Panasonic Announces Annual Business Policy

President Fumio Ohtsubo of Panasonic Corporation (NYSE:PC)(TOKYO:6752) today announced its business policy for the fiscal year ending March 2012 (fiscal 2012) at the company’s business policy meeting. Addressing before an audience of Panasonic Group employees, he first touched upon the impacts of the March 11 earthquake (the Great East Japan Earthquake) on the group’s operations. He then summarized the group’s progress made in the first year of the Green Transformation 2012 (GT12) management plan covering three years through March 2013 and laid out Panasonic’s growth imperatives for fiscal 2012, including reorganization. The following is a summary of his presentation.

One and Half Months after the Great East Japan Earthquake

(1) Recovery and Reconstruction Initiatives: While operations at Panasonic factories in the disaster-hit region have been recovering steadily, disruptions in its supply chain are still affecting the group’s operations.

Towards full recovery of the company and reconstruction of the nation, Panasonic continues to extend a helping hand to the people in the affected region, and at the same time, it is accelerating its efforts to restore its operations to normal state and prepare itself for future disaster risks. While Panasonic plans to cut cost and investment in accordance with changes in sales stemmed from the disaster, it is determined to play a significant role in the country’s reconstruction efforts with its products and business activities.

(2) Contribution through Products and Business Activities: To be specific, to respond to the needs for measures to cope with anticipated power shortages and blackouts, Panasonic will promote the use of energy-efficient LED lighting and propose its solutions that combine energy creation, storage and management. To the nation’s full-scale recovery, the group intends to offer comprehensive solutions for the entire home, building and town that address energy challenges and bring about safe and secure living. The group will put its concept of "green innovation company” into practice along the way.

1. Progress and Key Issues in "GT12”

Under the GT12 three-year midterm management plan, Panasonic set the following targets for FY 2013 ending March 2013.

*1: Panasonic’s sales of consumer and systems products in BRICs + Vietnam and MINTS + B (Mexico, Indonesia, Nigeria, Turkey, Saudi Arabia and the Balkans)

In the first year of the GT12 plan, from April 2010 to March 2011, Panasonic saw steady growth in the heating/refrigeration/air conditioning and LED businesses among its six key business areas. Sales in the emerging countries registered 20% growth over the previous fiscal year, driven by robust sales in India and Vietnam. The group also experienced progress in CO₂ reductions, which exceeded its targets, as a result of increased sales of its energy-efficient products and reduced CO₂ emissions from production process. During the first year of GT12, some businesses and regions met their sales targets. Overall, however, substantial sales growth was not materialized in the new business sectors and overseas.

2. Group Reorganization and New Growth Strategy

<Direction of Business Reorganization>

Panasonic will undergo group-wide reorganization in line with its basic concepts: "Maximize value creation by strengthening contacts with customers,” "Realize speedy and lean management” and "Accelerate growth businesses by boldly shifting management resources.” The group currently consists of five business segments by technology platform. Putting customers’ perspectives in the center, it will be reorganized into three business sectors by business model: Consumer, Components & Devices and Solutions.

In these three business sectors, nine internal companies called "business domain companies” and a marketing division will be set up. Panasonic will build an optimum business model for each business sector and aims to optimize synergies among the group companies.

<Growth Strategies of the Three Business Sectors>

<Reorganization of the Head Office>

3. Strengthening Management Structure - Act Decisively, Change and Mix Together

<Act Decisively>

<Change>

To successfully carry out management innovations, Corporate Division for Group Management Innovation, consisting of six subcommittees and one committee, will orchestrate innovation initiatives across all the group companies and accelerate the group-wide innovation efforts. Individual businesses will also be drastically reorganized.

<Mix Together>

Involving all employees of the Panasonic Group, Panasonic will create a new group culture. By sharing management philosophy and making the most of diversity of the group, they will strive to make the new group culture directly contribute to the group’s growth.

4. New Panasonic Group after Reorganization

<New Panasonic Group>

When the drastic group-wide reorganization is completed, Panasonic will have an optimum structure that enables the group to effectively pursue new growth strategies. Panasonic aims to realize sales of at least 3 trillion yen from each of the three business sectors in fiscal 2013. It expects the group’s total employees will be the 350,000 people level as it will build an organization with global competitiveness.

<Reorganization>

Panasonic will review overlapping businesses within the group and consider consolidation or transfer them to outside companies. At the same time, Panasonic will reorganize its bases and reassign its personnel, as the reorganization involves consolidation and streamlining at the group’s head offices and all business domains. Panasonic expects the restructuring charges will be the 110 billion yen level in fiscal 2012 and the 50 billion yen level in fiscal 2013.

