency of management and the clarification of

product services that can significantly assist

responsibility. Transparency of management and thecustomers’ response to corporate social responsibility

clarification of responsibility are tied to the credibility(CSR) as an IT company.

of 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

to achieve two objectives on the theme of becoming a

PC application software, industrial waste managementcompany with social significance. The first objective

ASP services, sales of thin-client terminals, andrelates to undertaking environmental, social, andvehicle traffic control services, while working

economic initiatives within the company with the aiminternally on promoting recycling and resource-andof becoming a sustainable company that can help

energy-conservation.

realize a sustainable society through a well-balanced
In addition, as disaster countermeasures, we arebusiness management. Among them, since theCompany places special focus on compliance, we arecontributing to society by enhancing our disaster recovery

implementing training for every employee using e-system and through such services as the “Mimamorilearning and promoting the raising of consciousness

Net,” which provides regular information about the

toward compliance in a grass-roots manner.

condition of elderly people living alone via e-mail.

The second objective is contribution to the society.

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

10

IDC service

METRONET

Backup centerPEWIS̲AR08̲1118変更3̲TF 09.1.6 11:36 AM ページ 11

Five-Year Summary
For the Years Ended March 31, 2008, 2007 and 2006, the Four Month Period Ended March 31, 2005 and the Year Ended
November 30, 2004
Thousands of
U.S. Dollars

Millions of Yen
March 31,2008

March 31,2007

March 31,2006

March 31,2005

November 30,
2004

March 31,2008

¥ 39,066¥ 40,226¥ 41,385¥ 13,895¥ 42,109$ 390,660

Cost of sales

31,54332,66634,316

11,82636,230315,430

Selling, general and administrative expenses

2,646

2,546

2,459

740

2,161

26,460Operating income

4,877

5,014

4,610

1,329

3,718

48,770

Income before income taxes and minority interests

4,847

5,070

4,682

1,309

3,683

48,470Net income

2,842

3,001

2,800

776

2,107

28,420Current assets

18,754

19,33916,303

13,506

11,589187,540

Net property and equipment

1,139

547

538

401

386

11,390Total assets

21,18521,307

18,610

16,11914,017

211,850

Current liabilities

5,538

7,754

7,246

6,939

5,214

55,380Long-term liabilities

95

207

366

636

696

950

15,552

13,346

10,985

8,539

8,105

155,520

Research and development costs

39

75

13

3

49

390

Depreciation and amortization

614

615

755

289

1,056

6,140

March 31,2008

March 31,2007

March 31,2006

March 31,2005

November 30,
2004

March 31,2008

Basic net income¥ 266.78¥ 281.65¥ 260.42¥ 72.04¥ 195.68$ 2.67

Cash dividends

65.00

55.00

55.00

10.00

45.00

0.65

RESULTS OF OPERATIONS:Net sales

FINANCIAL POSITION:

EquityOTHER STATISTICS:

Yen

U.S. Dollars

PER SHARE OF COMMON STOCK:

Note: The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been
made at the rate of ¥100 to $1, the approximate rate of exchange at March 31, 2008.

11

PEWIS̲AR08̲1118変更3̲TF 09.1.6 11:36 AM ページ 12

Management's Discussion and Analysis of Operations
Operations

Consequently, income before income taxes andminority interests declined by 4.4% to 4,847

For the fiscal year ended March 31, 2008, theCompany reported consolidated net sales of

million yen.
As a result of the above developments, net

39,066 million yen, down 2.9% from theincome for the fiscal year ended March 31, 2008previous year.

was 2,842 million yen, down 5.3% from the

The cost of sales was down 3.4% to 31,543
million yen. The ratio of costs to sales improved

previous year. The ratio of net income to net
sales fell 0.2 points to 7.3%.

from previous year's 81.2% by 0.5% to 80.7%

Basic net income per share declined toas a result of contributions to profits from the266.78 yen, a 5.3% (14.87 yen) decrease fromsales with high profit margins such as made-to-the previous year, in conjunction with a decrease

order outsourced system development as wellin net income. Return on equity was down 5.0

as reductions in outsourcing expenses. Selling,

points from the previous year to 19.7% as a

general and administrative (SG&A) expenses

result of an increase in shareholders' equity.

increased 4.0% from the previous year to 2,646
million yen, resulting in an SG&A ratio of 6.8%, a

Summary for Each Division

0.5 point increase from 6.3% in the previous
year. The change was due to a bolstering of thesales force. As a result, consolidated operating

The Group (the Company and its subsidiaries)

income declined by 2.7% to 4,877 million yen.

engages in the businesses of information

The operating margin was 12.5%, and althoughservices including system development, system

the increase from the previous year was slight,

operation, provision of communications services,

this represents a new record high.

and sales of system equipment. The Company

Net other income or loss fell from a profit of
56 million yen previous year to a loss of 30

segment information concerning individual

million yen. Interest income increased

business areas has been omitted.

substantially from the previous year, but 153

Business results for each service productmillion yen in write-down of investmentarea during the fiscal year ended March 31, 2008

securities were incurred, resulting in a net loss.

