UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 20-F

ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 20082009

Commission file number 1 - 6784

MATSUSHITA DENKI SANGYOPANASONIC KABUSHIKI KAISHA

(Exact name of Registrant as specified in its charter)

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.PANASONIC CORPORATION

(Translation of Registrant’s name into English)

Japan

(Jurisdiction of incorporation or organization)

1006, Oaza Kadoma, Kadoma-shi, Osaka 571-8501, Japan

(Address of principal executive offices)

Yukitoshi Onda, +81-6-6906-1763, onda.yukitoshi@jp.panasonic.com, address is same as above

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

Indicate the number of outstanding shares (excluding treasury stock) of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x    No  ¨.

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes  ¨    No  x.

Indicate by check mark whether the Company (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):     

Large accelerated filer  x        Accelerated filer  ¨        Non-accelerated filer  ¨.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP  x        International Financial Reporting Standards as issued by the International Accounting Standards Board  ¨        Other  ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17  ¨     Item 18  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  x        Accelerated filer  ¨Non-accelerated filer  ¨.

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x.

This form contains 174147 pages.

CONTENTS

- 1 -

All information contained in this annual report is as of March 31, 20082009 or for the year ended March 31, 20082009 (fiscal 2008)2009) unless the context otherwise indicates.

The noon buying rate for yen in New York City as certified for customs purposes by the Federal Reserve Bank of New York on June 18, 200819, 2009 was 108.0596.15 yen = U.S.$1.

About the Company

Matsushita Electric Industrial Co., Ltd.Panasonic Corporation (hereinafter, unless the context otherwise requires, “Matsushita,“Panasonic,” the “Matsushita“Panasonic Group” or the “Company” refers to Matsushita Electric Industrial Co., Ltd.Panasonic Corporation and its consolidated subsidiaries as a group), best known for its “Panasonic” brand name, is one of the world’s leading manufacturers of electronic and electric products for a wide range of consumer, business and industrial uses, as well as a wide variety of components. The shareholders of the Company resolved in June 2008 that the name of the Company will be changed to “Panasonic Corporation” asAs from October 1, 2008.2008, the Company changed its company name from “Matsushita Electric Co., Ltd.” to “Panasonic Corporation.” Based in Osaka, Japan, the Company recorded consolidated net sales of approximately 9,0697,766 billion yen for fiscal 2008.2009. Over the past eightnine decades, the Company has grown from a small domestic household electrical equipment manufacturer into a comprehensive electronic and electric equipment, systems and components manufacturer operating internationally. Of the fiscal 20082009 net sales, nearly one-half was represented by sales in Japan, with the rest by overseas sales.

Cautionary Statement Regarding Forward-Looking Statements

This annual report 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 Matsushita.Panasonic. To the extent that statements in this annual report 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 MatsushitaPanasonic 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 MatsushitaPanasonic 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. MatsushitaPanasonic undertakes no obligation to publicly update any forward-looking statements after the date of this annual report (June 2008)2009). Investors are advised to consult any further disclosures by MatsushitaPanasonic in its subsequent filings with the U.S. Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934 and its other filings.

- 2 -

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 MatsushitaPanasonic Group operates businesses, or in which assets and liabilities of the MatsushitaPanasonic Group are denominated; the ability of the MatsushitaPanasonic 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; the ability of the MatsushitaPanasonic Group to achieve its business objectives through joint ventures and other collaborative agreements with other companies; the ability of the MatsushitaPanasonic 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 MatsushitaPanasonic Group; the possibility that the MatsushitaPanasonic 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 MatsushitaPanasonic Group has holdings or changes in valuation of long-lived assets, including property, plant and equipment and goodwill, and deferred tax assets and uncertain tax positions; future changes or revisions to accounting policies or accounting rules; as well as natural disasters including earthquakes and other events that may negatively impact business activities of the MatsushitaPanasonic Group. The factors listed above are not all-inclusive.

- 32 -

PART I

Not applicable

Not applicable

- 43 -

Not applicable

Not applicable

Once a year, MatsushitaPanasonic implements a Groupwide risk assessment survey to identify potential risks in an integrated and comprehensive manner. By identifying, assessing, evaluating and prioritizing these risks, MatsushitaPanasonic specifies risks related toat the Corporate Headquarters, business domain companies and Group affiliates, takes countermeasures that correspond to the materiality of each risk, and seeks continuous improvements through the monitoring of the progress of such countermeasures. Primarily because of the business areas and geographical areas where it operates, and the highly competitive nature of the industry to which it belongs, MatsushitaPanasonic is exposed to a variety of risks and uncertainties in conducting its businesses, including, but not limited to, the following. These risks may adversely affect Matsushita’sPanasonic’s business, operating results and financial condition. This section includes forward-looking statements and future expectations as of the date of this annual report.

Risks Related to Economic Conditions

Continued or further weakness in Japanese and global economies may cause reduced demand for Panasonic’s products

Weakness in Japanese and global economies may cause reduced demand for Matsushita’sPanasonic’s products

Demand for Matsushita’sPanasonic’s products and services may be affected by general economic trends in the countries or regions in which Matsushita’sPanasonic’s products and services are sold. Economic downturns and resulting declines in demand in Matsushita’sPanasonic’s major markets worldwide may thus adversely affect the Company’s business, operating results and financial condition. Since the financial crisis occurred in 2008, Panasonic’s business environment has been rapidly deteriorating due to declines in global consumption and business activities and due to intensified price competition. Panasonic expects a decrease in profitability in fiscal 2010 because further deterioration of domestic and overseas market conditions will likely cause sales of Panasonic’s products to decline and Panasonic will incur increased costs for additional business restructuring in order to cope with the business environment. If global market conditions worsen beyond expectations, the business environment of Panasonic may deteriorate more than currently anticipated, which may adversely affect the Company’s business, operating results and financial condition.

Currency exchange rate fluctuations may adversely affect Matsushita’sPanasonic’s operating results

Foreign exchange rate fluctuations may adversely affect Matsushita’sPanasonic’s business, operating results and financial condition, because its international business transactions and costs and prices of its products and services in overseas countries are affected by foreign exchange rate changes. In addition, foreign exchange rate changes can also affect the yen value of Matsushita’sPanasonic’s investments in overseas assets and liabilities because Matsushita’sPanasonic’s consolidated financial statements are presented in Japanese yen. Generally, an appreciation of the yen against other major currencies such as the U.S. dollar and the euro may adversely affect Matsushita’sPanasonic’s operating results. Meanwhile, a depreciation of the yen against the aforementioned major currencies may have a favorable impact on Matsushita’sPanasonic’s operating results.

- 5 - The global financial crisis, which occurred in 2008, caused the rapid appreciation of the yen against other major currencies, which adversely and significantly affected Panasonic’s operating results in fiscal 2009. Any further or continued appreciation of the yen may adversely affect the Company’s business, operating results and financial condition.

Interest rate fluctuations may adversely affect Matsushita’sPanasonic’s financial condition, etc.

MatsushitaPanasonic is exposed to interest rate fluctuation risks which may affect the Company’s operational costs, interest expenses, interest income and the value of financial assets and liabilities. Accordingly, interest rate fluctuations may adversely affect the Company’s business, operating results and financial condition.

- 4 -

Continuation or deterioration of financial market turmoil may adversely affect Panasonic’s ability to raise funds or may increase the cost of fund raising

Panasonic raises funds for its business through methods such as borrowing from financial institutions and issuance of bonds and commercial papers. Where, among other events, financial market turmoil continues or deteriorates, financial institutions reduce lending to Panasonic, or rating agencies downgrade Panasonic’s credit ratings, Panasonic may not be able to raise funds in the time and amount necessary for Panasonic, or under conditions which Panasonic deems appropriate, and Panasonic may incur additional costs of raising funds, which may adversely affect the Company’s business, operating results and financial condition.

Decreases in the value of Japanese stocks may adversely affect Matsushita’sPanasonic’s financial results

MatsushitaPanasonic holds mostly Japanese stocks as part of its investment securities. The value of thesesuch stocks may drop substantiallydropped significantly due to the global financial crisis and economic conditions or other factors, resultingdownturn in Japan, causing Panasonic to record losses fromon the valuation declines of its investment securities. Suchsecurities in fiscal 2009. Further decreases in the value of stocks may occur, causing adverse effectscause additional losses due to Matsushita’sdecreases in the valuation of investment securities, thereby adversely affecting Panasonic’s operating results and financial condition. The decrease in the value of Japanese stocks may also reduce stockholders’ equity on the balance sheet, as unrealized holding gains (losses) of available-for-sale securities are included as part of accumulated other comprehensive income (loss).

Risks Related to Matsushita’sPanasonic’s Business

Competition in the industry may adversely affect Matsushita’sPanasonic’s ability to maintain profitability

MatsushitaPanasonic develops, produces and sells a broad range of products and therefore faces many different types of competitors, from large international companies to relatively small, rapidly growing, and highly specialized organizations. MatsushitaPanasonic may choose not to fund or invest in one or more of its businesses to the same degree as its competitors in those businesses do, or it may not be able to do so in a timely manner or even at all. These competitors may have greater financial, technological, and marketing resources than MatsushitaPanasonic in the respective businesses in which they compete.

Rapid declines in product prices may adversely affect Matsushita’sPanasonic’s financial condition

Matsushita’sPanasonic’s business is subject to intense price competition worldwide, which makes it difficult for the Company to determine product prices and maintain adequate profits. Such intensified price competition may adversely affect Matsushita’sPanasonic’s profits, especially in terms of possible decreases in demand. For the year ending March 31, 2009, Matsushita expects that itsAs global consumption has declined and demand has shifted to low-priced products, Panasonic’s product prices in consumer digital electronics and many other business areas will continue tomay decline as has been the case in recent years.

- 6 -significantly.

Matsushita’sPanasonic’s business is, and will continue to be, subject to risks generally associated with international business operations

One of Matsushita’sPanasonic’s business strategies is business expansion in overseas markets. In many of these markets, MatsushitaPanasonic may face risks generally associated with international manufacturing and other business operations, such as political instability, cultural and religious differences the spread of infectious diseases and labor relations, as well as economic uncertainty and foreign currency exchange risks. MatsushitaPanasonic may also face barriers in commercial and business customs in foreign countries, including difficulties in timely collection of accounts receivable or in building and expanding relationships with customers, subcontractors or parts suppliers. MatsushitaPanasonic may also experience various political, legal or other restrictions in investment, trade, manufacturing, labor or other aspects of operations, including restrictions on foreign investment or the repatriation of profits on invested capital, nationalization of local industry, changes in export or import restrictions or foreign exchange controls, and changes in the tax system or the rate of taxation in countries where MatsushitaPanasonic operates businesses. With respect to products exported overseas, tariffs, other barriers or shipping costs may make Matsushita’sPanasonic’s products less competitive in terms of price. Expanding its overseas business may require significant investments long before MatsushitaPanasonic realizes returns on such investments, and increased investments may result in expenses growing at a faster rate than revenues.

- 5 -

MatsushitaPanasonic may not be able to keep pace with technological changes and develop new products or services in a timely manner to remain competitive

MatsushitaPanasonic may fail to introduce new products or services in response to technological changes in a timely manner. Some of Matsushita’sPanasonic’s core businesses, such as consumer digital electronics and key components and devices, are concentrated in industries where technological innovation is the central competitive factor. MatsushitaPanasonic continuously faces the challenge of developing and introducing viable and innovative new products. MatsushitaPanasonic must predict with reasonable accuracy both future demand and new technologies that will be available to meet such demand. If MatsushitaPanasonic fails to do so, it will not be able to compete effectively in new markets.

MatsushitaPanasonic may not be able to develop product formats that can prevail as de facto standards

MatsushitaPanasonic has been forming alliances and partnerships with other major manufacturers to strengthen technologies and the development of product formats, such as next-generation home and mobile networking products, data storage devices, and software systems. Despite these efforts, Matsushita’sPanasonic’s competitors may succeed in developing de facto standards for future products before MatsushitaPanasonic can. In such cases, the Company’s competitive position, business, operating results and financial condition could be adversely affected.

- 7 -

MatsushitaPanasonic may not be able to successfully recruit and retain skilled employees, particularly scientific, technical and management professionals

Matsushita’sPanasonic’s future success depends largely on its ability to attract and retain certain key personnel, including scientific, technical and management professionals. Matsushita anticipates that it will need to hire additional skilled personnel in all areas of its business. Industry demand for suchskilled employees, however, exceeds the number of personnel available, and the competition for attracting and retaining these employees is intense. Because of this intense competition for skilled employees, MatsushitaPanasonic may be unable to retain its existing personnel or attract additional qualified employees to keep up with future business needs. If this should happen, Matsushita’sPanasonic’s business, operating results and financial condition could be adversely affected.

