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Fiscal 2009 First-quarter Financial Results (ended June 30, 2008) Q&A Summary

Q What were the reasons for the higher sales of flat-panel TVs?
A Our product strategy has changed from last year in terms of expanding our product range, increasing the share of full HD models, and producing larger screens. In terms of regional strategy, there has been a recovery in North America. Matsushita is gradually seeing the results of promoting its VIERA Link products, such as flat-panel TVs, digital cameras and Blu-ray DVD recorders. The Company has also expanded sales channels from nationwide mass retailers to local mass retailers, and implemented structural change to unify sales and manufacturing divisions in April 2008. As a result, the Company is better able to respond to the changing market. In Europe, meanwhile, our range of products, including 37-inch models, sold well.
Q How has your strategy for the Olympic Games been working?
A Compared with the previous fiscal year, the Company has seen shipment units of flat-panel TVs rise sharply in year-on-year terms since June, with a 28% increase in May, followed by a rise of 54% in June.
Q Why did operating profit at PAVC only rise 1% year on year despite a 15% increase in sales compared with a year earlier?
A This result is due mainly to the impact of IPS Alpha Technology Ltd. Excluding this factor, the operating profit to sales ratio increased.
Q Digital camera prices seem to have been getting lower worldwide. What was the situation in the first quarter?
A Sales rose in all regions. Furthermore, digital camera operations remained strong, due to steady sales of new products and high profitability. In particular, the Company posted double-digit sales growth in China, as well as high growth in Central and South America. However, there is a considerable build-up of retailer stock in the industry as a whole.
Q Why has profitability improved at PMC?
A In addition to strong sales of "VIERA Keitai" mobile phones and 800 MHz base stations, PMC started to see the benefits of cuts to development expenses. Furthermore, it recorded a one-time gain due to resolution of a patent dispute. Compared to the past, PMC is now able to maintain a relatively high level of profitability.
Q Please tell us about the automotive electronics business.
A In the first quarter of fiscal 2009, this business recorded lower sales. Nevertheless, there has been no change to our project to achieve 1 trillion yen-plus sales in the automotive electronics business on a Group-wide basis in fiscal 2010, one year ahead of schedule.
Q How are home appliances performing in Europe?
A In home appliances, Matsushita currently sells only air conditioners and microwave ovens in Europe. In the first quarter of fiscal 2009, while air conditioner sales were weak because of a cool summer, sales picked up a little in July. Regarding refrigerators and washing machines, the Company intends to launch these in Europe in the fourth quarter as planned.
Q Please tell us the reasons for the lower sales in the components and devices business.
A Although semiconductor sales rose, sales of other products such as batteries and general electronic components decreased. Sales conditions for general electronic components were severe, with sharp price falls hurting sales of capacitors. Furthermore, in general components for automotive electronics, sales of speakers and other products declined.
Q Please tell us the reason for the fall in the effective tax rate.
A In recent years, Matsushita has increased earnings overseas due to higher overseas sales. Because Matsushita is increasing income in countries where the tax rate is lower than in Japan, its standard effective tax rate is around 35%. The previous year's effective tax rate was higher due mainly to losses at some domestic subsidiaries that had deferred tax assets.
Disclaimer Regarding Forward-Looking Statements
  This Q&A 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 and its Group companies (the Matsushita Group). To the extent that statements in this Q&A 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 Matsushita 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 Matsushita 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. Matsushita undertakes no obligation to publicly update any forward-looking statements after the date of this Q&A. Investors are advised to consult any further disclosures by Matsushita in its subsequent filings with the U.S. Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934.
  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 Matsushita Group operates businesses, or in which assets and liabilities of the Matsushita Group are denominated; the ability of the Matsushita 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 ability of the Matsushita Group to achieve its business objectives through joint ventures and other collaborative agreements with other companies; the ability of the Matsushita 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 Matsushita Group; the possibility that the Matsushita 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 Matsushita 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 Matsushita Group. The factors listed above are not all-inclusive and further information is contained in Matsushita's latest annual report on Form 20-F, which is on file with the U.S. Securities and Exchange Commission.

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