are as follows:

Net sales, Operating Income, Operating margin

Total Assets
,18
21

5

7

2006

9

2005

,30
,61

0

2,000

2007

2008

10,000
5,000

0
2005

(Four-month period)

15,000

16

39
,06
4,8 6
77

20,000
4,000

11.1%

0
2004

25,00018

10,000

12.5%(Millions of Yen)

,11

8.8%

12.5%

13
,89
5
1,3
29

20,000

,22
5,0 6
14

41
,38
4,6 5
10

42
,10
9

9.6%

40

30,0003,7
18

40,0006,000

750,00021

Operating Income(Millions of Yen)

,01

Operating margin

14

Net sales(Millions of Yen)

12

engages in a single business, and therefore

2006

2007

2008

0
2004

(Four-month period)

PEWIS̲AR08̲1118変更3̲TF 09.1.6 11:36 AM ページ 13

Management's Discussion and Analysis of Operations

Service Solutions Businessefforts led to increased sales of security-related(a) System Services Division

products, but thin-client projects fell because of

New orders for outsourcing services and sales ofslowing replacement of PCs by customers in thesystem operation and maintenance services

education segment. As a result, net sales were

were strong, resulting in net sales of 23,664

7,051 million yen, down 20.6% from themillion yen, up 0.6% from the previous year.

previous year.

(b) System Solutions Division
Orders for systems from the Panasonic Electric

Financial position

Works group companies declined, but orders for
system construction from Panasonic Electric

As of the end of the fiscal year ended March 31,

Works Co., Ltd. continued to grow steadily, and2008, total assets decreased by 121 million yen

efforts were made to expand business includingfrom the end of the previous fiscal year tothe launch of new products such as the

21,185 million yen. The decrease was primarily“eSmileCall” call center package and thethe result of a fall in current assets.

“Electronic Document / Electronic Contract

Current assets fell by 585 million yen from

Solutions.” As a result, net sales were 8,349

the end of the previous fiscal year to 18,754

million yen, up 6.7% from the previous year.

million yen. Although deposits paid increased
considerably, combined accounts receivable andSystem and Communications Equipment Businesscash and deposits decreased 2,208 million yen,In response to the enforcement of the Financial

resulting in the decline in current assets.

Instruments and Exchange Law (also known as

Fixed assets increased by 463 million yen

the Japanese version of the Sarbanes-Oxley Act,

from the end of the previous fiscal year to 2,431

or “J-SOX”), attention on information security is

million yen. The increase was primarily the result

rising throughout the society as moreof increased tools, furniture and fixtures.

businesses are taking measures for internal

Total liabilities as of the end of the fiscal year

control. The Company took active measures todeclined by 2,328 million yen from the end ofincrease sales and acquire new orders such as

the previous fiscal year to 5,633 million yen. The

the launch of new Mobile Thin-Client Solutions

decrease was primarily the result of lower

that combines convenience with security. These

current liabilities.

EquityResearch and Development Costs(Millions of Yen)

(Millions of Yen)

80
15

39

10

50

49
39

40

8,5

05
8,1

10,000

75

70
60

,98

5

15,000

13

,34

6

,55

2

20,000

30
5,000

20

13

10

3

0

0
2004

2005

(Four-month period)

2006

2007

2008

2004

2005

(Four-month period)

2006

2007

2008

13

PEWIS̲AR08̲1118変更3̲TF 09.1.6 11:36 AM ページ 14

Management's Discussion and Analysis of Operations
Current liabilities decreased by 2,217 million

such expenses as 2,260 million yen for income

yen from the end of the previous fiscal year totaxes paid and 1,399 million yen decrease in

5,538 million yen. The decline was largely theaccounts payable, funds increased due toresult of lower accounts payable-trade andincome before income taxes and minority

accounts payable-other and a decrease ininterests of 4,847 million yen, as well as 1,793

income taxes payable.

million yen decrease in accounts receivable.

Long-term liabilities declined by 111 million
yen to 95 million yen from the end of the

Cash flows from investing activities

previous fiscal year, primarily as a result of aFunds used in investing activities amounted todecrease in liabilities for retirement benefits.

1,921million yen. This decrease was due toTotal equity as of the end of the fiscal year

6,000 million increase in deposits paid, 5,100

increased by 2,206 million yen from the end of

million decrease in deposits paid, and expenses

the previous fiscal year to 15,552 million yen.

of 713 million yen for purchases of property and

The increase was the result of an increase inequipment, as well as expenses of 175 million

retained earnings generated from net income.

yen for purchases of software.

As a result, the equity ratio increased from
62.5% by 10.8 points to 73.3%.

Cash flows from financing activities
Funds used in financing activities amounted to
639 million yen due to the payment of dividends.