Alliances with, and strategic investments in, third parties, and mergers and acquisitions undertaken by MatsushitaPanasonic, may not produce positive results

MatsushitaPanasonic develops its business by forming alliances or joint ventures with, and making strategic investments in, other companies, including investments in start-up companies. Furthermore, the strategic importance of partnering with third parties is increasing. In some cases, such partnerships are crucial to Matsushita’sPanasonic’s goal of introducing new products and services, but MatsushitaPanasonic may not be able to successfully collaborate or achieve expected synergies with its partners. MatsushitaPanasonic does not, however, control these partners, who may make decisions regarding their business undertakings with MatsushitaPanasonic that may be contrary to Matsushita’sPanasonic’s interests. In addition, if these partners change their business strategies, MatsushitaPanasonic may fail to maintain these partnerships. Panasonic and SANYO Electric Co., Ltd. (“SANYO”), upon resolutions of meetings of their respective Boards of Directors held on December 19, 2008, entered into a Capital and Business Alliance Agreement. Panasonic aims to make SANYO its subsidiary through a tender offer (at a purchase price of 131 yen per share of common stock, 1,310 yen per share of Class A preferred stock and 1,310 yen per share of Class B preferred stock), which will be launched subject to, among other conditions, the completion of the procedures and measures that are required under domestic and overseas competition laws and regulations. However, Panasonic may not be able to promptly make SANYO its subsidiary and may fail to achieve the expected synergies with SANYO through the capital and business alliance. Furthermore, as a result of making SANYO its consolidated subsidiary, deterioration of SANYO’s operating results and financial condition may adversely affect Panasonic’s operating results and financial condition.

MatsushitaPanasonic is dependent on the ability of third parties to deliver parts, components and services in adequate quality and quantity in a timely manner, and at a reasonable price

Matsushita’sPanasonic’s manufacturing operations depend on obtaining raw materials, parts and components, equipment and other supplies including services from reliable suppliers in adequate quality and quantity in a timely manner. It may be difficult for MatsushitaPanasonic to substitute one supplier for another, increase the number of suppliers or change one component for another in a timely manner or at all due to the interruption of supply caused by, among other conditions, the bankruptcy of suppliers or increased industry demand. This may adversely affect the MatsushitaPanasonic Group’s operations. Although MatsushitaPanasonic decides purchase prices by contract, the prices of raw materials including oil, parts and components, may increase due to changes in supply and demand. Some components are only available from a limited number of suppliers, which also may adversely affect Matsushita’sPanasonic’s business, operating results and financial condition.

- 6 -

MatsushitaPanasonic is exposed to the risk that its customers may encounter financial difficulties

Many of Matsushita’sPanasonic’s customers purchase products and services from MatsushitaPanasonic on payment terms that do not provide for immediate payment. If customers from whom MatsushitaPanasonic has substantial accounts receivable encounter financial difficulties and are unable to make payments on time, Matsushita’sPanasonic’s business, operating results and financial condition could be adversely affected.

- 8 -

Risks Related to Matsushita’sPanasonic’s Management Plans

MatsushitaPanasonic is implementing its mid-term management plan called GP3 (announced on January 10, 2007), which will runruns from fiscal 2008 to fiscal 2010. Under this plan, MatsushitaPanasonic aims to achieve sales of 10¥10 trillion yen and ROE of 10% in fiscal 2010 by achieving steady growth with profitability. Furthermore,Panasonic, in line with its twin corporate visions under this plan of “contributingan effort to realizing a ubiquitous networking society” and “coexistencecoexist with the global environment,” Matsushita also aims to earn the support of all its stakeholders worldwide by sustaining growth through continued innovation and ensuring sound business activities on a global basis. Another way is by settingachieve a target of reducing total global CO₂ emissions during the plan by 300,000 tons in fiscal 2010 compared with fiscal 2007 at Matsushita’sPanasonic’s manufacturing operations worldwide through environmental initiatives.worldwide. Due mainly to various factors including, in particular, the various risk factors described in this section, Matsushita may notglobal recession resulting from the global financial crisis, it will be successful in achievingvery difficult for Panasonic to achieve all the goals set out in its mid-term management plan. In addition, Matsushita may not be able to improve efficiency or realize growth through these measures due to the increased costs arising from unexpected additional reorganization or restructuring, improper allocation of operational resources or other unpredictable factors. Also, MatsushitaPanasonic announced on April 28, 2008,May 15, 2009, its annual forecast and major initiatives for the year ending March 31, 2009.2010. However, MatsushitaPanasonic may not be successful in achieving all the targets or in realizing the expected benefits because of various external and internal factors.factors including, among other conditions, further deterioration of the business environment and increased costs of business restructuring such as additional business reorganization, the impairment of fixed assets and employment adjustment in order to cope with the business environment.

Risks Related to Legal Restrictions and Litigations

MatsushitaPanasonic may be subject to product liability or warranty claims that could result in significant direct or indirect costs

The occurrence of defects in MatsushitaPanasonic products could make MatsushitaPanasonic liable for damages not covered by product and completed operation liability insurance, whereby the Company could incur significant expenses. Due to negative publicity concerning these problems, Matsushita’sPanasonic’s business, operating results and financial condition may be adversely affected.

MatsushitaPanasonic may fail to protect its proprietary intellectual properties, or face claims of intellectual property infringement by a third party, and may lose its intellectual property rights on key technologies or be liable for significant damages

Matsushita’sPanasonic’s success depends on its ability to obtain intellectual property rights covering its products and product design. Patents may not be granted or may not be of sufficient scope or force to provide MatsushitaPanasonic with adequate protection or commercial advantage. In addition, effective copyright and trade secret protections may be unavailable or limited in some countries in which MatsushitaPanasonic operates. Competitors or other third parties may also develop technologies that are protected by patents and other intellectual property rights, which make such technologies unavailable or available only on terms unfavorable to Matsushita.Panasonic. The Company obtains licenses for intellectual property rights from other parties; however, such licenses may not be available at all or on acceptable terms in the future. Litigation may also be necessary to enforce Matsushita’sPanasonic’s intellectual property rights or to defend against intellectual property infringement claims brought against MatsushitaPanasonic by third parties. In such cases, MatsushitaPanasonic may incur significant expenses for such lawsuits. Furthermore, MatsushitaPanasonic may be prohibited from using certain important technologies or liable for damages in cases of admitted violations of intellectual property rights of others.

- 9 -

Changes in accounting standards and tax systems may adversely affect Matsushita’sPanasonic’s financial results and condition

Introduction of new accounting standards or tax systems, or changes thereof, which MatsushitaPanasonic cannot predict, may have a material adverse effect on the Company’s operating results and financial condition. In addition, if tax authorities have different opinions from MatsushitaPanasonic on the Company’s tax declarations, MatsushitaPanasonic may need to make larger tax payments than estimated.

- 7 -

Payments or compensation related to environmental regulations or issues may adversely affect Matsushita’sPanasonic’s business, operating results and financial condition

MatsushitaPanasonic is subject to environmental regulations such as those relating to air pollution, water pollution, elimination of hazardous substances, waste management, product recycling, and soil and groundwater contamination, and may be held responsible for certain related payments or compensation. Furthermore, if these regulations become stricter and an additional duty of eliminating the use of environmentally hazardous materials is imposed, or if the Company determines that it is necessary and appropriate, from the viewpoint of corporate social responsibility, to respond to environmental issues, the payment of penalties for the violation of these regulations or voluntary payment of compensation for consolation to parties affected by such issues may adversely affect Matsushita’sPanasonic’s business, operating results and financial condition.

Leaks of confidential information may adversely affect Matsushita’sPanasonic’s business

In the normal course of business, MatsushitaPanasonic holds confidential information mainly about customers regarding credit worthiness and other information, as well as confidential information about companies and other third parties. Such information may be leaked due to an accident or other inevitable cause, and any material leakage of confidential information may result in significant expense for related lawsuits and adversely affect Matsushita’sPanasonic’s business and image. Moreover, there is a risk that Matsushita’sPanasonic’s trade secrets may be leaked by illegal conduct or by mere negligence of external parties, etc. If such is the case, Matsushita’sPanasonic’s business, operating results and financial condition may be adversely affected.

Governmental laws and regulations may limit Matsushita’sPanasonic’s activities or increase its operating costs

MatsushitaPanasonic is subject to governmental regulations in Japan and other countries in which it conducts its business, including governmental approvals required for conducting business and investments, laws and regulations governing the telecommunications businesses and electric product safety, national security-related laws and regulations and export/import laws and regulations, as well as commercial, antitrust, patent, product liability, environmental laws and regulations, consumer protection, financial and business taxation laws and regulations, and internal control regulations due to the implementation of stricter laws and regulations and stricter interpretations.

However, to the extent that MatsushitaPanasonic cannot comply with these laws and regulations from technical and economic perspectives, or if they become stricter and MatsushitaPanasonic determines that it would not be economical to continue to comply with them, MatsushitaPanasonic would need to limit its activities in the affected business areas. In addition, these laws and regulations could increase Matsushita’sPanasonic’s operating costs.

- 10 -

Risks Related to Disasters or Unpredictable Events

Matsushita’sPanasonic’s facilities and information systems could be damaged as a result of disasters or unpredictable events, which could have an adverse effect on its business operations

Matsushita’sPanasonic’s headquarters and major facilities including manufacturing plants, sales offices and research and development centers are located in Japan. MatsushitaPanasonic also operates procurement, manufacturing, logistics, sales and research and development facilities all over the world. If major disasters such as earthquakes, fires, floods, wars, terrorist attacks, computer viruses or other events occur, or Matsushita’sPanasonic’s information system or communications network breaks down or operates improperly as a result of such events, Matsushita’sPanasonic’s facilities may be seriously damaged, or the Company may have to stop or delay production and shipment. MatsushitaPanasonic may incur expenses relating to such damages. In addition, if an infectious disease, such as a new highly-pathogenic flu strain, becomes prevalent throughout the world, Panasonic’s manufacturing and sales may be materially disrupted.

Other Risks

External economic conditions may adversely affect Matsushita’sPanasonic’s pension plans

MatsushitaPanasonic has contributory, funded benefit pension plans covering substantially all employees in Japan who meet eligibility requirements. A decline in interest rates may cause a decrease in the discount rate on benefit obligations. A decrease in the value of stocks may also affect the return on plan assets. As a result, the actuarial loss may increase, leading to an increase in future net periodic benefit costs of these pension plans.

- 8 -

Some long-lived assets may not produce adequate returns

MatsushitaPanasonic has many long-lived assets, such as plant, property and equipment, and goodwill, that generate returns. The Company periodically reviews the recorded value of its long-lived assets to determine if the future cash flows to be derived from these propertiesfair value will be sufficient to recoversupport the remaining recorded asset values. If these long-lived assets do not generate sufficient cash flows, impairment losses will have to be recognized, adversely affecting Matsushita’sPanasonic’s results of operations and financial condition.

Realizability of deferred tax assets and uncertain tax positions may increase Matsushita’sPanasonic’s provision for income tax

In assessing the realizability of deferred tax assets and uncertain tax positions based on the expected future generation of taxable income or assessed sustainability of uncertain tax positions, MatsushitaPanasonic considers whether it is more likely than not that any portion or all of the deferred tax assets or recognized tax position benefit will not be realized. If MatsushitaPanasonic determines that temporary differences and loss carryforwards or recognized tax benefits cannot be realized upon the generation of future taxable income during the deductible periods due to deteriorating business conditions or tax position benefits may not be realized upon settlement, valuation allowance against deferred tax assets or unrecognized tax benefit reserves could be recognized and Matsushita’sPanasonic’s provision for income tax may increase.

- 11 -

Financial results and condition of associated companies may adversely affect Matsushita’sPanasonic’s operating results and financial condition

MatsushitaPanasonic holds equities of several associated companies. MatsushitaPanasonic can exercise influence over operating and financing policies of these companies. However, MatsushitaPanasonic does not have the right to make decisions for them since the companies operate independently. Some companies may record losses. If these associated companies do not generate profits, Matsushita’sPanasonic’s business results and financial condition may be adversely affected.

American Depositary Share (ADS) holders have fewer rights than shareholders and may not be able to enforce judgments based on U.S. securities laws

The rights of shareholders under Japanese law to take actions, including exercising their voting rights, receiving dividends and distributions, bringing derivative actions, examining Matsushita’sPanasonic’s accounting books and records, and exercising appraisal rights are available only to shareholders of record. Because the depositary, through its nominee, is the record holder of the shares underlying the ADSs, only the depositary can exercise those rights in connection with the deposited shares. The depositary will make efforts to exercise their voting rights underlying ADSs in accordance with the instructions of ADS holders and will pay the dividends and distributions collected from Matsushita.Panasonic. However, ADS holders will not be able to bring a derivative action, examine Matsushita’sPanasonic’s accounting books and records, or exercise appraisal rights through the depositary.

GENERAL

The Company was incorporated in Japan on December 15, 1935 under the laws of Japan as Matsushita Denki Sangyo Kabushiki Kaisha (Address: 1006, Oaza Kadoma, Kadoma-shi, Osaka 571-8501, Japan. Phone :Phone: +81-6-6908-1121 / Agent :Agent: Mr. Yoichi Nagata, Director of Overseas Investor Relations of Matsushita Electric Industrial Co., Ltd.)Panasonic Corporation) as the successor to an unincorporated enterprise founded in 1918 by the late Konosuke Matsushita. Mr. Matsushita led the Company with his corporate philosophy of contributing to the peace, happiness and prosperity of humankind through the supply of quality consumer electric and electronic goods. The Company’s business expanded rapidly with the recovery and growth of the Japanese economy after World War II, as it met rising demand for consumer electric and electronic products, starting with washing machines, black-and-white TVs and refrigerators. During the 1950s, Matsushitathe Company expanded its operations by establishing mass production and mass sales structures to meet increasing domestic demand, while also creating subsidiaries, making acquisitions and forming alliances. During the 1960s, Matsushitathe Company expanded its overseas businesses, and its products started obtaining worldwide recognition.

