Annual Report 2013 - パナソニックインフォメーションシス …Annual Report 2013...

For the Year Ended March 31, 2013

Message from the President　　Page 2

We are succeeding in gaining a steady foothold, despite significant changes in the operating environment.Kazuhiro Maegawa, President

New Medium-Term Management Plan Page 6

Delivering Higher Levels of Customer Satisfaction through IT as a ServiceBusiness Overview Page 12

CSR Page 14

Corporate Governance Page 16

AnnualReport

2013

Corporate History

The Company was established in 1999, when the information system department of the former Matsushita

Electric Works, Ltd., became independent. For some 50 years since that time, based on our technical expertise

we have offered total solutions for information systems from planning and designing to development, operation

and maintenance.

Our strength lies in our on-site capabilities cultivated by staying closely in tune with site needs, solving

problems through trial and error. We strive to deliver useful solutions from the customer’s perspective.

Listen, think and create solutions

Action Guideline

CorporateVision

Corporate Slogan

For the creation of information systems embedded with computers to be unnoticed by people

To strive for the creation of new values, by pursuing user-friendliness and accomplishing high-tech mindset, driven by challenging spirits and full speed of actions

Our Philosophy

Medium-Term Management Plan（Fiscal 2013-2015）

Medium-Term Management Plan（Fiscal 2010-2012）

1999　Establishment of Matsushita Electric Works Information Systems Co., Ltd.

1961　Establishment of an information system department at the former Matsushita Electric Works, Ltd.

2001　Listing of the stock on the over-the-counter market (JASDAQ)

2003　Listing on the Second Section of the Tokyo Stock Exchange

2004　Listing on the First Section of the Tokyo Stock Exchange

2008　Change in corporate name to Panasonic Electric Works Information Systems Co., Ltd.

2009　Establishment of the Osaka Central Data Center

2012 Change in corporate name to Panasonic Information Systems Co., Ltd.

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261.13240.51 242.25

253.56

209.024,3714,632

4,255 4,425

12.6

4,205

2,7832,563 2,581

2,227

2,702

Net Sales

(Millions of Yen)

37,320 36,650 36,37335,179

2009 2010 2011 2012 2013

34,221

Operating Income/Operating Income to Net Sales(Millions of Yen / %)

2009 2010 2011 2012 2013

Net Income

(Millions of Yen)

2009 2010 2011 2012 2013

Basic Net Income per Share

(Yen)

2009 2010 2011 2012 2013

12.4 11.9 12.3 11.7

Operating Income (Millions of Yen)Operating Income to Net Sales (%)

Corporate D

ataS

tock Information

New

Medium

-Term

Managem

ent Plan

Cautionary Statement with Respect to Forward-Looking StatementsThis annual report contains forward-looking statements that reflect the Panasonic Information Systems Group’s plans, business strategies and targets. These statements are in accordance with assumptions and beliefs determined by management based on currently available information and involve uncertainties and changes in the business environment at home and abroad. Actual results and business performance may differ materially from these statements.

Panasonic Information Systems Co., Ltd. and consolidated subsidiaries　Years Ended March 31

Consolidated Financial Highlights

*1. Amounts expressed in U.S. dollars are calculated using the exchange rate prevailing on March 29, 2013 of ¥94 to US $1.00.*2. Diluted net income per share is not indicated here, because there are no potentially dilutive shares.

Millions of YenThousands of U.S.

Dollars *1

2013 2012 2011 2010 2009 2013

Net sales ¥ 35,179 ¥ 36,373 ¥ 34,221 ¥ 36,650 ¥ 37,320 $ 374,245

Operating income 4,425 4,255 4,205 4,371 4,632 47,074

Net income 2,702 2,227 2,581 2,563 2,783 28,745

Net cash provided by operating activities 4,670 3,834 3,154 4,483 3,864 49,681

Net cash (used in) provided by investing activities （12,299） 6,908）（2,862）（2,829）（3,866）（130,840）