Cash Flows
Cash and cash equivalents (hereinafter referred
to as “funds”) at the end of the year ended

Risk Management 2008

March 31, 2008 increased by 288 million yen(1) Recruiting Human Resourcesfrom the end of the previous year to 4,679

The Group is aware that for recruiting highly-

million yen (up 6.6%).

skilled human resources with technology or
management abilities is essential for the

Cash flows from operating activities
Funds generated from operating activities

success of its future business activities.
The Group conducts periodic and interim

amounted to 2,848 million yen. Although we hadhiring and engages in dynamic and varied

Capital Expenditure

Cash Flows 2008

(Millions of Yen)

(Millions of Yen)

3,000

1,200

Operating activities
Investing activities

2,848

1,066
1,000
800
600

Net increase in cash and cash equivalents

1,000
574

557

288
0

363

400
213

200

-1,000-2,0000
2004

14

Financing activities

2,000

2005

(Four-month period)

2006

2007

2008

-639
-1,921PEWIS̲AR08̲1118変更3̲TF 09.1.6 11:36 AM ページ 15

Management's Discussion and Analysis of Operations

recruiting activities such as holding briefing(3) Transactions with the Parent Company

sessions via the Internet, but this type of

The Company is a consolidated subsidiary ofoutstanding personnel is limited in thePanasonic Electric Works Co., Ltd., which owns

information service and other industries, and63.86% of the voting rights including indirectcompetition to hire the best personnel isownership, and is fully contracted for information

intensifying.

system services for the parent company. The

In addition, much system development andsales to Panasonic Electric Works in the fiscal

other work rely on outsourcing, and we are

year ended March 31, 2008 accounted for 56.5%.

working closely with subcontracting companies

While we are expanding sales outside theto secure outsourced personnel.

Panasonic Electric Works Group, any significant

Under these circumstances, if we are unablechanges in business strategy in our businessto prevent current employees from leaving, torelationship with Panasonic Electric Works could

recruit new employees or to secure outsourcing

exert an impact upon our business performance.

personnel, there is a risk that there will be a

In addition, Panasonic Corporation is thesubstantial impact on the future businessparent company of Panasonic Electric Works andactivities of the Group.

also the parent company of our company.

(2) Information Security(4) System for Software Development

If information systems should break down or

The Company is engaged in the development ofleaks of a customer's or individual's information

software in collaboration with domestic partner

should occur for any reason during the course ofcompanies. If any problems in businessprovision of system services from our group, any

performance or deterioration of financial

claims for damages from customers or collapse

confidence should occur to any of the partnerof credit resulting from this could have an

companies that has large-scale transactions withadverse impact on our business results. For thisus, it could affect our business results.

reason, our group regards information control asWith the goal of providing state-of-the-art

a matter of the utmost importance tosystems to our customers, we are constantly

management. In this respect, we have set up an

keeping an eye on trends in the evolution andInformation Security Management Committee,

standardization of information technology. It is,which is under the direct control of the

however, impossible to keep pace with all of

President, to play a central role in promoting,these rapid and diversely varied technologicalenhancing and maintaining thorough internal

movements, and any delay in responding to a

information management structure within thepotential advanced technology could have anGroup. The committee also promotes

effect on business performance. At the Company,

enlightenment, education, and awareness raising

we are leveraging partnerships with outside

for employees concerning information

developers, with a focus on the Corporate

management.

Technology Development Division / R&D
Center, to ensure our response to a broad rangeof technology trends.

15

新フォーマット̲1118変更̲TF 09.1.6 11:49 AM ページ 16

Matsushita Electric Works Information Systems Co., Ltd. and Consolidated Subsidiaries

Consolidated Balance Sheets
March 31, 2008 and 2007

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

ASSETS
CURRENT ASSETS:
Cash and deposits (Note 3)
Accounts receivable - Trade (Note 12)
Inventories (Note 4)
Deposits paid (Note 12)
Deferred tax assets (Note 9)
Other current assets (Note 12)
Total current assets
PROPERTY AND EQUIPMENT:
Buildings
Tools, furniture and fixtures
Construction in progress
Total
Accumulated depreciation
Net property and equipment
INVESTMENTS AND OTHER ASSETS:
Investment securities (Note 5)Long-term loans
Goodwill
Software
Long-term deposits paid
Prepaid pension cost (Note 7)
Deferred tax assets (Note 9)
Other assets
Allowance for doubtful receivables
Total investments and other assets
TOTAL
See notes to consolidated financial statements.