- 129 -

During the global recession caused by the first oil crisis in 1973, Matsushitathe Company strengthened its structure and overseas business relations. The advent and popularity of the video cassette recorder (VCR) from the late 1970s enabled Matsushitathe Company to receive worldwide recognition as a global consumer electronics manufacturer. In the 1980s, Matsushitathe Company further worked to evolve from a consumer products manufacturer to a comprehensive electronics products manufacturer, expanding its business in the areas of information and communications technology, industrial equipment and components and devices. Since the 1990s, Matsushitathe Company has been emphasizing technological development and the use of advanced technology in every phase of life. In particular, Matsushitathe Company has been expanding its development activities in such areas as next-generation audiovisual (AV) equipment, multimedia products, and advanced electronic components and devices, many of which incorporate digital technology.

Matsushita currently offers a comprehensive range of products, systems and components for consumer, business and industrial use based on sophisticated electronics and precision technology, expanding to building materials and equipment, and housing business. Most of the Company’s products are marketed under the “Panasonic” brand name worldwide, along with other product- or region-specific brand names, including “National” primarily for home appliances and household electric equipment sold in Japan and “Technics” for certain hi-fi products. Some of its subsidiaries also use their own brand names, such as “PanaHome.” To sustain the future growth in the forthcoming ubiquitous networking age, Matsushita continues to emphasize technological development and the creation of new businesses, concentrating on several priority areas, such as digital AV networking equipment, mobile communications, data storage devices, environmental systems and related key components and devices and software. The Company is also striving to develop new service-oriented businesses, such as systems solutions and engineering services, as areas of potential growth over the mid-term.

In June 1995, Matsushitathe Company sold an 80% equity interest in MCA (subsequently renamed Universal Studios, Inc.) which the Company purchased in December 1990, to The Seagram Company Ltd. (currently Vivendi Universal S.A.) for approximately U.S.$5.7 $5.7 billion, leaving the Company with a minority interest. And inIn February 2006, Matsushitathe Company sold the remaining shares to Vivendi Universal S.A.

In March 1998, the Company announced a package of new management initiatives aimed at better sharing of interests with shareholders. As part of this package, management implemented, with approval at the annual shareholders’ meeting in June 1998, repurchase of 50 million shares of the Company’s common stock, spending approximately 99 billion yen during fiscal 1999.

In October 1999, EPCOS AG, a German electronic components joint venture of the Company and Siemens AG of Germany, had its initial public offering, listing its shares on German and U.S. stock exchanges. Following EPCOS AG’s public offering, Matsushita’s 45% (held by a subsidiary) and Siemens AG’s 55% holdings in EPCOS AG were each reduced to nearly 12.5%. Matsushita realized a 59 billion yen gain from the sale of its shares in EPCOS AG in fiscal 2000. In fiscal 2007, Matsushita sold the remaining shares in the market.

- 13 -

In April 2000, the Company made two of its majority-owned subsidiaries, Matsushita Refrigeration Company and Wakayama Precision Company, into wholly-owned subsidiaries by means of share exchanges. As a result of the share exchanges, Matsushitathe Company issued 16,321,187 shares of its common stock to shareholders of the respective companies.

In June 2000, Kunio Nakamura became President of Matsushitathe Company and, under his leadership, the Company implemented a new three-year business plan, called Value Creation 21, in April 2001. As the plan’s theme “Deconstruction and Creation” indicates, its objective was to transform Matsushita into a company that meets the needs of the 21st century through structural reforms and growth strategies with an emphasis on enhancing growth potential, profitability and capital efficiency, thereby ensuring the Company’s continued contribution to society.

In April 2001, the Company absorbed Matsushita Electronics Corporation, its wholly-owned subsidiary, by merger to implement unified operational management in such key device areas as semiconductors and display devices.

In April 2002, Matsushitathe Company and Toshiba Corporation (Toshiba) separated their respective liquid crystal display (LCD) panel operations and established a joint venture company, Toshiba Matsushita Display Technology Co., Ltd. (TMD), for the development, manufacture and sale of LCD panels and next-generation display devices. Of the new company’s initial stated capital of 10 billion yen, 60% was invested by Toshiba and 40% by Matsushita.the Company.

As a drastic structural reform aimed at achieving new growth, under the Value Creation 21 plan, MatsushitaCompany implemented share exchanges on October 1, 2002 with five of its majority-owned subsidiaries (Matsushita Communication Industrial Co., Ltd., Kyushu Matsushita Electric Co., Ltd., Matsushita Seiko Co., Ltd., Matsushita Kotobuki Electronics Industries, Ltd. and Matsushita Graphic Communication Systems, Inc.) and transformed them into wholly-owned subsidiaries of Matsushita. Following the completion of the share exchanges, Matsushita implemented a comprehensive Groupwide business reorganization on January 1, 2003 via company splits, business combinations and business transfers among several Group companies, including the parent company’s internal divisional companies, whereby businesses of most of the Matsushita Group were reorganized into 14 new business domains.Company.

As an extension of this Groupwide reorganization, Matsushitathe Company transformed two of its majority-owned subsidiaries, Matsushita Electronic Components Co., Ltd. and Matsushita Battery Industrial Co., Ltd., into wholly-owned subsidiaries via share exchanges, effective April 1, 2003.

Upon the aforementioned Groupwide restructurings, in April 2003, to prepare a framework that enables each business domain company to implement autonomously responsible management, Matsushitathe Company established a new global consolidated management system that focuses on capital efficiency and cash flows.

- 14 -

Also on April 1, 2003, Matsushitathe Company launched another joint venture company with Toshiba, upon separating their respective cathode ray tube (CRT) businesses with the exception of domestic CRT manufacturing operations. The Company formerly accounted for the investment in the new company, Matsushita Toshiba Picture Display Co., Ltd. (MTPD), aimed to maintain a competitive position in the global CRT market by integrating Matsushita and Toshiba’s advanced CRT technologies, as well as both companies’ product development and manufacturing capabilities. The Company formerly accounted for the investment in MTPD and its subsidiaries under the equity method, and began to consolidate MTPD on March 1, 2006 in accordance with FIN 46R,Financial Accounting Standards Board (FASB) Interpretation No. 46 (revised December 2003), “Consolidation of Variable Interest Entities,”Entities” (FIN 46R), as a result of certain restructuring activities of MTPD. At March 31, 2006, the Company had a 64.5% equity interest in MTPD. At March 30, 2007, the Company acquired the remaining 35.5% equity interest in MTPD from Toshiba and MTPD was renamed MT Picture Display Co., Ltd.

- 10 -

Since fiscal 2003, Matsushitathe Company has been gradually shifting its focus from restructuring to growth. MatsushitaThe Company made concerted efforts to enhance product competitiveness. V-products, which aim to capture leading shares in high-volume markets, made a significant contribution to overall business results.

In April 2003, Matsushitathe Company announced that it would position the Panasonic brand as a globally unified brand for overseas markets under the global brand slogan of “Panasonic ideas for life.” This new brand strategy conveys to customers all over the world a new image for the Company and its products, while further enhancing brand value.

In December 2003, Matsushitathe Company reached a basic agreement regarding a comprehensive business collaboration with its affiliate, MatsushitaPanasonic Electric Works Co., Ltd. (MEW)(PEW), after which Matsushitathe Company initiated a tender offer for additional shares of MEW.PEW. As a result of the tender offer in which the Company purchased an additional 140,550 thousand shares of common stock of MEWPEW at the total cost of 147 billion yen, MEW,PEW, PanaHome Corporation and their respective subsidiaries became consolidated subsidiaries of the Company in April 2004. Through collaboration, Matsushita and MEW aim for global excellence by maximizing synergy effects between the two companies to create new growth. Furthermore, Matsushita and MEW unified product designs, opened joint showrooms and introduced a series of Collaboration V-products that incorporate differentiated technologies of both companies, such as modular furniture systems, tank-less toilets, bathroom systems, high efficiency lighting systems and Integrated IP Network Platforms for building and area security management systems. For fiscal 2005, MatsushitaPanasonic and MEW alsoPEW integrated overlapping businesses in the area of electrical supplies, building materials and equipment, home appliances and industrial equipment, and reformed distribution channels to establish an optimized, customer-oriented operational structure. In fiscal 2006, Matsushitathe Company leveraged the strengths of both companies to achieve sales increases in Collaboration V-products including bathroom systems, modular kitchens and air purifiers. At the same time, sales of air conditioners and related products rose substantially through the effective use of MEW sales channels for electrical supplies and building materials in Japan.

In fiscal 2005, as part of business restructuring of the Matsushitaits Group companies, power distribution equipment and monitoring and control system operations of Matsushita Industrial Information Equipment Co., Ltd. (MIIE) were transferred to MEW,PEW, while MIIE’s information machine business was shifted to Panasonic Communications Co., Ltd. Subsequently, MIIE was absorbed by Matsushitathe Company in April 2005, and no longer operates as a separate entity.

- 15 -

In June 2006, Fumio Ohtsubo became President of Matsushita.the Company. Under its new management, Matsushita will makeit has been making efforts to achieve global excellence, or in other words, to aim to earn the support of all its stakeholders worldwide by sustaining growth through continued innovation and ensuring sound business activities on a global basis.

In July 2007, each of Victor Company of Japan, Limited (“JVC”), a consolidated subsidiary of Matsushita,the Company, KENWOOD and SPARX International (Hong Kong) Limited, an investment management company which belongs to a group of companies headed by SPARX Group Co., Ltd. adopted resolutions for, or affirmed, JVC’s issuance of 107,693,000 new shares of its common stock through third party allotments, and the new shares were subscribed by KENWOOD and the several investment funds managed by SPARX International (Hong Kong) Limited. JVC issued and allocated the new shares to KENWOOD and the SPARX funds on August 10, 2007. As a result, the Company’s shareholding in JVC decreased from 52.4% to 36.8%, and JVC became an associated company under the equity method from a consolidated subsidiary in the fiscal 2008 second quarter.

MatsushitaIn February 2008, the Company finalized a definitive agreement on February 15, 2008 with Hitachi, Ltd. related to comprehensive LCD panel business alliance under which it willwould acquire a majority voting interest in IPS Alpha Technology, Ltd. (“IPS Alpha”), which was owned by Hitachi Displays, Ltd. once certain conditions are satisfied. As a result, IPS Alpha became a consolidated subsidiary of Matsushitathe Company on March 31, 2008, in accordance with Financial Accounting Standards Board (FASB) Interpretation No.46 (revised December 2003), “Consolidation of Variable Interest Entities” (FIN 46R).FIN 46R.

In April 2008, Matsushita Refrigeration Company was absorbed.absorbed, and in October 2008, Matsushita Battery Industrial Co., Ltd. was absorbed, by the Company.

In JuneOn October 1, 2008, the shareholders of the Company resolved that thechanged its name of the Company will be changedfrom “Matsushita Electric Industrial Co., Ltd.” to “Panasonic Corporation” asand its ticker symbol on the New York Stock Exchange from October 1, 2008. Matsushita“MC” to “PC.” The Company will undertakecomplete its brand name change from the “National” brand, used for home appliances and housing equipment in Japan, and “Technics” brand, used for audio equipment, to the “Panasonic” brand by the end of fiscal 2010, ending March 31, 2010. Subsequently, the “National” brand will be abolished and the “Technics” brand will be used only for specific audio products. Accordingly, the corporate brands will be “Panasonic” and “PanaHome.”

On October 1, 2008, JVC and Kenwood integrated management by establishing JVC KENWOOD Holdings, Inc. (JVC KENWOOD HD) through a share transfer. The company has 24.4% of total issued shares of JVC KENWOOD HD.

- 11 -

On December 19, 2008, Panasonic and SANYO Electric Co., Ltd. (“SANYO”) entered into the capital and business alliance agreement. The Company will aim to acquire the majority of the voting rights of SANYO assuming full dilution (which takes into account conversion of Class A preferred stock and Class B preferred stock into common stock) by means of a public tender offer bid. Panasonic and SANYO will form a close alliance in business with the prospect of organizational restructurings of both companies.

In April 2009, Toshiba acquired all of Panasonic’s shares in TMD, a joint venture that develops, manufactures and sells liquid crystal displays (LCDs) and organic light emitting displays (OLEDs).

CAPITAL INVESTMENT

Total capital investment amounted to 494 billion yen, 449 billion yen 418 billion yen and 346418 billion yen for fiscal 2009, 2008 2007 and 2006,2007, respectively. (For a reconciliation of capital investment to the most directly comparable U.S. GAAP financial measures, see “Overview—Key performance indicators” in Section A of Item 5.) In these years, Matsushitathe Company curbed capital investment in a number of business areas, in line with an increased management emphasis on cash flows and capital efficiency. MatsushitaThe Company did, however, selectively invest in facilities for those product areas that are expected to drive future growth, including such key areas as flat-panel TVs, semiconductors, particularly advanced system LSIs PDPs and other strategic products.

- 16 -

SALES BY BUSINESS SEGMENT

MatsushitaPanasonic is engaged in the production and sales of electronic and electric products in a broad array of business areas. The following table sets forth the Company’s sales breakdown by business segment for the last three fiscal years:

- 12 -

Digital AVC Networks

Matsushita’sPanasonic’s principal products in theDigital AVC Networks segment include video and audio equipment and information and communications equipment. Incorporating Matsushita’s cutting-edge technologies, AVC NetworksThis segment provides products,hardware, software, services and solutions built on cutting-edge technologies as a source of competitiveness. In addition to developing attractive products with the Company’s proprietary technology, Digital AVC Networks links together various equipment to offer consumers more secure and comfortable lifestyles. Moreover, this segment works actively on developing products that contribute to the realization ofwill help create a ubiquitous networking society. Associety, thereby driving Panasonic’s global growth.