Net cash used in financing activities （940）（903）（821）（863）（710）（10,000）

Cash and cash equivalents 5,500 14,069 4,230 4,759 3,968 58,511

Total assets 31,355 29,012 27,317 25,146 23,211 333,564

Equity 24,838 22,859 21,359 19,659 17,604 264,234

Yen U.S. Dollars *1

Basic net income per share*2 ¥ 253.56 ¥ 209.02 ¥ 242.25 ¥ 240.51 ¥ 261.13 $ 　2.70

Full-year dividends per share 65.00 65.00 65.00 65.00 75.00 0.69

Operating income to net sales 12.6% 11.7% 12.3% 11.9% 12.4%

Return on equity 11.3% 10.1% 12.6% 13.8% 16.8%

Equity ratio 79.2% 78.8% 78.2% 78.2% 75.7%

Panasonic Information Systems Co., Ltd. Annual Report 2013 1

From 2011: Expanding External Sales and Working on One Panasonic

From 2010: The Start of Major Change

Message from the President

We are succeeding in gaining a steady foothold, despite significant changes in the operating environment.Nurturing Budding Strength

Review of the Medium-Term Management Plan(Fiscal 2010–2012)

We formulated a three-year medium-

term management plan around the time

I was appointed president in April 2010.

At the time, this plan had three themes,

namely to strengthen external sales

(meaning sales to companies outside the

former Panasonic Electric Works Group),

contribute to the former Panasonic

Electric Works Group and bolster our

management constitution. The plan’s

targets were to reach consolidated net

sales of ¥40,000 million, consolidated

operating income of ¥4,900 million and a

consolidated operating margin of 12.3%

by the fiscal year ended March 31, 2013.

One of the measures of this plan

was to expand external sales, and as

part of that effort we relocated and

expanded our Tokyo office. At the same

time, we shifted some members of our

development team in Osaka to Tokyo

with the aim of accelerating our response

to customer needs, and reinforced our

sales capacity in Tokyo in other ways.

In the same year, we began offering

“Nextructure” as a systematic solution

that embodies the experience we have

built up in constructing and operating

systems.

In July 2010, Panasonic announced

plans to convert Panasonic Electric

Works to a consolidated subsidiary in

April 2011 and dramatically reconfigure

the Panasonic Group domain in January

2012. As the new framework was

expected to involve system changes,

many of our system development

products that were underway for

Panasonic Electric Works were delayed

or canceled.

As a result, in the fiscal year ended

March 31, 2011, net sales amounted to

¥34,221 million, and operating income

was ¥4,205 million.

With the Great East Japan Earthquake

occurring in March, the start of 2011

was characterized by a sharp fall in

business confidence. Nevertheless, the

initiatives that we had been pursuing to

expand external sales began to steadily

bear fruit. During the year, we acquired

such large-scale projects as a thin

client system for the Fuji Educational

Committee and cloud services for Nidec

Corporation. We also successful ly

received orders for a ticketing system

we were promoting in cooperation with

the Panasonic Group from TOKYO

SKYTREE, KYOTO AQUARIUM and

SUMIDA AQUARIUM. Furthermore, we

introduced the ERP package “GRANDIT”

as a solut ion centered on system

integration for core functions, leading

to a strong increase in the number of

customers.

We also faced some major challenges

in our business for the Panasonic Group.

In August 2011, Panasonic announced

the absorption-type merger of Panasonic

Electric Works. Activities in response to

“One Panasonic” suddenly accelerated.

We energetically took part in some of

the restructuring activities, such as

integrating and linking the systems of

Group companies. Recognizing that this


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Kazuhiro MaegawaPresident

3Panasonic Information Systems Co., Ltd. Annual Report 2013

Three Years in Review

From 2012: Initiatives Targeting the Next Phase of Growth

Oper

ation

Dev

elo

pm

ent

was a project that must succeed at all

costs, our employees pulled together

and worked tirelessly to bring it to a

successful conclusion.

Consequently, in the fiscal year ended

March 31, 2012, net sales came to

¥36,373 million, and operating income

was ¥4,255 million.

We began business in 2012 amid

major changes occurring in the Group’s

framework and operating environment.