16

¥

2008

2007

773
7,810
525
9,039
349
258

¥ 1,216
9,577
535
7,388
390
233

18,754

19,339187,540

240
1,697
164
2,101
(962)

235
943
18
1,196
(649)

2,400
16,9701,640
21,010(9,620)

1,139

547

11,390

205

315
1

2,050

4
337
147
125
385
109
(20)

2008

$

7,730
78,1005,250
90,390
3,490
2,580

440
26
(21)

40
3,370
1,470
1,250
3,850
1,090
(200)

1,292

1,421

12,920¥ 21,185¥ 21,307$ 211,850

510
150

新フォーマット̲1118変更̲TF 09.1.6 11:49 AM ページ 17

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

LIABILITIES AND EQUITY

2008

2007

2008

CURRENT LIABILITIES:
Accounts payable - Trade (Note 12)
Accounts payable - Other (Note 12)
Income taxes payable
Consumption taxes payable
Deposits received (Note 6)
Other current liabilities¥ 2,199
1,711
901
50
3
674

¥ 3,600
2,221
1,211
92
2
628

$ 21,990
17,110
9,010
500
30
6,740

5,538

7,754

55,380

40
55

113
42
52

400
550

95

207

950

1,040
871
13,614(3)(0)
15,522
30

1,040
871
11,411

13,322
24

10,4008,710
136,140(30)(0)
155,220300

15,552

13,346

155,520¥ 21,185¥ 21,307$ 211,850

Total current liabilities
LONG-TERM LIABILITIES:
Liability for retirement benefits (Note 7)
Deposits received (Note 6)
Other
Total long-term liabilities
COMMITMENTS (Note 11)
EQUITY (Notes 8 and 13):
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 2008
Total
Minority interests
Total equity
TOTAL

17

新フォーマット̲1118変更̲TF 09.1.6 11:49 AM ページ 18

Matsushita Electric Works Information Systems Co., Ltd. and Consolidated Subsidiaries

Consolidated Statements of Income
Years Ended March 31, 2008 and 2007

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

2008

2007

2008

¥ 39,066¥ 40,226$390,660

COST OF SALES (Notes 10 and 12)

31,54332,666315,430

Gross profit

7,523

7,560

75,230SELLING, GENERAL AND ADMINISTRATIVE EXPENSES(Notes 10 and 12)

2,646

2,546

26,460

4,877

5,014

48,770

69
(3)
54
(153)
3

25
(3)
30
4

690
(30)
540
(1,530)
30

(30)

56

(300)

INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS

4,847

5,070

48,470

INCOME TAXES (Note 9):
Current
Deferred

1,898
101

2,050
8

18,980
1,010

1,999

2,058

19,9906

11

60¥ 2,842¥ 3,001$ 28,420

NET SALES (Note 12)

Operating income
OTHER INCOME (EXPENSES):Interest income
Interest expense
Receipt of cancellation fee of operating system (Note 12)
Write-down of investment securities
Other - net
Other income (expense) - net

Total income taxes
MINORITY INTERESTS IN NET INCOME
NET INCOMEYen

PER SHARE OF COMMON STOCK (Notes 2.n and 13):
Basic net income
Cash dividends
See notes to consolidated financial statements.

18¥ 266.78
65.00

U.S. Dollars¥ 281.65
55.00

$

2.67
0.65

新フォーマット̲1118変更̲TF 09.1.6 11:49 AM ページ 19

Matsushita Electric Works Information Systems Co., Ltd. and Consolidated Subsidiaries

Consolidated Statements of Changes in Equity
Years Ended March 31, 2008 and 2007

IssuedNumber of
Shares ofCommon Stock

BALANCE, APRIL 1, 2006

CommonStock

10,656,000 ¥ 1,040 ¥CapitalSurplusMillions of Yen
Unrealized
Loss onRetained Available-for-sale Treasury
Securities
Earnings
Stock871 ¥ 9,074

Minority
Interests Total Equity

Total¥10,985¥10,985

Reclassified balance as ofMarch 31, 2006 (Note 2.i)

¥

13

13

Net income

3,001

3,001

3,001

Cash dividends, ¥60 per share

(639)

(639)

(639)

Bonuses to directors

(25)

(25)

(25)

Net changes in the year
BALANCE, MARCH 31, 2007

11
10,656,000

11871 11,411

13,32224 13,346

Net income

2,842

2,842

2,842

Cash dividends, ¥60 per share

(639)

(639)

(639)

(0)

(0)

1,040

Purchase of treasury stock¥

Net changes in the year
BALANCE, MARCH 31, 2008¥
10,656,000 ¥ 1,040 ¥CommonStock

BALANCE, MARCH 31, 2007

871 ¥13,614 ¥CapitalSurplus

(0)

(3)

(3)
(3) ¥

6

(0) ¥15,522 ¥Thousands of U.S. Dollars (Note 1)
Unrealized
Loss onRetained Available-for-sale Treasury
Securities
Earnings
Stock
Total

30 ¥15,552

Minority
Interests Total Equity$133,220 $$10,400 $ 8,710 $114,110

3240 $133,460

Net income

28,42028,42028,420Cash dividends, $0.60 per share(6,390)(6,390)(6,390)(0)(0)

Purchase of treasury stock
Net changes in the year
BALANCE, MARCH 31, 2008$$
$10,400 $ 8,710 $136,140 $(30)(30) $(0)(30)(0) $155,220 $60

30

300 $155,520

See notes to consolidated financial statements.