In the digital AVC business, Panasonic is pursuing the creation of a leading manufacturerhigh definition product group containing a variety of AV, security, electronic, and Internet-enabled equipment that can be linked to a flat-panel VIERA TV and easily operated with a single remote. In fiscal 2009, in manya turbulent market, Panasonic stepped up measures to strengthen the competitiveness of each product linesas pillars of this business. In addition, it proposed consumers new lifestyles unique to the Panasonic brand through the further evolution of VIERA Link.

For flat-panel TVs, although growth in the AVC Networks segment, Matsushita has been striving to achieve newsales slowed and prices declined sharply, Panasonic posted steady sales growth by offering competitive digital and networkable products based on the Company’s proprietary technologies, designed to differentiate productsseamless and strengthen cost-competitiveness facilitated by the vertical integration by in-house productionvigorous promotion of key componentsboth plasma and devices.

- 17 -LCD TVs. Compared with fiscal 2008, flat-panel TV sales increased 1.3 times, recording 10 million units in fiscal 2009.

In large-screen flat-panelplasma TVs, globalthe Company strengthened sales of high-value-added sets, substantially enhancing its full HD models as well as launching a 46-inch model. The affordable price of HD models also drove high demand for these sets. Consequently, Panasonic remained the market share leader in many countries, exceeding unit sales units. In LCD TVs, the Company delivered high picture quality and performance by incorporating IPS alpha panels*, which demonstrate superior breadth of viewing angle and other outstanding properties. For personal users, Panasonic worked to expand its business by introducing a compact display, which is rapidly expanding, especiallyavailable in fiscal 2008 by more than 1.32 million units to reach 5.57 million in a wide range of colors, specifically for terrestrial digital broadcasting. As a result, LCD TV unit sales climbed in excess of 1.22 million units year on year, recording 4.47 million units.

* The In-Plane-Switching mode system utilizes horizontally oriented liquid crystal molecules to provide for wider viewing angles.

Meanwhile, Panasonic worked to establish its flat-panel TV production system to be ready for future expansion in demand for both plasma and LCD TVs. For plasma TVs, as leading products, Matsushita maintainsthe Company increased panel production efficiency by concentrating PDP production in the Amagasaki plants. For LCD TVs, the Company has started to construct an IPS Alpha plant in Himeji. Panasonic aims to establish a vertically integrated manufacturing structure from key components and devices, such as plasma display panel (PDP),flexible production system that can adjust to finished products.demand growth. In fiscal 2006, Matsushita realized full HD (2.07 million pixelslight of 1,920 horizontal and 1,080 vertical pixels) withrecent conditions, the Company has reduced its 65-inch plasma TV and developedplanned capital investment for construction of the world’s largest 103-inch full HD PDP. Responding to the growing demand for plasma TVs, Matsushita began operating its No. 3fifth domestic PDP plant in September 2005, thus increasing monthly production to 300 thousand units (based on 42-inch panels) worldwide in December 2005. In fiscal 2007,Amagasaki and the aforementioned No.3 domestic PDP plant came fully on stream in June 2006, realizing a global monthly production capacity of 460 thousand units. With the launch of its 103-inch model, the world’s largest, and other full HD compatible products in Japan and overseas, Matsushita created a more extensive lineup. In addition, the Company offered more distinct high-value-added functions creating a more user-friendly experience with products. These initiatives helped Matsushita to maintain the leading market share in plasma TVs in Japan, the United States and Europe in fiscal 2007. In fiscal 2008, Matsushita released the world’s first full HD 42-inch models in an effort to expand its lineup of full HD models, thereby maintaining a leading market share in many countries. In addition, Matsushita developed three NeoPDP, representing a major technological innovation: a 42-inch PDP with twice the luminous efficiency of previous models (providing the same brightness at just half the power consumption)*¹; a 50-inch PDP that is just 24.7mm*² thick; and a 150-inch high definition PDP, the world’s largest*³. Looking forward, Matsushita will accelerate technological development in pursuit of even more advanced PDPs. In fiscal 2008, Matsushita began supplying Hitachi, Ltd. with 103- and 65-inch panels under an agreement whereby Matsushita and Hitachi supply each other with PDPs in an effort to strengthen cooperation in the plasma TV business. In terms of PDP production, the Company’s fourth domestic PDP plant came on stream in June 2007, realizing a global monthly production capacity of 790,000 units (based on 42-inch panels) as of the end of fiscal 2008. Construction of Matsushita’s fifth domestic plant, which is scheduled to be operational in May 2009, began in November 2007. This plant will further increase the Company’s PDP production capacity, already one of the largest in the world, enabling it to meet expanding global PDP demand.

*1. Compared to Matsushita’s former model (TH-42PZ750SK)

*2. Thickest point from the glass surface is 23.7mm

*3. As of January 8, 2008; Matsushita estimate.

Regarding LCDs, Matsushita and Toshiba Corporation (Toshiba) combined their respective LCD operations and jointly established Toshiba Matsushita Display Technology Co., Ltd. in April 2002, which manufactures LCD panels for PCs, mobile phones and smaller screen TVs with screen sizes 20-inches and smaller. For LCD TVs with screen sizes of 26- to 32-inches, the Company jointly established IPS Alpha Technology, Ltd. with Hitachi Displays, Ltd.plant in Himeji and Toshiba in January 2005 and began mass production in May 2006 aiming to secure a stable supply of high-quality LCD panels for TVs. In fiscal 2007, LCD TV products which feature IPS technology to realize vivid color even from a wide angle have been well received in markets worldwide due to their high picture quality and performance. This helpedalso postponed the Company to capture around 20% of the domestic market for LCD TVs in the 26- to 32-inch range. In fiscal 2008, a 37-inch model was added to the product lineup to further boost sales. Matsushita has also concluded a comprehensive business alliance agreement with Hitachi, Ltd. and Canon Inc. in the area of LCD panels. This alliance will deepen Matsushita’s involvement in the operations of IPS Alpha Technology, Ltd., an IPS LCD panel design, manufacturing and sales company, providing the Company with a more stable supply of LCD panels, and giving further impetus to Matsushita’s aggressive vertical integration of its flat-panel TV business.

- 18 -start-up dates.

For digital cameras, amid the sharp downturn in global demand and severe price declines, sales of LUMIX digital cameras fell year on year in fiscal 2006, new technologies such as2009. However, Panasonic’s products were highly evaluated by the industry’s first EX optical x19 zoom functionmarket for their pursuit of high performance and ease of use. The Company launched the LUMIX G1, the world’s first 16:9 wide CCDmost compact and lightest* digital interchangeable lens camera which also achieves high performance and picture quality thanks to an unconventional mirror-less structure. The combination of compactness, light weight and ease of use has enabled the Company to attract new customers. Panasonic’s compact digital cameras were well-received and maintained one of the top sharesparticularly popular in the Japanese market. Overseas salesmarket, including models incorporating face recognition, an evolution from “face detection,” and models capable of digital cameras also increased, particularly in the European market. In fiscal 2007, cameras featuring a 28mm wide-angle lens and compact models with 10x zoom capability were particularly well received in the market. Moreover, with the launchlong periods of the Company’s first digital SLR camera, Matsushita has a stronger lineup to meet a wider range of customer needs. As a result, the Company recorded much higher sales of digital cameras in fiscal 2007, particularly in the U.S. and Europe. In fiscal 2008, popular products included those featuring the iA (Intelligent Auto) mode—a world first*—which automatically chooses settings optimal for each condition based on various information such as the presence of people’s faces and distance from the subject, as well as compact models with 10x optical zoom capability.HD moving picture recording.

* AsFor an interchangeable lens digital camera equipped with a movable LCD as of July 24, 2007.February 9, 2009

As for DVDs, Matsushita offers a wide range of DVD recorders and players. Since introducing the world’s first consumer-use DVD recorder in 2000, the Company has been the market forerunner in this segment. In fiscal 2006, Matsushita expanded a new series of DVD recorders with HD compatible models in the Japanese market and launched digital broadcast-ready models in Europe ahead of competitors. Furthermore, Matsushita enhanced user-friendliness by introducing new models which are compatible to different DVD formats, and by significantly shortening times required to display program guides and begin recording, as well as incorporating universal design concepts. Such innovations helped Matsushita maintain its top global share in DVD recorders. In fiscal 2007, the Company introduced Blu-ray disc (BD) players in the U.S., Europe and other markets in September 2006, andFor BD recorders in Japan in November 2006. In addition, Matsushita put particular emphasis on making AV equipment more user-friendly. As a result of these initiatives, Matsushita maintained its leading global share in the DVD recorder market. In fiscal 2008, sales of BD recorders and DVD recorders, increased, in particular HD-compatible modelsfiscal 2009, robust sales were recorded in the domestic market, amid rising demand for high-quality video recordingBD recorders, which were widely embraced by customers, due to the spread of digital HD broadcasting. Modelsbroadcasting and the unification of next-generation DVD standards. BD recorders that allowdrove sales included models capable of long recording periods for approximately four times more full HD recording time*¹ than previousvideo and of transferring a recorded program onto an SD Memory Card allowing the user to view the program on “one-segment”-enabled mobile phones or VIERA One-Seg. These models and are the world’s thinnest*² at only 59mm thick were particularly well received. The Company also focused on enhancing ease of use and network functionality through VIERA Link and other innovations. As a result of these initiatives, Matsushita maintainedhelped Panasonic maintain its leading globaltop share in the DVD recorderglobal market.

*1. During recording in HE mode (approx. 5.7Mbps). Compared to recording BS digital HD broadcasts in DR mode (approx. 24Mbps).

*2. As of February 20, 2008.- 13 -

For portable “One-Segment” TVs in Japan, demand for products that allow people to watch TV or listen to music in the bath is growing. To meet this demand, Panasonic developed VIERA One-Seg, a portable waterproof TV in fiscal 2009. This new product held the top market share for a portable “one-segment”-enabled AV device for nine consecutive months after its launch. The latest model has earned high marks not only by taking advantage of the technology developed for VIERA to provide high picture quality, but also by enabling content recorded on DIGA recorders to be transferred to an SD Memory Cards, the use of SD Memory Cards in PCs, mobile phones, car navigation systemsCard and other new products is rapidly increasing, in addition to their usage as a bridge media for flat-panel TVs and other digital AV products. These developments are solidifying the SD Memory Card’s position as the industry standard. In fiscal 2007, Matsushita launched a new 4GB SDHC Memory Card* to meet rising consumer needs related to the recording and storage of large volumes of data such as HD video. This product enables Matsushita to respond to demands for high-speed, reliable recording and large data storage capacity, which are required for HD movies and other applications. In fiscal 2008, Matsushita launched a 16GB SDHC Memory Card.viewed where one likes.

- 19 -

For digital video cameras, in fiscal 2006, while expanding its lineups of DVD video cameras, Matsushita introduced the world’s smallest high-resolution SD Memory Card camcorder. In February 2006, the Company also launched the first 3CCD DVD camcorder for global markets. In fiscal 2007, Matsushita launched new products in December 2006 that can record HD video. SD Memory Card camcorders in particular2009, sales were populardown due to their high picture quality, compactdemand and rugged design,price declines, particularly in Europe and dust-resistance, leading to strong sales. In fiscal 2008, Matsushita launched newthe United States, and came in under last year’s figures. Nevertheless, the Company’s strengthened lineup of HD camcorders with better picture qualityregistered firm growth, mainly in Japan and a more compact design which were well received by the market. Particularly popular were models with the world’s first* “face detection” function, which automatically locates any faces in the picture and makes necessary adjustments when recording moving pictures. Other popular products included models with long recording times that allow recording on either HDDs or SD Memory Cards.Europe.

With respect to PCs, Matsushita has continuedin fiscal 2009, consumers and business users have given high marks to upgrade its notebook models over the last several years, concentrating on lightweight notebook PCsCompany’s Let’snote and ruggedized notebook PCs. In February 2006, Matsushita announced new models forTOUGHBOOK series, which have made strong advances under the domestic market, featuring the world’s longest battery running time and the lightest model in its class. Matsushita will continue to provide high value-added products in this segment to remain an industry leader. In fiscal 2007, salesconcept of notebook PCs continued to grow as lightweight products featuringintegrating high-performance, lightness, extended battery life, and rugged designs were well received in major markets includingtoughness. In particular, the U.S., Europe and Japan. In March 2007, Matsushita launched new notebook PCs that weighed less than previous models, were significantly better at withstanding shocks when dropped, and incorporated spill-resistant keyboards, a feature currently in high demand from customers. These kinds of features were well received, helpingTOUGHBOOK series has maintained the Company to maintain its leading sharetop position in the domestic mobile PC market in 2006. In fiscal 2008, Matsushita introduced the CF-52 Semi-Tough notebook PC, part of its Toughbook series. This model features a 15.4-inch widescreen LCD and improved cost performance. In addition, Matsushita enhanced basic performance in the Let’snote series launched in fall 2007. All models in the Let’snote series were made significantly more able to withstand shocks when dropped, and incorporate drip-proof keyboards which are high on the list of customer demands. Such proprietary enhancements were well received, helping the Company maintain its leading share in the worldwideglobal market for durable field notebooks and in the domestic mobile PC market during 2007.for seven consecutive years.