For the general market (external sales),

we began the full-fledged provision of

services via the cloud environment we

had received orders for and constructed

in the prev ious f isca l year, which

contributed to a significant increase in

sales. In system development projects,

as well, we launched several services

us ing the ERP system we began

promot ing in the preceding term.

Meanwhile, rather than selling PCs and

other equipment on a stand-alone basis,

we clarified our structure for offering

them as sets together with solutions.

In May 2012, we completed the One

Panasonic project, which we had been

involved in for around a year and a half.

At that point, we continued to make

proposals to Panasonic Corporation Eco

Solutions Company, which is Panasonic

Group company regarding an order for IT

systems related to the company’s next-

stage growth strategy. These efforts led

to the acquisition of a large-scale project

in the summer of 2012.

Unfortunately, however, our f inal

push for new project orders fell short

of the mark, with net sales amounting

to ¥35,179 mi l l ion. On the other

hand, rationalization and streamlining

contributed to increases in operating

income, which exceeded the previous

year’s level and amounted to ¥4,425

mill ion. Although below the targets

we had set in 2010, we achieved an

operating margin of 12.6%, a record high.

Broadly speaking, these were the major

trends over the past three years. To

summarize, conditions were undeniably

difficult for us as the result of major

・Cultivate new customers in the general market

・Support the business systems of the Panasonic Group

・Make the step up from growth businesses to core businesses

・Combine Panasonic products with IT, preparing the ground and planting the seeds for new business

・Make significant quality improvements on both the operational and development fronts

l Set up in April 2012l Training/monitoring/

management of entire/individual project

Quality control byPMO

Quality control by CMMI®

l Achieved Level 3 in December 2008l Began working to reach

Level 4 in 2014

l Acquired in February 2011l Continue fixed activities

Sal

es

dis

cuss

ion Information provision

Proposals

Estimate

Contract

Requirement definition

Design

Development

Testing

Medium-Term Management

Plan (Fiscal 2010–2012)

Milestones

Quality control by ISO 20000

Operation and maintenance

Message from the President


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Future Measures

Shareholder Returns

changes in the operating environment for

the client that had previously provided a

stable source of revenue and income—

the former Panasonic Electric Works

Group. Even so, I am proud of the fact

that we sowed the seeds for growth by

solidifying our position in the general

market and for business from the

Panasonic Group.

Of part icular importance are the

advances we made in the “five growth

business areas” defined in this plan.

Over the course of the plan, net sales

rose 75% compared with the initial year.

I believe that cultivating these growth

businesses into core businesses that will

support our management going forward

contributed greatly to these results.

We have also enjoyed some success

in terms of bolstering our management

constitution. In addition to the rationalization

and streamlining initiatives that were in

place, we began to see good progress

f rom thorough effor ts to improve

quality on both the operational and

development f ronts. We acquired

ISO 20000 certification in 2011, and

owing to ongoing quality improvement

activities based on this certification, the

amount of money lost on operations

fell by approximately 12% over three

years. In addition, we adopted CMMI®*

to manage development quality and

conducted training and monitoring via

the Project Management Office (PMO).

As a result, the “number of projects to

be monitored,” meaning the number of

high-risk projects that require stronger

monitoring during development, reached

zero in March 2013. Rather than

increasing our capacity for earning high

profits, I believe that these developments

resulted in higher levels of customer

satisfaction. *CMMI® (Capability Maturity Model Integration)

Process improvement model for software and systems developed at the Software Engineering Institute of Carnegie Mellon University

We have now formulated a medium-term

management plan for the three years

beginning from April 2013. Generally

speaking, we plan to continue moving

in the same direction as we have in the

past. That being said, the environment

is no longer the same and we ourselves

cannot afford to maintain the same

consciousness we have had in the past.

We will need to be more ambitious and

feel a sense of urgency as we think

about new developments.