19

新フォーマット̲1118変更̲TF 09.1.6 11:49 AM ページ 20

Matsushita Electric Works Information Systems Co., Ltd. and Consolidated Subsidiaries

Consolidated Statements of Cash Flows
Years Ended March 31, 2008 and 2007

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

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 (increase) in accounts receivable
Decrease (increase) in inventories
Decrease (increase) in other current assets
Increase in prepaid pension cost
Decrease in accounts payable
Increase (decrease) in other current liabilities
Increase in other long-term liabilities
Other - net
Total adjustments
Interest received
Interest paid
Income taxes paid

2008

2007

2008

¥ 4,847¥ 5,070$ 48,470

614

615
1
(220)
(25)
3

6,140

(113)
(69)
3
153

Net cash provided by operating activities
INVESTING ACTIVITIES:
Increase in deposits paid
Decrease in deposits paid
Purchases of securities
Proceeds from sales of securities
Purchases of property and equipment
Purchases of software
Purchases of investment securities
Payment for purchase of V-internet Operations, Inc. net of cash acquired
Other - net

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

(219)
316
61
(29)
325
12
(3)
(1,662)

17,930240(370)(1,250)(13,990)(6,530)
10
120
2,040
600
(30)
(22,600)

2,848

3,742

28,480(6,000)5,100(4,200)1,200(3,010)
3,011
(170)
(170)

(60,000)
51,000

(202)
(225)
249

2

(7,130)(1,750)
(520)
(490)
(320)

(1,921)(3,337)(19,210)FINANCING ACTIVITIES - DIVIDENDS PAID

(639)

(639)

(6,390)NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

288

(234)

2,880

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

4,391

4,625

43,910CASH AND CASH EQUIVALENTS, END OF YEAR (Note 3)¥ 4,679¥ 4,391$ 46,790

(713)
(175)
(52)
(49)
(32)

Net cash used in investing activities

ADDITIONAL CASH FLOWS INFORMATION:
Assets acquired
Liabilities assumed
Cash paid for the capital
Goodwill
See notes to consolidated financial statements.

20(1,130)
(690)
30
1,530

¥

190
61
133
4

$ 1,900
610
1,330
40

新フォーマット̲1118変更̲TF 09.1.6 11:49 AM ページ 21

Matsushita Electric Works Information Systems Co., Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
Years Ended March 31, 2008 and 2007

1. BASIS OF PRESENTING CONSOLIDATEDFINANCIAL STATEMENTS

effect on the accompanying consolidated financial
statements would not be material.

Matsushita Electric Works Information Systems Co., Ltd.
(the "Company") was incorporated on February 22, 1999 asa subsidiary of Matsushita Electric Works, Ltd. (the"Parent"). The Company is 64% owned by the Parent at
March 31, 2008 and 2007, respectively. The principle
business of the Company is to provide integration service
for information systems; maintenance of computer
systems; design, development, sales, lease, rental ofcomputer software; information network service and salesof related equipment.
The accompanying consolidated financial statements havebeen prepared in accordance with the provisions set forthin the Japanese Financial Instruments and Exchange Law(formerly, the Japanese Securities and Exchange Law) and
its related accounting regulations, and in conformity withaccounting principles generally accepted in Japan("Japanese GAAP"), which are different in certain respects
as to application and disclosure requirements ofInternational 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.

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.
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.

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 - Merchandise and supplies are statedat the lower of cost, determined by the movingaverage method, or market. Work in process
inventories are stated at cost determined by the
specific identification method.

d.

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

The consolidated financial statements are stated inJapanese yen, the currency of the country in which theCompany is incorporated and operates. The translations ofJapanese yen amounts into U.S. dollar amounts areincluded solely for the convenience of readers outside
Japan and have been made at the rate of ¥100 to $1, theapproximate rate of exchange at March 31, 2008. 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.

Non-marketable available-for-sale securities arestated 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.

e.

Consolidation - The accompanying consolidated
financial statements as of March 31, 2008 include theaccounts of the Company and its 2 subsidiaries (1subsidiary in 2007) (together, the "Group").
Under the control or influence concept, the Company
consolidates entities that it, directly or indirectly, isable to exercise control over operations.
Investment in unconsolidated subsidiary in which theCompany has control is stated at cost due toimmateriality. If the equity method of accounting had
been applied to the investment in this company, theProperty and Equipment - Property andequipment are stated at cost. Depreciation ofproperty and equipment of the Company is 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.
The range of useful lives is from 8 to 15 years forbuildings and from 3 to 10 years for tools, furnitureand fixtures.

2. SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIESa.

Investment Securities - Available-for-salef.

Long-lived Assets - The Group reviews its longlived assets for impairment whenever events orchanges in circumstance indicate the carrying amountof an asset or asset group may not be recoverable.
An impairment loss would be recognized if thecarrying amount of an asset or asset group exceeds
the sum of the undiscounted future cash flows

21

新フォーマット̲1118変更̲TF 09.1.6 11:49 AM ページ 22

expected to result from the continued use andeventual disposition of the asset or asset group. The
impairment loss would be measured as the amount bywhich the carrying amount of the asset exceeds its
recoverable amount, which is the higher of the
discounted cash flows from the continued use andeventual disposition of the asset or the net selling
price at disposition.

g.

n.