In the area of PC peripherals, Matsushita has been focusing on upgrading its optical disc drive lineup. In fiscal 2006, Matsushita’s slim products, including the industry’s thinnest (9.5 mm) DVD Super Multi Drive, maintained the No.1 share in the global market. In addition, Matsushita completed the development of a next-generation, high-capacity BD Drive. In fiscal 2007, Matsushita launched BD Drivesmobile communications business, Panasonic offers mobile phones incorporating advanced technologies, and continued to lead the industry in developing slimmer, lighter disc drives by building on its success with the DVD Super Multi Drive, the industry’s thinnest at just 9.5mm.communications infrastructure equipment such as base stations. In fiscal 2008, MatsushitaPanasonic launched an internal Blu-ray Disc Drive for personal computers, the world’s thinnest at just 9.5mm, as it continued to lead the industry in developing slimmer optical disk drives.

- 20 -

In the area of mobile communications equipment, in recent years Matsushita has developed and introduced a number of new mobile phones with advanced function, stylish design and ease-of-use. In fiscal 2006, new models released in Japan, such as a 3G mobile phone that enables users to watch terrestrial digital broadcasting with outstanding picture quality, led to favorable domestic results. Meanwhile, overseas mobile phone markets faced rapid price declines in 2.5G mobile phones, due to the ongoing shift in demand to 3G. Owing to these factors, the Company’s mobile phone business on the whole continued to struggle. In light of this situation, Matsushita announced that it will phase out overseas 2.5G mobile phone businesses, and subsequently restructure certain overseas business locations, including manufacturing operations in the Philippines and the Czech Republic. In fiscal 2007, mobile number portability (MNP) was introduced in Japan in October 2006, triggering more intense competition among mobile phone handset manufacturers. In this environment, Matsushita resumed shipments of handsets to SOFTBANK MOBILE Corporation and KDDI CORPORATION. The Company also launched new mobile phone handsets for NTT DoCoMo, Inc. such as the P903iTV handset compatible with “one-segment” terrestrial digital TV broadcasts that combines Matsushita’s high picture quality, high reception and energy-saving technologies, and the P703iµ, the world’s thinnest handset at just 11.4mm*¹. In fiscal 2008, Matsushita increased sales by further enhancing its product lineup, including models that allow viewing of “one-segment” mobile TV broadcasts in high-quality video or that pushed the envelope in terms of thinness. For NTT DoCoMo, Inc., Matsushita launched products that included the P905i “VIERA Keitai.Keitai,” This handsetwhich has a screen that can be opened vertically or horizontallyhorizontally. In fiscal 2009, the domestic mobile phone market shrank rapidly, due mainly to a change in handset sales incentives and the economic downturn. Nevertheless, the “VIERA Keitai” series firmly maintained its high market share. This mobile phone series allows viewing ofusers to view “one-segment” broadcasts thanks to Matsushita’s uniqueand features Panasonic’s high-quality image technology derived from the flat-panel VIERA TV. Also introduced was the P705iµ, the world’s thinnest*² clamshell-type 3G mobile handset at just 9.8mm. For SOFTBANK MOBILE Corporation, the Company supplied the SoftBank 920P “VIERA Keitai,” as well as the SoftBank 822P, a slim straight-type handset just 8.9mm thick. For KDDI CORPORATION, Matsushita brought out the W61P, a 12.9mm thick handset with a sophisticated design that is compatible with “one-segment” broadcasts.

*1. As of February 2007; clamshell-type 3G (W-CDMA) phones.

*2. As of December 17, 2007; Matsushita estimate.TVs.

In the area of fixed-line communications in fiscal 2006, strong sales ofbusiness, Panasonic annually supplies households around the world with over 30 million telephones and facsimile machines led to an increased global market share for these products, while a newmachines. The Company is also developing its multi-function printers, electronic whiteboard, TV door intercom system, with wireless color monitor handsets, the first product of its type, received market acclaim. In the U.S. market, Matsushita launched a High Definition Power Line Communication (HD-PLC) adapter that enables high-speed data transmission over existing power lines by simply plugging the module into an electrical outlet. In full-color digital multifunction products (MFPs), Matsushita introduced new models boasting the world’s fastest start-up time (just 15 seconds), made possible through the Company’s unique induction-heating (IH) technology, which also contributes to significant energy savings.and PC optical disk drive operations. In fiscal 2007, in home networks, the aforementioned TV door intercom systems continued to be well received by Japanese consumers. In addition, MatsushitaPanasonic launched its HD-PLC adapter in Europe and Japan. In office networks, Matsushita maintainedfiscal 2009, Panasonic’s PLC technology, which is used in this HD-PLC adapter, was approved as one of the leading market sharesglobal standard baseline technologies for private branch exchange (PBX) products. This reflected strongbroadband over power line networks (IEEE P1901). The technology attracted considerable interest. As awareness of security and crime prevention increases, sales particularly overseas, of models that boast greater functionality and user-friendliness. Sales of new full-color digital MFPs were also favorable. In fiscal 2008, in home networks, TV door intercom systemsintercoms with wireless color monitor handsets continued tomonitors and sensor cameras that can be well supportedconnected by Japanese consumers. In addition, Matsushita recordedVIERA Link were strong sales of its HD-PLC adapters. In cordless telephones, by focusing on developing overseas markets, the Company achieved cumulative sales of 100 million units in North America in fall 2007, as well as cumulative sales of 10 million units in the CIS region. In office networks, sales remained robust for PBX products offering greater functionality and user-friendliness, enabling Matsushita to maintain one of the leading market shares.Japan.

- 21 -

Matsushita’sIn the automotive electronics business, encompasses two priority areas: automotive multimedia equipment such as car AV andPanasonic is developing operations in wide-ranging fields, from car navigation systems and components andto key devices that promote safety, environmental preservation and energy efficiency.such as engine control unit. In fiscal 2006, taking the lead in the introduction of new products, Matsushita continued robust domestic sales of its2009, Panasonic commercialized Strada series connectable to digital tuners that allow viewing of high-quality terrestrial digital TV broadcasts. Overseas, the Company launched the Strada series in China. Driven by strong sales, particularly in North America, Matsushita retained its leading global position in rear-seat entertainment systems. The Company also achieved the top position in Japan for its Electronic Toll Collection (ETC) terminals with voice confirmation functions. Moreover, the Company increased sales inF Class, a variety of electrical devices including batteries for hybrid vehicles, which continue to enjoy increased demand, car-mounted cameras and smart entry systems. In fiscal 2007, Matsushita recorded strong sales of the introduction of new Strada series with standard equipped terrestrial digital TV tuner in Japan, leading to a higher share in both the automaker and consumer markets. Meanwhile, with the growing popularity of ETC systems, Matsushita’s ETC terminals continued to be well received in the Japanese market. In components and devices, the Company also increased sales of a variety of products that improve environmental performance, safety and security. In fiscal 2008, Matsushita recorded strong sales of car navigation systems, centered on the Strada seriessystem equipped with a world-first*¹ home-link feature, which let passengers view high-quality terrestrial digital TV broadcasts. Matsushita launched Portable Navigation Device (PND) products in Europe in October 2007 and thereafter progressively rolled out products in North America, Japan, and China, as it developed the Strada series globally and bolstered its product lineup. Sales of car audio equipment remained strong, particularly overseas sales of original equipment manufacturing (OEM) products.enables drivers to remotely control household appliances from their vehicles. Amid growing use of Electronic Toll Collection (ETC) systems, whichPanasonic’s ETC terminal, the smallest in the world*², was popular among car owners and retained a high market share. The ETC systems are now installed in more than 70%80%*³ of the cars passing through expressway toll booths in Japan, Matsushita launchedand this is easing traffic congestion at these bottlenecks, which is expected to reduce CO₂ emissions.

*1 As of April 25, 2008; as a car navigation product for the industry’s smallest ETC terminal and held onto its strong shareconsumer market. Panasonic estimate.

*2 As of the domestic market.April 2008; as an antenna separation type on-board device. Panasonic estimate.

*3 As of June 2009

In the system solutions business, MatsushitaPanasonic conducts business in a variety of fields including security systems, broadcasting systems and business solutions. In fiscal 2006, Matsushita released2009, the Company promoted its security business to respond to a seriesvariety of systems and products that provide total building and areagrowing security solutions, utilizing an Integrated IP Network Platform developed in close collaboration with MEW. Within this product range, the Company’s megapixel network camera received market acclaim for its outstanding picture quality. With the establishment of an Integrated IP Network Platform Center in October 2005, Matsushita is accelerating the development of comprehensive security businesses. Other products, including payment terminals for logistics industries and product tracking systems, also contributed to increased sales. In fiscal 2007, Matsushita launched new security system products compatible with an integrated IP network platform, and a seriesneeds. Sales of security products. Megapixel networkand surveillance camera systems increased in China, where they were used at the Beijing Olympics, and in the emerging markets. Amid the growing popularity of HD video content, Panasonic introduced multi-format cameras that realize high picture quality sold particularlyand video editing equipment, which have been well in fiscal 2007. Meanwhile, amid the spread of terrestrial digital broadcastingreceived both in Japan Matsushita maintained its high market share in digital set-top boxes for cable TV. The Company also continued to win strong support for its HD cameras from TV broadcasters. Furthermore, the Company recorded higher sales of IC card verification and settlement systems, payment terminals for logistics industries, and wireless systems for business users. In fiscal 2008, in the security field, Matsushita posted firm sales of security systems centered on surveillance cameras, amid rising demand for video surveillance following an increase in concern about crime, strengthening of internal controls in companies, and other developments. In the broadcasting systems field, the Company secured a large market share for digital set-top boxes for cable TV broadcasts amid the spread of terrestrial digital broadcasting in Japan, achieving a cumulative total of 3 million units shipped in December 2007. Matsushita was the first in the industry to reach this mark. It also continued to win strong support for its HD cameras from TV broadcasters. In the business solutions field, Matsushita saw an increase in sales of contactless IC card reader/writer units used in multiple applications, including electronic settlement via IC card or mobile phone.

- 22 -abroad.

Home Appliances

Matsushita’sPanasonic’s principal products in this segment include home appliances such as washing machines, vacuum cleaners, dishwasher/dryers, rice cookers, microwave ovens, induction-heating (IH) cooking equipment, refrigerators, room air conditioners, water heating systems, and compressors. This segment also includes healthcare systems, lighting business and environmental systems.

- 14 -

In home appliances, Matsushita strives to develop products based on environmental technologiesleveraging its many years of experience in insulation and universal design concepts that meet rapidly changing customer needs and growing interest in health and the environment.

In the area of electric household appliances, refrigeration and air conditioning equipment, in fiscal 2006, Matsushita introduced the world’s first model of tilted-drum washer/dryer to employ a heat-pump drying system that uses no electric heater or cooling water for the drying process. The Company’s refrigerators with 50% more freezer space were also well-received in the domestic market. In fiscal 2007, Matsushita maintained its dominant share of IH cooking equipment in the Japanese market by realizing high quality through its integrated production system including IH coils. Matsushita’s air conditioners captured the leading market share in Japan owing to automatic airflow control mechanism as well as the aforementioned automatic filter cleaning and dust removal functions. In addition, Matsushitatechnology, Panasonic developed the U-Vacua series of high-performance vacuum insulation boasting the world’s highest level of thermal insulation. Theinsulation in fiscal 2007. With this technology, the Company boosted the storage space of refrigerators with this technology, thereby securingand secured the leading market share in Japan. In fiscal 2008, in drum washer/dryers, Matsushita dramatically upgraded washing performance with2009, the Company marketed its “Dancing laundering & drying system” that features an energy-efficient heat-pump drying system. The Company also released thehome appliance products, such as room air conditioners, that automatically adjust air flows depending on people’s senserefrigerators, and tilted-drum washer/dryers, featuring improved energy-saving performance and a variety of temperature.new functions, under the Panasonic brand for the first time nationwide in Japan. The lineup of products for all-electric homes demonstrated the superiority of Panasonic’s product competitiveness and sales network. As a result, sales of “Eco Cute” natural-refrigerant water heating systems and induction-heating (IH) cooking equipment were steady. Panasonic has reached the 3-million mark in cumulative production of IH cooking units since Panasonic developed the first IH cooking unit for the mass market as a 200V model in 1990. In refrigerators, products equipped with “nano-e crispers,”the energy-generation business, which use nano-sized ionsaims to penetrate alllead the way in “eco ideas,” Panasonic became the first Company to the cellular level to keep cold-sensitive fruitsship a home-use fuel cell, “Ene Farm,” in July 2008. Overseas, Panasonic introduced new refrigerators and vegetables fresh for a long time, were well receivedwashing machines with cutting-edge technologies in Japan.

- 23 -Europe in March 2009.