<Synergies and GT12 Targets>

Panasonic expects some negative synergies in fiscal 2012, such as sales decline, inherent in the consolidation of home appliances businesses and sales companies. However, it also expects the rationalization and restructuring will more than offset the negative effect and increase its annual operating profit by 6 billion yen in fiscal 2012.

In fiscal 2013, Panasonic predicts synergies from the restructuring will contribute 60 billion yen to its annual operating profit, as increased sales in solar cells, lithium-ion batteries, LED lighting and air conditioning equipment and rationalization are expected to exceed the negative synergies.

Under the GT12 plan, Panasonic set the targets of 10 trillion yen in sales and 5% or more in operating profit to sales ratio for fiscal 2013. Considering impact of exchange rate changes and the above-mentioned synergies, Panasonic maintains the operating profit to sales ratio target of 5% or more for fiscal 2013. For operating profit, it will strive for achieving the original goal of the 500 billion yen level in fiscal 2013. As to sales, Panasonic now aims for 9.4 trillion yen for fiscal 2013, taking into account a further appreciation of the yen and the reorganization plans shaped in its "Transformation Project” that was developed after the GT12 plan.

About Panasonic

Panasonic Corporation is a worldwide leader in the development and manufacture of electronic products for a wide range of consumer, business, and industrial needs. Based in Osaka, Japan, the company recorded consolidated net sales of 8.69 trillion yen (US$105.0billion) for the year ended March 31, 2011. The company's shares are listed on the Tokyo, Osaka, Nagoya and New York (NYSE:PC) stock exchanges. For more information on the company and the Panasonic brand, visit the company's website at http://panasonic.net/

Disclaimer Regarding Forward-Looking Statements

This press release includes forward-looking statements (within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934) about Panasonic and its Group companies (the Panasonic Group). To the extent that statements in this press release do not relate to historical or current facts, they constitute forward-looking statements. These forward-looking statements are based on the current assumptions and beliefs of the Panasonic Group in light of the information currently available to it, and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause the Panasonic Group's actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. Panasonic undertakes no obligation to publicly update any forward-looking statements after the date of this press release. Investors are advised to consult any further disclosures by Panasonic in its subsequent filings with the U.S. Securities and Exchange Commission pursuant to the U.S. Securities Exchange Act of 1934 and its other filings.

The risks, uncertainties and other factors referred to above include, but are not limited to, economic conditions, particularly consumer spending and corporate capital expenditures in the United States, Europe, Japan, China and other Asian countries; volatility in demand for electronic equipment and components from business and industrial customers, as well as consumers in many product and geographical markets; currency rate fluctuations, notably between the yen, the U.S. dollar, the euro, the Chinese yuan, Asian currencies and other currencies in which the Panasonic Group operates businesses, or in which assets and liabilities of the Panasonic Group are denominated; the possibility of the Panasonic Group incurring additional costs of raising funds, because of changes in the fund raising environment; the ability of the Panasonic Group to respond to rapid technological changes and changing consumer preferences with timely and cost-effective introductions of new products in markets that are highly competitive in terms of both price and technology; the possibility of not achieving expected results on the alliances or mergers and acquisitions including the business reorganization after the acquisition of all shares of Panasonic Electric Works Co., Ltd. and SANYO Electric Co., Ltd.; the ability of the Panasonic Group to achieve its business objectives through joint ventures and other collaborative agreements with other companies; the ability of the Panasonic Group to maintain competitive strength in many product and geographical areas; the possibility of incurring expenses resulting from any defects in products or services of the Panasonic Group; the possibility that the Panasonic Group may face intellectual property infringement claims by third parties; current and potential, direct and indirect restrictions imposed by other countries over trade, manufacturing, labor and operations; fluctuations in market prices of securities and other assets in which the Panasonic Group has holdings or changes in valuation of long-lived assets, including property, plant and equipment and goodwill, deferred tax assets and uncertain tax positions; future changes or revisions to accounting policies or accounting rules; natural disasters including earthquakes, prevalence of infectious diseases throughout the world and other events that may negatively impact business activities of the Panasonic Group; as well as direct or indirect adverse effects of the Great East Japan Earthquake on Panasonic Group in terms of, among others, component procurement, manufacturing, distribution, and economic conditions in Japan and overseas including consumer spending and corporate capital investment. The factors listed above are not all-inclusive and further information is contained in Panasonic's latest annual reports, on Form 20-F, and any other reports and documents which are on file with the U.S. Securities and Exchange Commission.