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

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.

Presentation of Equity - On December 9, 2005,
the Accounting Standards Board of Japan (ASBJ)
published a new accounting standard for presentationof equity. Under this accounting standard, certain
items which were previously presented as liabilities
are now presented as components of equity. Suchitems include minority interests. This standard was
effective for fiscal years ending on or after May 1,
2006. The balances of such items as of March 31,
2006 were reclassified as separate components ofequity as of April 1, 2006 in the consolidated
statement of changes in equity.

j.

Leases - Under Japanese accounting standards forleases, finance leases that deem to transfer ownershipof the leased property to the lessee are to becapitalized, while other finance leases are permitted tobe accounted for as operating lease transactions if
certain "as if capitalized" information is disclosed in
the notes to the lessee's financial statements. Allother leases are accounted for as operating leases.

k.

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

l.

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.

m. Income Taxes - The provision for income taxes iscomputed based on the pretax income included in the
consolidated statements of income. The asset andliability 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 andliabilities. Deferred taxes are measured by applying
currently enacted tax laws to the temporary
differences.

22

The weighted-average number of common sharesused in the computation was 10,655,997 shares and
10,656,000 shares for 2008 and 2007.

Retirement Benefits - The Company has a noncontributory funded pension plan together with the
Parent and certain domestic consolidated subsidiariesof the Parent 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.

Per Share Information - Basic net income pero.

New Accounting Pronouncements
Measurement of Inventories - Under Japanese
GAAP, inventories are currently measured either by
the cost method, or at the lower of cost or market.
On July 5, 2006, the ASBJ issued ASBJ Statement
No. 9, "Accounting Standard for Measurement of
Inventories", which is effective for fiscal years
beginning on or after April 1, 2008 with early adoption
permitted. 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.

Lease Accounting - On March 30, 2007, the
ASBJ issued ASBJ Statement No. 13, "AccountingStandard for Lease Transactions", which revised theexisting accounting standard for lease transactions
issued on June 17, 1993. The revised accounting
standard for lease transactions is effective for fiscal
years beginning on or after April 1, 2008 with early
adoption permitted for fiscal years beginning on orafter April 1, 2007.
LesseeUnder the existing accounting standard, financeleases that deem to transfer ownership of the leased
property to the lessee are to be capitalized, however,other finance leases are permitted to be accounted for
as operating lease transactions if certain "as if
capitalized" information is disclosed in the note to thelessee's financial statements. The revised accounting
standard requires that all finance lease transactions
shall be capitalized recognizing lease assets and leaseobligations in the balance sheet.

新フォーマット̲1118変更̲TF 09.1.6 11:49 AM ページ 23

Construction Contracts - Under the current

can be estimated reliably. If the outcome of aconstruction 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 should be immediately recognized byproviding for loss on construction contracts. This
standard is applicable to construction contracts andsoftware development contracts and effective forfiscal years beginning on or after April 1, 2009 withearly adoption permitted for fiscal years beginning on
or before March 31, 2009 but after December 27,
2007.

Japanese GAAP, either the completed-contract
method or the percentage-of-completion method ispermitted to account for construction contracts. On
December 27, 2007, the ASBJ published a new
accounting standard for construction contracts.
Under this accounting standard, the construction
revenue and construction costs should be recognizedby the percentage-of-completion method, if theoutcome of a construction contract can be estimatedreliably. When total construction revenue, total
construction costs and the stage of completion of thecontract at the balance sheet date can be reliably
measured, the outcome of a construction contract

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, 2008 and 2007 were as follows:
Thousands of
U.S. Dollars

Millions of Yen

2008

2007

2008

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

¥ 773
3,916
(10)

¥ 1,216
3,185(10)$ 7,730
39,160(100)

Cash and cash equivalents¥ 4,679¥ 4,391$ 46,790

4. INVENTORIESInventories at March 31, 2008 and 2007 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2008

2007

2008

MerchandiseWork in process
Supplies

¥ 226
297
2

¥ 201
331
3

$ 2,260
2,970
20

Total

¥ 525

¥ 535

$ 5,25023

新フォーマット̲1118変更̲TF 09.1.6 11:49 AM ページ 24

5. INVESTMENT SECURITIESInvestment securities as of March 31, 2008 and 2007 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2008
Non-current:
Marketable equity securities
Unquoted equity securities
Investment in unconsolidated subsidiary
Total

2007

2008

¥ 196
8
1

¥

315

$ 1,960
80
10

¥ 205

¥

315

$ 2,050

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

Cost

Millions of Yen
Unrealized
LossesThousands of U.S. Dollars
Unrealized
Fair
Losses
Value
Cost

Fair
Value

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

¥ 200

¥ (4)

¥ 196

$ 2,000$ (40)$ 1,960

6. DEPOSITS RECEIVED
Deposits received at March 31, 2008 and 2007 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2008
Welfare pension
Other

2008

¥

40
3
43
(3)

¥

42
2
44
(2)

$

400
30
430
(30)