In the lighting business, Matsushita significantly increased its market share in consumer-use fluorescent lamps with new models which extended its lifetimePanasonic is endeavoring to develop products that help to effectively conserve energy, utilize resources and spiral-shaped screw-in compact models in fiscal 2006. Meanwhile,reduce the Company outperformeduse of substances that may impact the industry in sales growth of LCD backlights. In fiscal 2007, Matsushita launched its Pa-look Ball Premier series, which significantly reduces electricity consumption and compares with the best in the industry in terms of energy efficiency and product lifetime. In fiscal 2008, sales rose in Japan of Matsushita’s Twin Pa-look Premier, which offers the longest life (approximately 16,000 hours) in the industry, and Pa-look Ball Premier, as household light bulbs are increasingly switched to energy-efficient ball-type fluorescent bulbs due to rising energy consciousness.

In the environmental systems business, the Company released a micro-mist sauna for the bathroom, attracting significant market acclaim in Japan, in fiscal 2006.environment. In addition, the Company launched an ion-generating air purifierhas maintained a top-class share of the general lighting and optical device markets in Japan, by combining the Company’s black-box technologies with those of MEW.developing highly-efficient and long-lasting lamps based on its nanotechnology. In fiscal 2007, micro-mist saunas that employ nanometer-size water particles recorded strong sales.2009, Panasonic was the first in the fluorescent lamp industry to eliminate the use of environmentally damaging lead, replacing all of its in-house manufactured products with non-lead glass. The Company rolled outalso increased its recycling of glass from used fluorescent lamps. Overseas, Panasonic developed energy-saving measures, primarily in China, such as promoting the industry’s first dehumidifieruse of high-frequency (Hf) fluorescent lamps. These lamps achieved significant reductions in power consumption as a result of greater efficiency when used in combination with intelligent hybrid control, which realizes optimal levelsspecial fixtures.

The environmental systems business aims to realize environmentally friendly and comfortable lifestyles and a recycling-oriented society through the purification of humidity for any season. Also, Matsushita’s strong domestic track recordair, water and technologies enabled it to win an order for an electronic dust collection system for a road tunnel in Madrid, Spain, as part of a highway extension project.soil. In fiscal 2008, sales were driven by a strong performance in bathroom heater/dryers with a micro-mist sauna function, stemming from rising interest in healthy and comfortable living. As a result, the overall ventilation systems business retained its top share of the global market (in monetary terms). Matsushita alsoCompany operated a new environmentally friendly factory with significantly reduced air conditioning costs due to an eco-friendly air conditioning system and the installation of thermal insulating material in the roof.

Components In fiscal 2009, Panasonic’s DC motor-driven ceiling mount ventilation fan, which was designed to save energy, be long-lasting and Devices

Matsushita develops and supplies components and devices used in various products ranging from AV equipment and information and communication devices to home appliances and industrial equipment. Since components and devices are increasingly important in helping equipment become more sophisticated, smaller and lighter, and morequiet, acquired a market acclaim for its energy efficient, Matsushita is facilitating even closer cooperation between component and device divisions and finished product divisions right from the development phase. This approach helps the Company to rapidly launch high-value-added products that meet the customer needs.

conservation. In the semiconductor business, Matsushita primarily focuses on products for digital TVs, optical discs, mobile communications equipment, image sensor application productshome environment systems field, humidifier/air purifiers featuring humidifiers combined with air purifiers to combat influenza and automotive devices. The Company provides total solutions for a wide range of semiconductor products such as system LSIs, image sensors, analog LSIs and discrete devices. Moreover, Matsushita supplies key devices founded on cutting-edge technologies to finished product divisions across the Group, and actively works to tap demand from external clients.

In fiscal 2006, Matsushita strengthened its UniPhier Integrated Platform that combines software and hardware resources across different product categories to improve R&D efficiency and design quality, and began incorporating this into SD camcorders and other products. In fiscal 2007, this platform was fully extended to digital product categories such as plasma TVs, DVD recorders and mobile phones. The wider use of UniPhier is allowing Matsushita to dramatically increase product development speed and reduce development costs. It is also playing a major role in realizing a high level of reliability thanks to the reuse of tried and tested software.

- 24 -

In addition to the system LSI field, distinct productshay fever were popular in the discrete device, analog LSI and image sensor fields also supported operations in the semiconductor business during the year under review. In fiscal 2006, Matsushita began mass-producing and shipping the industry’s smallest camera modules featuring a MOS image sensor with high image quality and low power consumption. In fiscal 2008, Matsushita was the first in the world to develop highly weather-resistant technology with no color fading or losses in sensitivity by using inorganic materials in the photo diode area, and dynamic range expansion technology that enables vivid pictures of subjects with significant light-dark contrast. These technologies will enable an image sensor to function normally even under severe conditions.

In terms of manufacturing, operations in both Japan and overseas have been strengthened and expanded. In order to advance process technology for system LSIs from the conventional 0.13-micrometer process, in fiscal 2006 Matsushita commenced mass production of 65-nanometer process system LSIs using 300mm wafers, thereby achieving significant improvements in production efficiency. In fiscal 2007, Matsushita began the full-scale mass production of these 65-nanometer process system LSIs using 300mm wafers at its new Uozu plant to meet accelerated demand for high-performance digital consumer products. Matsushita promoted to further increase the volume of discrete general-purpose devices and analog LSI manufacturing at overseas plantsmarket, as it works to create an optimal global manufacturing framework. In June 2007, the Company began mass production of cutting-edge 45-nanometer process system LSIs using 300mm wafers at the aforementioned Uozu plant, the first in the world. The UniPhier system LSI is used in Blu-ray disc recorders where it facilitates high-quality video recording and allows these recorders to be smaller and consume less power.

The electronic devices business operates globally with a focus on seven priority areas: capacitors, tuners, printed circuit boards, power supply products, circuit components, electromechanical components, and speakers. Aiming to meet customer needs for higher performance AV equipment, and more compact and thinner information and communication devices, Matsushita strives to develop high-value-added components. The Company is also strengthening its position in the automotive electronics field which continues to grow as cars are fitted with more electronic components. In fiscal 2006, Matsushita strengthened its lineup with products including digital TV tuners, high-fidelity speakers for flat-panel TVs, and the high-density printed circuit boards “ALIVH” (Any Layer Inner Via Hole) that help to realize more compact equipment. The Company also saw continued strong sales of circuit components for AV equipment and electromechanical components such as switches for automotive applications. In fiscal 2007, Matsushita continued to grow sales of digital TV tuners that enable exceptional picture quality, and specialty polymer aluminum electrolytic capacitors that are compact and have a high noise reduction function. The Company’s angular rate sensors, which sustained a high market share as components that improve the accuracy of car navigation systems, were also incorporated in digital cameras. In fiscal 2008, Matsushita grew sales of specialty polymer aluminum electrolytic capacitors that are compact and have a high noise reduction function. In addition, sales of power supply units for plasma TVs rose, as did sales of angular rate sensors used in car navigation systems and digital cameras and light touch switches for mobile phones. In the past, Matsushita’s Device Application Center, which has both development and sales functions, was located only in Japan, but now the Company has opened centers in the U.S., Europe, and China, to improve competitive total solutions for customers.

- 25 -

The battery business consists of primary batteries, including dry batteries, and rechargeable batteries, such as lithium-ion batteries. Batteries are key devices that aid the development of a wide variety of more compact, thinner and lighter products. In addition to larger capacity and longer life, batteries today have to be even safer and more reliable. In fiscal 2006, Matsushita implemented global marketing initiatives for Oxyride dry batteries, which attracted significant market acclaim particularly for use in digital equipment. In rechargeable batteries, the Company developed new lithium-ion batteries with larger capacity and the industry’s highest energy density. In fiscal 2007, in primary batteries, the aforementioned Oxyride dry battery proved popular with customers, particularly for use in digital cameras and other digital AV equipment. In rechargeable batteries, the Company focused on boosting capacity and developing new safety technology in response to customer needs for more compact notebook PCs, mobile phones and other mobile equipmentdehumidifiers that can be used all year round. In the environmental engineering field, sales of ultra pure water manufacturing equipment, for extended periods. In fiscal 2008, responding to increasing demand for electronic equipment that consumes less electricity, Matsushita developed the EVOLTA dry alkaline battery, which offers long life in a wide range of products beyond just digital AV equipment. In rechargeable batteries, in response to customer needs for more compact notebook PCs, mobile phones, and other mobile equipment that can be used for extended periods, the Company focused on enhancing its high-capacity lithium-ion batteries, as well as pursuing even safer rechargeable batteries.

In electric motors, Matsushita supplies products that meet growing market needs in terms of efficiency, noise reduction and compact design. These motors are incorporated into various products, including home appliances, AV equipment and industrial equipment. In fiscal 2006, Matsushita facilitated close cooperation with finished product divisions, supplying motors foruse not only conventional products,in plasma and LCD panel but also new products such as tilted-drum washer/dryers and DVD recorders, as well as commencingsemiconductor production equipment, increased favorably. Sales of compressor motors in China. In fiscal 2007, sales of FA servo motors, motorspurification equipment for vacuum cleaners and compact brushless motors used in game consolescoating processes were strong. The electric motors business promoted the use of motors produced in-house in tilted-drum washer/dryers, optical disc drives and other new products. In fiscal 2008, strong sales were recorded in FA servo motors, small motors used in air conditioners, motors for vacuum cleaners, and compact brushless motors used in game consoles. The electric motors business also enhanced cooperation with finished product divisions, leading to the use of motors and motor drivers produced in-house in the Company’s tilted-drum washer/dryers, electronic component mounting machines, and other new products.steady.

MEWPEW and PanaHome

This segment includes MatsushitaPanasonic Electric Works Co., Ltd. (MEW)(PEW), PanaHome Corporation (PanaHome) and their respective subsidiaries.

- 26 -

MEWPEW manufactures, sells, installs and provides services related to a wide variety of products. These include electrical construction materials, home appliances, building products, electronic and plastic materials and automation controls. In fiscal 2006, MEW, through collaboration with Matsushita, attracted market acclaim with new Collaboration V-products in housing materials and equipment, including bathroom systems, modular kitchens and modular furniture systems for home theaters. In electrical construction materials, sales grew steadily in energy-efficient lighting fixtures featuring audio feedback functions, along with household fire alarm devices.

In fiscal 2007 MEW recorded sales gains for a number of products in electrical construction materials. In addition to a substantial increase in sales of home fire alarms, MEW saw strong sales of security equipment such as room access control systems, as well as atmospheric lighting and highly efficient lighting fixtures. In building products, sales of all-electric homes and interior furnishings such as modular furniture were robust, as were those of exterior finishing materials such as photocatalytic self-cleaning cladding. In home appliances, amid rising public interest in health and beauty, MEW reported particularly strong sales increases for the JOBA horseback-riding fitness machine and aesthetic products. In fiscal 2008, the electrical construction materials business unit at MEW recorded a rise in sales of home fire alarms, while salesin response to an increase of high-performance products, including wiring devices and home-use distribution panelboards designed for all-electric homes, were strong. Moreover, the Lifinity electrical facility networking system for home safety was popular with customers, as were energy-saving wiring devices outfitted with sensors. Other popular products include lighting devices sporting electrodeless light sources with 60,000-hour lifespans, as well as devices that provide the light of two conventional lamps via a new light source and a special inverter.public demand. In the home appliances business, aesthetic products such as nanocare facial ionic steamers won strong market acceptance. In building products, meanwhile, the self-cleaning A La Uno toilet, which is made from a new material that resists dirt, recorded higher sales, as did modular bathrooms systems for collective housing, which help create a pleasant living environment. In the electronic and plastic materials business, sales of environmentally friendly products like multilayer printed circuit board materials and semiconductor encapsulation materials grew significantly. Meanwhile,In fiscal 2009, the core construction-related business suffered from the domestic housing market downturn and curbs in private-sector capital expenditures. Furthermore, sales in electronic materials, automation controls business saw strongand other businesses fell under the impact of production declines across industry sectors. Since sales of automotive deviceshorseback-riding fitness machines and other products.health-related products were also weak, overall sales dropped. Nevertheless, new Panasonic brand products, including personal care products, such as men’s shavers and nanoparticle ion steamers, and fully automated cleaning toilet systems, received strong market acceptance. In addition, sales of home fire alarms, increasingly popular products for all-electric homes, and environmentally friendly lighting products including LED lighting showed steady growth.

PanaHome’s operations are primarily focused on detached housing, asset and property management, and home remodeling. In all these businesses, to provide living spaces that are friendly to both people and the environment, the company’sCompany’s product strategies are guided by the basic “Eco-life“Eco-Life Home” concept, which advocates all-electric homes with an emphasis on safety, security, health, comfort and high energy efficiency. In fiscal 2006, PanaHome began marketing an “Eco-life” Home which is particularly suited to cold weather regions. In the asset and property management business, PanaHome met the diversified needs of varied tenant segments, established a structure for providing design recommendations for rental homes, and enhanced its business proposals aimed at landowners. In fiscal 2007 in the detached housing business, PanaHome enhanced its lineup of EL SOLANA homes, aiming to realize environments where residents can live in health and comfort by offering a wider choice of equipment and fittings such as solar power generation systems and photocatalytic external wall tiles. In the home remodeling business, the company offered living spaces designed around its “Eco-life Reform” concept and took other steps to enhance its consulting-based sales approach.