¥

40

¥

42

$

400

Total
Less current portionLong-term debt, less current portion

2007

Interest rates applicable to the welfare pension were 6.5% at March 31, 2008 and 2007.
Annual maturities of deposits received at March 31, 2008, were as follows:Year Ending March 31

24

Millionsof Yen

2009
2010
2011
2012
2013
2014 and thereafter

¥

3
2
2
2
2
32

Total

¥ 43

Thousands of
U.S. Dollars

$

30
20
20
20
20
320

$ 430

新フォーマット̲1118変更̲TF 09.1.6 11:49 AM ページ 25

7. RETIREMENT BENEFITSThe Company has severance payment plans for employees.
Under most circumstances, employees terminating their employment are entitled to retirement benefits determinedbased on principally accumulated points allocated to them each year according to their age and job evaluation andinterest points over the accumulated points. Such retirement benefits are made in the form of annuity payments fromthe 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 specificages prior to the mandatory retirement age.
The liability for employees' retirement benefits at March 31, 2008 and 2007 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2008

2007

2008

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

¥ 3,256(2,556)700(1,010)185¥ 3,013(2,461)
552
(642)
203

$ 32,560(25,560)
7,000(10,100)
1,850

Net liability (asset)¥ (125)¥$ (1,250)

113

The components of net periodic benefit costs for the years ended March 31, 2008 and 2007 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2008

2007

2008

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

¥

185
75
(74)
(18)
55

¥

184
72
(66)
(18)
48

$

1,850
750
(740)
(180)
550

Net periodic benefit costs

¥

223

¥

220

$

2,230

Assumptions used for the years ended March 31, 2008 and 2007 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

2008

2007

2.5%
3.0%
7years15years

2.5%
3.0%
7years15years25

新フォーマット̲1118変更̲TF 09.1.6 11:49 AM ページ 26

8. EQUITY
Since May 1, 2006, Japanese companies have been subject to the Corporate Law of Japan (the "Corporate Law"),
which reformed and replaced the Commercial Code of Japan. The significant provisions in the Corporate Law that
affect financial and accounting matters are summarized below:(a) Dividends
Under the Corporate Law, 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 theBoard of Directors, (2) having independent auditors, (3) having the Board of Corporate Auditors, and (4) the term ofservice of the directors is prescribed as 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 thecompany has prescribed so in its articles of incorporation.
The Corporate Law permits companies to distribute dividends-in-kind (non-cash assets) to shareholders subject to acertain 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 Corporate Law provides certain limitations on the amounts available fordividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to theshareholders, but the amount 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 Corporate Law requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (acomponent of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on theequity account charged upon the payment of such dividends until the total of aggregate amount of legal reserve andadditional paid-in capital equals 25% of the common stock. Under the Corporate Law, the total amount of additional
paid-in capital and legal reserve may be reversed without limitation. The Corporate Law also provides that common
stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings can be transferred among theaccounts under certain conditions upon resolution of the shareholders.
(c) Treasury stock and treasury stock acquisition rights
The Corporate Law also provides for companies to purchase treasury stock and dispose of such treasury stock byresolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for
distribution to the shareholders which is determined by specific formula. Under the Corporate Law, stock acquisitionrights, which were previously presented as a liability, are now presented as a separate component of equity. The
Corporate Law also provides that companies can purchase both treasury stock acquisition rights and treasury stock.
Such treasury stock acquisition rights are presented as a separate component of equity or deducted directly from stockacquisition rights.

26

新フォーマット̲1118変更̲TF 09.1.6 11:49 AM ページ 27

9. INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in theaggregate, resulted in normal effective statutory tax rates of approximately 40.4% for the years ended March 31, 2008
and 2007.
The tax effects of significant temporary differences, which resulted in deferred tax assets and liabilities at March 31,
2008 and 2007, are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2008
Deferred tax assets:
Accrued enterprise taxes
Depreciation
Retirement benefits
Accrued bonus to employees
Others
Total

¥

69
339

¥

175
202
785

Deferred tax liabilities:
Prepaid pension cost¥

51

Net deferred tax assets

¥

734

2007
¥

¥

¥

92
360
46
171
161
830

830

2008
$

690
3,390

$

1,750
2,020
7,850

$

510

$

7,340

For the years ended March 31, 2008 and 2007, 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.

10. RESEARCH AND DEVELOPMENT COSTS
Research and development costs included in cost of sales and selling, general and administrative expenses were ¥39
million ($390 thousand) and ¥75 million for the years ended March 31, 2008 and 2007, respectively.

27

新フォーマット̲1118変更̲TF 09.1.6 11:49 AM ページ 28

11. LEASESThe Group leases certain computer equipment and other assets.
Total lease payments under finance leases for the years ended March 31, 2008 and 2007 were ¥1,968 million ($19,680
thousand) and ¥2,432 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 years ended March 31, 2008 and 2007 was as follows:
Millions of Yen

2008
Tools,
Furniture
andFixtures2007

Software

Total

Tools,
Furniture
andFixtures

SoftwareTotal

Acquisition cost
Accumulated depreciation¥ 5,057(2,642)

¥

53
(35)

¥ 5,110(2,677)¥ 7,146(3,423)¥ 1,210(683)¥ 8,356(4,106)Net leased property¥ 2,415¥18¥ 2,433¥ 3,723¥¥ 4,250

527

Thousands of U.S. Dollars

2008
Tools,
Furniture
andFixtures

SoftwareTotal

Acquisition cost
Accumulated depreciation$ 50,570(26,420)

$

530
(350)

$ 51,100(26,770)

Net leased property$ 24,150$

180$ 24,330

Obligations under finance leases:
Thousands of
U.S. Dollars

Millions of Yen

2008

2007

2008

Due within one year
Due after one year

¥ 1,298
1,270¥ 1,955
2,336$ 12,980
12,700Total¥ 2,568¥ 4,291$ 25,680

Depreciation expense and interest expense under finance leases:
Thousands of
U.S. Dollars

Millions of Yen

2008

2007

2008

Depreciation expense
Interest expense¥ 1,85142¥ 2,33073$ 18,510
420

Total

¥ 1,893¥ 2,403$ 18,930

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.

28

新フォーマット̲1118変更̲TF 09.1.6 11:49 AM ページ 29

12. RELATED PARTY TRANSACTIONS
Balances at March 31, 2008 and 2007 and transactions for the years ended March 31, 2008 and 2007 with the Parent,
its consolidated subsidiaries and its associated companies were as follows:
Thousands of
U.S. Dollars

Millions of Yen

Sales
Purchases
Lease and rental expense
Receipt of cancellation fee of operating system

2008

2007

2008

¥ 25,323
14849¥ 25,885
305
863
30

$ 253,230
140
8,490

Thousands of
U.S. Dollars

Millions of Yen

2008
Accounts receivable
Other current assets
Accounts payable
Deposits paid

¥

5,378
24
132
8,983

2007
¥

5,729
15
195
7,383

2008
$ 53,780
240
1,320
89,83013. SUBSEQUENT EVENT
Appropriation of Retained Earnings
The following appropriations of retained earnings at March 31, 2008 were resoluted at the Board of Directors meeting
held on May 21, 2008:

Year-end cash dividends, ¥32.50 ($0.33) per share

Millionsof YenThousands of
U.S. Dollars¥ 346$ 3,460

29

新フォーマット̲1118変更̲TF 09.1.6 11:49 AM ページ 30

30

PEWIS̲AR08̲1118変更3̲TF 09.1.6 11:37 AM ページ 31

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
531Tokyo Stock Exchange, First Section

Establishment:
Paid-in capital:
Number of employees:
Stock listing:Shares of common stock
issued and outstanding: 10,656,000 shares**Effective April 1, 2004, a 200-for-one share split was implemented.

Number of shareholders: 5,544

Board of Directors,
Auditors and Officers
As of June 17,2008

Corporate Data

President:
Takeyoshi Kawamura
Vice President:
Kazuhiro Maegawa

The Company and Consolidated Subsidiaries As of March 31, 2008

Managing Director:
Tsutomu Toda

Major Shareholders
Shareholder

Number ofsharesPercentage ofvoting rights (%)

Matsushita Electric Works, Ltd.*1
Japan Trustee Services Bank, Ltd. (Trust Account)
The Master Trust Bank of Japan, Ltd. (Trust Account)
MEW-IS*2 Employee Stock Ownership Association

6,787,200
362,200
258,100
207,200

63.69
3.40
2.42
1.94

Meiji Yasuda Life Insurance Company Account 51
Bank of New York GCM Client Accounts ELRG
Japan Trustee Services Bank, Ltd. (Trust Account 4)
FUJITSU LIMITEDIBM Japan, Ltd.
Oki Electric Industry Co., Ltd.

91,40042,70039,80036,00036,00036,000

0.86
0.40
0.37
0.34
0.34
0.34

Directors:
Akira Hisano
Hisashi Kurono
Shinichi Hasegawa *1
Shinichiro Satani *1
Auditors:
Tatsuji Shinkai *2
Kuniaki Watanabe *2
Makoto Ishii
Executive Officers:
Hiroyuki Maruoka *3
Keisuke Tanaka
Hajime Onishi*1 outside director*2 external auditor*3 senior executive officer*1 Matsushita Electric Works, Ltd. has changed its name to Panasonic Electric Works Co., Ltd. in October 2008.
*2 The Company has changed its name to Panasonic Electric Works Information Systems in October 2008.

Disclaimer
Annual Report 2008 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 document thatare not historical or current facts are forward-looking statements based on current assumptions and beliefs of management. Many factors that theCompany is unable to predict with accuracy could cause the Company’s actual results, performance, achievements or financial position to be materiallydifferent 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, and shall in no event beliable for any damages arising out of the use or interpretation of this material.

PEWIS̲cover 09.1.6 11:50 AM ページ 1

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/

This annual report was printed on recycled paper.
Printed in Japan