- 15 -

In fiscal 2008, in the detached housing business, PanaHome released a variety of new products, all of which received high praise. These products included SOLANA Bianca, a “white tile home” made possible with photocatalytic tiles, and SOLANA eu Lucia, a home that is easy to keep clean and tidy and fun to live in due to an efficient design that facilitates ease of movement. In the asset and property management business, PanaHome became the first in the Japanese housing industry to offer an all-electric rental apartment homehouse series called EL MAISON NEXT,NEXT. In fiscal 2009, PanaHome proposed the “Kajiraku” plan, which has photocatalytic tiles on its exterior walls, ensuring thatwas designed from a woman’s perspective to make housekeeping easier by facilitating ease of movement. PanaHome also actively developed “Overnight-stay Model Homes” where customers can see, feel, and experience homes look as good as when they were built forby staying the night in a long time. They also boast impressive earthquake resistance. In addition, PanaHome created a framework enabling itmodel home. As environmental awareness increases, PanaHome’s achievements in contributing to handle all aspectsthe reduction of land asset utilization for its customers. At the same time, PanaHome restructured production and downsized its workforce as part of structural reforms geared toward optimizingCO₂ emissions through the use of business resources in order to strengthen operations from a medium- to long-term standpoint.

- 27 -superior insulation and energy-saving features, such as solar power generation systems, have been given high marks.

JVCComponents and Devices

This business segment of Components and Devices supplies high-performance and high-value-added components and devices used in various products ranging from digital AV equipment and information and communication devices to home appliances and industrial equipment. Panasonic develops and strengthens the competitiveness of cutting-edge devices that help equipment become smaller, lighter, slimmer and more sophisticated. This business segment also contributes significantly to making finished products more energy efficient.

In the semiconductor business, Panasonic provides a wide range of semiconductor products as total solutions, such as system LSIs, image sensors, analog LSIs and discrete devices.

The UniPhier^® Integrated Platform combines software and hardware resources across different product categories to improve R&D efficiency and design quality. In fiscal 2007, Panasonic began the full-scale mass production of 65-nanometer process system LSIs using 300mm wafers to meet accelerated demand for high-performance digital consumer products. This platform was fully extended to digital product categories such as plasma TVs, DVD recorders and mobile phones. In fiscal 2008, the Company began mass production of 45-nanometer process system LSIs using 300mm wafers. In fiscal 2009, the growth in sales of key finished products slumped under the global economic downturn, leading to a sharp slowdown in semiconductor demand and other severe business conditions. Under these circumstances, Panasonic proceeded with the commercialization of 45-nanometer process next-generation UniPhier^® system LSIs. The Company also developed an application/transmission integrated LSI that combines one system LSI for the communications function of mobile phones and another system LSI for an application function in one UniPhier^®. By the end of fiscal 2009, UniPhier^® was applied in about 200 digital products. Amid the shift to full HD digital TVs, Panasonic has supplied optimal image-processing engines for a variety of flat-panel TV models. In producing semiconductors for cameras, Panasonic achieved higher picture quality and speed in digital interchangeable lens cameras by fusing the high-sensitivity technology of its image sensors with the high-speed technology of its system LSIs. The Company has also aggressively developed system LSIs in core business fields including optical disk devices and mobile phones, and accelerated the use of system LSIs in finished products.

The JVC segmentelectronic devices business utilizes a wide-ranging product group, including capacitors, printed circuit boards and electromechanical components.

To provide optimal key devices and total solutions worldwide to meet finished product concepts, Panasonic has developed high-value-added components mainly for Digital AV equipment, information and communication equipment, and automotive electronics equipment in recent years. In fiscal 2008, the Company opened Device Application Centers which have both development and sales functions, in the U.S., Europe and China, to improve competitive total solutions for its customers. In fiscal 2009, Panasonic maintained its leading global market share for angular rate sensors, which are used for increasing the precision of car navigation systems and for image stabilizers used in digital cameras. In addition, sales of power supplies for plasma TVs were relatively steady. However, sales of capacitors, electromechanical components and other products struggled due to deteriorating market conditions and inventory cutbacks at finished product manufacturers. Nevertheless, the Company focused on growing industries amid the economic downturn and actively endeavored to expand sales.

The battery business consists of businessesprimary batteries, including dry batteries and rechargeable batteries, such as lithium-ion batteries. In this business, besides creating safer batteries, Panasonic develops products that address market needs for higher capacity, longer life and batteries that are thinner, smaller and lighter, and more cost effective.

- 16 -

In fiscal 2008, responding to increasing demand for electronic equipment that consumes less electricity, Panasonic developed the EVOLTA dry alkaline battery, which offers long life in a wide range of Victorproducts beyond just digital AV equipment. In fiscal 2009, the Company of Japan, Ltd.started to sell the EVOLTA dry alkaline batteries and rechargeable EVOLTA batteries, expanding its group companies. In August 2007, Victor Company of Japan Ltd. and its consolidated subsidiaries became associated companies underlineup to meet diversified needs. Although battery sales decreased due to the equity method from Matsushita’s consolidated subsidiaries. Accordingly,economic slowdown, the accounting for JVC shareholdingsEVOLTA series were highly evaluated as an equity method investment iseco product combining both ecology and economy, thereby recording favorable sales.

The electric motors business provides products in a variety of fields, including home appliances, industrial equipment, and AV equipment and office products. It develops and supplies motors that meet such market needs as high efficiency and performance.

In fiscal 2007 and 2008, strong sales were recorded in equityFA servo motors, motors for vacuum cleaners and compact brushless motors used in earnings (losses)game consoles. During fiscal 2009, although sales declined due to a fall in demand, the electric motors business pushed ahead with efforts to accelerate collaboration with Panasonic’s finished product divisions by proceeding with the start up of associated companies.mass production of Dual DD motor for the “Dancing laundering & drying system” washer/dryer. Moreover, the electric motors business contributed to lower energy consumption in finished products by upgrading motor efficiency using design optimization that leverages analysis technology and other techniques.

Other

In the factory automation (FA) business, Matsushita aims to contributePanasonic is contributing to the developmentgreater sophistication of client businesses through innovative manufacturing processes in circuit manufacturing technology. As mobile phones, notebook PCs, digital AV equipment and other products get smaller, thinner, and more sophisticated, Matsushita is working to provide customerselectronic devices with the latest mounting processes and solutions, spanning everything from component insertion toits proprietary wafer processing, surface modification technologies, and flip chip mounting technologies. The Company also contributes to help increase productivity. In fiscal 2006, Matsushita reported continued steady sales growthhigh-quality mounting and increased productivity in the electronic component mounting business and semiconductor mounting business. In addition, Matsushita developed the Integrated Process Assembly Cell (IPAC), a modular line that combines electronic component and semiconductor mounting in one platform. In fiscal 2007, Matsushita enhanced its product lineup in the electronic component mounting business. This included upgrading its high-speed modular placement machines, introducing new ultra-high-speed models and providing more products for small- and medium-scale manufacturing. In the semiconductor mounting business, the Company launched high-speed die bonders and other products that feature both high precision and high productivity. printed circuit board production.

In fiscal 2008, the electronic component mounting business maintained a leading global position by enhancing its lineup of mainstay high-speed modular placement machines in response to various market needs. In the semiconductor mounting business, MatsushitaPanasonic released new products that enable multiple mounting and mounting of high-brightness LEDs. Moreover, as manufacturing-related needs continueIn fiscal 2009, although the mounting equipment market was stagnant due to diversify, the FA business createdglobal trend to reduce capital investment, Panasonic targeted a further increase in the performance of its core high-speed modular mounting machines. The Company developed a high-performance head and improved productivity and versatility in response to its client needs. “NPM (Next Production Modular)”, a new modular mounter announced in December 2008, achieves high area productivity by carrying out all processes, from printing and mounting to inspection using the same platform. In addition, “NPM” reduces equipment switching losses with changes in product type or production volume. Panasonic expanded its lineup of mounting equipment and maintained a global testing framework for supporting prototyping and production method development overseas to help it provide customers with optimized solutions.

- 28 -leading market share.

MARKETING CHANNELS

The table below shows a breakdown of Matsushita’sPanasonic’s net sales by geographical area for the periods indicated:

Sales and Distribution in Japan

In Japan, Matsushita’sPanasonic’s products are sold through several sales channels, each established according to the type of products or customers: Sales of consumer and household products are handled or coordinated by relevant corporate sales divisions, such as the Corporate Marketing Division for Panasonic BrandDigital AVC Products and the CorporateHome Appliances and Wellness Products Marketing Division, for National Brand, while sales of general electronic components and certain other devices to manufacturers are handled by the Corporate Industrial Marketing & Sales Division, in each case to stay close to respective customers and meet their specific and ever-diversifying needs. For other products, there are also organizations under the direct control of business domain companies that conduct sales and marketing of their own products, mostly to non-consumer customers, such as industrial and business corporations, public institutions, construction companies and governments through their sales offices and subsidiaries or through outside agencies.

Of the above, the Corporate Marketing Division for Panasonic Brand and the Corporate Marketing Division for National Brand were established in April 2001 as part of Matsushita’s domestic consumer sales and distribution structure reorganizations, whereby the former corporate consumer products sales divisions, sales functions within individual product divisions and the Advertising Division were integrated into the two new corporate marketing divisions to provide greater customer satisfaction by shortening the distance between factories and consumers.

- 2917 -

In fiscal 2005, MatsushitaPanasonic and MEWPEW integrated the sales functions of each of the electrical supplies, building materials and equipment, and home appliances businesses as a part of collaboration between the two companies. Regarding the electrical supplies business, in January 2005, the Corporate Electrical Supplies Sales Division of Matsushita was integrated into MEW and the Corporate Construction Business Promotion Division was newly established within Matsushita. In April 2005, in the building materials and equipment business, the Corporate Housing Equipment Sales Division of Matsushita, excluding the businesses for city gas companies and OEM sales of equipment and instruments, and the Matsushita Housing Equipment & Systems Corporation were transferred and integrated to MEW. Furthermore, in the home appliances business, MEW sales functions for beauty and health products were integrated into Matsushita, whereby Matsushita reorganized the integrated MEW’s sales functions and Corporate Marketing Division for National Brand of Matsushita into a new Corporate Marketing Division for National Brand Home Appliances and Corporate Marketing Division for National Brand Wellness Products. The Corporate Marketing Division for National Brand Home Appliances handles such large electric appliances as air conditioners, refrigerators and washing machines, while the Corporate Marketing Division for National Brand Wellness Products is responsible for products in fields such as beauty, health, batteries and lamps.

Overseas Operations

Worldwide, MatsushitaPanasonic has 556540 consolidated companies as well as 139182 companies which are accounted for by the equity method. International marketing and sales of Matsushita’sPanasonic’s products are handled mainly through its sales subsidiaries and affiliates located in respective countries or regions in coordination with business domain companies and regional headquarter companies. In some countries, however, marketing and sales are handled through independent agents or distributors, depending on regional characteristics. Additionally, certain products are also sold on an OEM basis and marketed under the brand names of third parties.

Overseas sales represented approximately 50%47% of the Company’s total consolidated sales in fiscal 2008.

In order to promote global business development, Matsushita has been expanding its overseas manufacturing operations. The Company’s overseas manufacturing is conducted by overseas manufacturing subsidiaries and affiliates under the control of business domain companies in coordination with regional headquarter companies.

In April 2003, a new business performance evaluation system (which had previously been applied at domestic companies only) was extended to overseas operations, whereby the performance of each business domain company is now evaluated based on Capital Cost Management (CCM), which measures capital efficiency, and cash flows, on a global consolidated basis, including overseas companies under its control. This provides incentive to each business domain company to further establish globally optimized operational structures.

- 30 -

In recent years, the Company established a globally optimized manufacturing structure, taking into consideration cost and proximity to market as well as social, political and environmental factors. Currently, the Company views Asia, China and Eastern Europe as critical to this structure. Specifically, Matsushita has focused on China as a large potential market and a production site to supply global, as well as Chinese markets. As such, the Company has been enhancing production capacity at its Chinese facilities for such borderless products as DVD players, microwave ovens, compressors and components, as well as such new growth products as PDPs.

Matsushita also places an emphasis on promoting localization of research and development of products and technologies to enhance competitiveness of overseas manufacturing sites. Such endeavors included establishment of a second R&D base in China in fiscal 2003 to speed up local-based product development and to build an optimum global R&D network. In January 2004, Matsushita established a software development site in China to minimize escalating software development costs in areas such as digital consumer electronics. In March 2005, Matsushita and MEW established the Chinese Lifestyle Research Center in Shanghai, China to strengthen product planning activity. In Asia, the Company established the Panasonic R&D Center Malaysia in October 2003 as a digital networking multi-media software development base.2009.

Overseas operations are expected to serve as a “growth engine” for the entire MatsushitaPanasonic Group. MatsushitaPanasonic will therefore further strengthen ties between manufacturing companies in various regions and business domain companies in Japan. MatsushitaPanasonic will also identify strategic products and sales channels for each region and country, and effectively allocate management resources in order to boost sales.achieve further progress and strengthen management structure. In addition to markets in Europe and the United States, MatsushitaPanasonic views the growing BRICs and Vietnam markets as a key to success overseas.

The Company established a Russia Division, India Coordination Department and Brazil Coordination Department in April 2007.

Customers

The largest markets for MatsushitaPanasonic have traditionally been consumer products. However, since the 1980s, the proportion of sales to non-consumer customers, such as industrial and business corporations, governments and other institutions, including large customers such as electric and electronic equipment manufacturers, automotive manufacturers and various other machinery makers, has been rising as MatsushitaPanasonic places increasing emphasis on industrial and commercial products and systems and electronic components. Matsushita’sPanasonic’s business is not materially dependent on any single customer.

SEASONALITY OF BUSINESS

The Company’s business has no significant seasonality in terms of sales or profits. However, for the consumer electronics business, the fiscal third quarter (October to December) is normally a peak period because it falls in the year-end shopping season in Japan and many overseas markets. Additionally, seasonal appliances, such as air conditioners and refrigerators, have different business cycles, sales of which peak in summer. These do not have a material effect upon the Company’s overall operations.

- 31 -

RAW MATERIALS AND SOURCE OF SUPPLY

MatsushitaPanasonic purchases a wide variety of parts and materials from various suppliers globally. The Company applies a multi-sourcing policy—not depending upon any one particular source of supply for most essential items. The Company has also been endeavoring to promote a policy of global optimum procurement by concentrating order placements to qualified suppliers from all over the world and purchasing the most competitive parts and materials.

In an attempt to improve operational efficiency and to reduce parts and materials costs, MatsushitaPanasonic has been increasing centralized purchasing at its headquarters for materials commonly used in many product divisions throughout Matsushita,Panasonic, such as steel, plastics, semiconductors and electronic components, while at the same time accelerating the initiatives to standardize parts and materials.grade unification of steel and resin. Such efforts are coordinated by the Global Sourcing Centre established in April 2003. At the business domain company level, an increasing focus has been put on centralized purchasing for parts and materials commonly used in factories within each business domain company.

- 18 -

To minimize the adverse effects of global price increasesincrease of raw materials, MatsushitaPanasonic further strengthened materials cost reduction initiatives including a reduction in the number of parts through the standardization of design, use of “Value Engineering” techniques, and additional cost reduction activities covering indirect materials.

With an increasing global awareness of CSR values, the Company recently decided to extend its commitment to social responsibility by requiring its suppliers to maintain environmental preservations, quality, safety, information security management, human rights and comply with the related laws and regulations.

To strengthen Panasonic eco ideas Declaration, Panasonic promotes joint activities with business partners to reduce impact of business activities on the global environment and accelerate PDCA management cycle effective from 2009.

By implementing above mentioned activities and strengthening partnership with excellent suppliers, MatsushitaPanasonic aims to reinforce its procurement activities.

PATENT LICENSE AGREEMENTS

MatsushitaPanasonic holds numerous Japanese and foreign patent registrations for its products, and shares technologies with a number of Japanese and foreign manufacturers. Its technical assistance, or licensing, to other manufacturers has been increasing year by year.

For example, Matsushita’sPanasonic’s patents related to MPEG2 technology, which is widely used in digital TVs, are licensed to other companies through MPEG LA LLC. Patents which are essential to DVD technology are licensed as a part of the joint licensing program operated by seven Japanese, U.S. and U.S.Korean companies. Furthermore, the Company’s patents relating to CD technology are licensed to many manufacturers. Further, MatsushitaPanasonic has non-exclusive cross-license agreements with Samsung Electronics Co., Ltd. for semiconductor technology and with Sharp Corporation for mobile phone technology.

- 32 -

MatsushitaPanasonic is a licensee under various license agreements which cover a wide range of products, including AV products, computers, communications equipment, semiconductors and other components. MatsushitaPanasonic has non-exclusive patent license agreements with, among others, Thomson Licensing Inc. and Thomson Licensing S.A. covering a broad range of products, including TVs, VCRs and DVD products. MatsushitaPanasonic has non-exclusive patent cross-license agreements with, among others, Texas Instruments Incorporated and International Business Machines Corporation, both covering semiconductors, information equipment and certain other related products. Further, MatsushitaPanasonic has a non-exclusive patent cross-license agreement with Eastman Kodak Company covering digital still camera, camcorder and mobile phones. Panasonic has a non-exclusive patent cross-license agreement with Ericsson covering mobile phones

The Company considers all of its technical exchange and license agreements beneficial to its operations.

COMPETITION

The markets in which the Company sells its products are highly competitive. Matsushita’sPanasonic’s principal competitors, across the full range of its products, consist of several large Japanese and overseas manufacturers and a number of smaller and more specialized companies. Advancements toward a borderless economy have also applied pressure to Japanese manufacturers, including Matsushita,Panasonic, in terms of global price competition, especially from Chinese and Korean manufacturers. To counter this, the Company is devising various measures to enhance its competitiveness, with a focus on the development of differentiated products, cost reduction and efficiency improvements. Such measures include the development of products with Matsushita’sPanasonic’s differentiated technologies, innovation of manufacturing processes through the use of information technology, increasing overseas production for optimum manufacturing allocation from a global perspective, and shortening production and distribution lead time through the expansion of supply chain management (SCM) in cooperation with several overseas and domestic mass-scale retailers and the introduction of cell-style production, as well as developing joint ventures and other cooperative agreements with domestic and overseas partners.

Also, with the development of digital and networking technologies, competition in terms of the so-called de facto standard has become crucial. In response, MatsushitaPanasonic has been strengthening its efforts toward alliances with leaders not only in the electronics industry but also the software, devices, broadcasting, communications services and other diverse industries.

- 3319 -

GOVERNMENT REGULATIONS

Like other electronics manufacturers, MatsushitaPanasonic is subject to governmentgovernmental regulations related to the environment issues.environmental preservation.

To comply with recycling laws both in Japan and other countries/regions, Matsushita isPanasonic has been actively taking measures. The Company has established an efficient system to collect and recycle used home appliances, comprising air conditioners, CRT TVs, flat-panel TVs, refrigerators, and washing machines and clothes dryers in compliance with the Law for Recycling of Specified Kinds of Home Appliances in Japan effective April 1, 2001. AndAs one of its measures to contribute to the establishment of a recycling-oriented society, the Company established the MatsushitaPanasonic Eco Technology Center Co., Ltd. not only to dismantle used products and recyclingor recycle scrapped materials, but also to promote research and development of recycling technology.technologies. In Europe, the Waste Electrical and Electronic Equipment (WEEE) Directive designed to promote recycling came into force sincein August 2005. Preparing for mandatory recycling under the WEEE directive, MatsushitaPanasonic established Ecology Net Europe GmbH (ENE) in Germany in April 2005. The Company promotes construction of networks connecting manufacturers, recycling companies and hauling companies through ENE. In the U.S., Panasonic Corporation of North America, which is a regional company of MatsushitaPanasonic, has established a new electronic product recycling management company, Electronics Manufacturers Recycling Management Company, LLC (MRM) with other manufacturers to satisfy requirements enacted in July 2007 in the state of Minnesota. Although MRM’s initial focus iswas to collectscollect products in Minnesota, plans are in developmenta scope of operation has been developing to expand its activities to other states with electronic product recycling mandates. Through these efforts, MatsushitaPanasonic is carrying out its compliance programs not only to meet the requirements demanded by legislations, but also to establish cost efficient systems that will further enhance its competitive edge.

In January 2003, the Company announced that disposed electric equipment that contained polychlorinated biphenyl (PCB) might be buried in the ground of its four manufacturing facilities and one former manufacturing facility in Japan. The applicable laws in Japan require that PCB equipment be appropriately maintained and disposed of by July 2016. The Company has accrued estimated total cost of approximately 1112 billion yen by March 31, 20082009 for necessary actions, such as investigation on whether the PCB equipment is buried at the facilities by excavating, maintaining and disposing the PCB equipment that is already discovered, and soil remediation. Although it represents management’s best estimate or minimum of the cost, the payments are not considered to be fixed and determined.

To deal with climate change issues, various kinds of measures have been taken worldwide, especially those for energy efficiency of products. In Japan, the Energy Conservation Law was revised in 1999, and “top-runner standard”the Top-runner standard was introduced, which aims to continuously increase products’ energy consumption efficiency.efficiency performance on an industry-wide basis. The Program uses a value of the product with the highest energy consumption efficiency on a market at the time of the standard establishment process as a target value for a goal year. An area of targeted products has been expanding, and a standard gets stringentstricter if necessary. Other countries/regions, such as the European Union, the United States, China, Korea, and Australia also have regulations for energy conservation improvement (energy-saving standards and labeling systems) for home appliances and AV products. MatsushitaPanasonic takes a proactive measure to comply with these requirements, and further promotes development of energy-saving products.

- 34 -

Also, MatsushitaPanasonic is promoting its initiatives for directives relevant to chemical substances management. In Europe, the RoHS Directive that bans the sales of electrical and electronic equipment using six specified hazardous substances (Lead, Mercury, Cadmium, Hexavalent chromium, Polybrominated biphenyls, Polybrominated diphenyl ethers) from the EU market has come into forcewas issued in February 2003. The Company completed initiatives for the non-use of the abovementioned six specified hazardous substances in its target products* (31,400 models) by the end of October 2005, in order to reduce possible contamination by these substances after products are disposed of. And the Registration, Evaluation, Authorisation and Restriction of Chemical Substances (REACH) came into force in June 2007. The REACH requires all chemicals of one ton or more in volume that are manufactured in or imported into the European Union each year to be testedevaluated for health and safety and registered with a central European authority.Chemical Agency. In Japan, the Law Concerning the Examination and Regulation of Manufacture, etc of Chemical Substances were introduced in 1973, and revised in 1986 and 2003. It aims for preventing pollution of the environment by chemical substances with persistent harmful properties by establishing a system of examination by regulating target substances manufactured, imported and used. In the revised Law for the Promotion of Effective Utilization of Resources in Japan, it is required for manufacturers to disclose information about targeted chemical substances same as the EU RoHS substances contained in 7 specific products (air conditioners, refrigerators, television sets, personal computers, laundrywashing machines, microwaves, and clothing dryers) by attaching a label. In China, Management Methods on the Control of Pollution from Electronic Information Products, commonly known as “China RoHS,” took effect from March 1, 2007. This applies to electronic information products imported or manufactured in China, that are sold on the Chinese market. Restricted substances are the same as the 6 EU RoHS substances, and it is required to disclose information about substances contained in products by placing a label on a product packaging. MatsushitaPanasonic is carrying out its compliance programs to meet the requirements of relevant regulations.

- 20 -

The Company is subject to a number of other government regulations in Japan and overseas as mentioned above, but overall, it presently manages to operate its businesses without any significant difficulty or financial burden in coping with them.

REPORT ON KEROSENE FAN HEATER RECALL

AND COMPANY’S COUNTERMEASURES

In 2005, certain kerosene fan heaters, which were manufactured by MatsushitaPanasonic between 1985 and 1992, resulted in hospitalization, and in some cases death, due to exposure to carbon monoxide exhaust. To prevent a recurrence, in November 2005, the Company established a special committee led by President Nakamura to implement recall efforts, product inspections and repairs of affected models of kerosene fan heaters. Using various media, MatsushitaPanasonic notified customers of the risks involved in the use of these products, while sending out employees (approximately 200,000 in total) to distribute leaflets directly to users, and visit kerosene suppliers.

- 35 -

MatsushitaPanasonic has made all-out efforts to locate recalled kerosene fan heaters through the cooperation of various parties, and will continue efforts to identify the purchasers and users of all remaining recalled heaters. At the same time, to prevent a recurrence, the Company is carrying out a wide range of initiatives. On May 1, 2006, MatsushitaPanasonic reorganized the aforementioned special committee into a permanent organization, the Corporate FF Customer Support & Management Division, under which Matsushita will continuePanasonic has continued recall efforts through various public awareness campaigns. Furthermore, the Company will thoroughly reviewhas reviewed product safety in design and manufacturing processes. Specifically, Matsushita will undertakePanasonic has undertaken studies of material deterioration caused by long-term use, together with the development of technologies to prevent risks caused by complex factors involved in the extended use of certain products. Furthermore, the Company will establishhas established a new risk management system to enable prompt action in an emergency, in compliance with its primary principle, the customer comes first. The Company willhas also reinforcereinforced safety education programs for the presidents of all Group companies, the directors of all divisions and the managers responsible for specific operations (such as design, manufacturing, and quality control). In terms of product quality issues, in addition to its commitment to the idea that safety and quality come first from the product design stage, MatsushitaPanasonic will continue to take all possible measures, such as the analysis of product age-related degradation and user environments, to ensure the quality and safety of products.

In order to maintain production, sales and service activities effectively in broad business areas as a comprehensive electronics manufacturer, MatsushitaPanasonic has been operating under a decentralized divisional management structure with substantial delegation of authority to divisional companies and subsidiaries, with the headquarters focusing on Groupwide strategic functions. In January 2003, MatsushitaPanasonic launched a new business domain-based organizational structure, and introduced new Group management control systems from April 1, 2003. Under this new structure, each business domain company, either an internal divisional company of the parent company or a subsidiary, takes full responsibility in its own business area, thereby establishing an autonomous management structure that expedites self-completive business operations to accelerate growth. On April 1, 2004, MEW,PEW, PanaHome and their respective subsidiaries became consolidated subsidiaries of the Company. Accordingly, the Company successfully eliminated overlaps in R&D, manufacturing and sales, thereby creating an optimum Group structure that facilitates the effective use of management resources to achieve growth strategies. JVC (Victor Company of Japan Ltd. and its subsidiaries) became associated companies under the equity method from consolidated subsidiaries in August 2007.

- 3621 -

Matsushita’sPanasonic’s consolidated financial statements as of March 31, 20082009 comprise the accounts of 556540 consolidated companies, with 139182 companies reflected by the equity method.

Principal divisional companies and subsidiaries as of March 31, 20082009 are as listed below:

- 22 -