As of June 2013, the Japanese

business environment is characterized

by anticipation of a recovery, fueled

by yen depreciation and higher stock

prices. Even so, the climate is marked

by a strong sense of caution with regard

to the future, prompting austerity toward

corporate IT investments. This trend

can be also explained as IT needs

undergoing a shift in focus, from the

enhancement of operational efficiency to

contribution to management. Ongoing

globalization and the forward march of

technology are requiring ever greater

management speed. In core businesses,

companies invest in management

resources; in non-core businesses they

seek eff iciency improvements. The

question for us to answer is how IT

can assist this trend. I see this solution

as the point at which we provide true

value. (See the “New Medium-Term

Management Plan” on page 6.)

We believe that providing returns to

shareholders is one of the management’s

most important priorit ies. We have

adopted a policy to actively and stably

distr ibute surplus funds based on

financial performance while keeping

in mind the need to increase internal

reserves to reinforce our management

foundations and ensure long-term growth.

For the fiscal year ended March 31,

2013, we awarded dividends of ¥65 per

share, for a consolidated payout ratio of

25.6%.

For the fiscal year ending March 31,

2014, we plan to award dividends from

surplus funds twice, with record dates

of September 30 and March 31, each

amounting to a regular dividend of

¥32.50 per share. This figure results in

an annual dividend of ¥65 per share and

a consolidated payout ratio of 25.5%.

Again this year, our executives and

employees will make a vigorous push to

move the Company to a new stage

of business.

We ask for the ongoing support of our

investors.

July 2013

Kazuhiro MaegawaPresident


New Medium-Term Management Plan

The Company has recently formulated the Medium-

Term Management Plan (Fiscal 2013–2015).

Since 2010, we have continued working in line

with three themes: “strengthen the general market,”

“reinforce partnership with the Panasonic Group”

and “bolster management constitution.” Our policy

going forward will be “aim to earn higher customer

satisfaction through IT as a service.” By achieving

this objective, we will progress from simply being

a partner in system development and operations

to become a partner that contributes to actual

operations and management.

Maintain and establish an IT environment within the Group

Take on the general market

Expand into the general market with on-site

capabilities

Aim to be a true business partner

Founding period

Department within the Company

From 2010

From 2013

Delivering Higher Levels of Customer Satisfaction through IT as a Service

Medium-Term Management Plan (Fiscal 2013–2015)


(Millions of Yen / %)

4,205

12.3 11.7 12.6 12.4 12.2 12.1

4,255 4,4254,450 4,500 4,600

201320122011

Operating Income (Millions of Yen) Operating Income to Net Sales (%)

Operating Income/Operating Income to Net Sales

2014（Plan）

2015（Plan）

2016（Plan）

(Millions of Yen)

34,22136,373 35,179 36,000

37,000 38,000

2014(Plan)

2015(Plan)

2016(Plan)

201320122011

Net Sales

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Outline of the Plan and Our Business DevelopmentBroaden and Deepen Value Our Initiatives to Date

Performance Targets for the Medium-Term Management Plan(Fiscal 2013–2015)

The outline of our plan involves continuing the themes under which we have progressed for the past three years. However, we

aim to deepen and expand our initiatives to date.

In other words, as we pursue these themes, we will focus even more on the keywords “new” and “service,” develop business

in new markets while maintaining the ability to earn high profits and use IT collaboration with Panasonic products as the catalyst

to unlock new potential. This will be our mission for the next three years.

To achieve these goals, we will develop our business along the combined lines of a “client orientation” and a “product orientation.”

By the fiscal year ending March 31, 2016, we are targeting net sales of ¥38,000 million and operating income of ¥4,600 million.

Driver for creating new possibilities

Bolster management constitution

Client Orientation

Product Orientation

Broaden and Deepen Value All Our Efforts to Date

IT collaboration with the Panasonic

Group

Reinforce partnership with the

Panasonic Group

Strengthen the general

market

Focus more on “new” and “service”

Propose optimal solutions to meet individual clients’ needs

Propose products that leverage our a c c u m u l a t e d exper ience and expertise

Develop business in new markets while maintaining high profitability

General market

IT infrastructure construction/

operation

ERP system construction

IT collaboration with the Panasonic

Group

New products/solutions

Panasonic Group


　（Millions of Yen）

2014 2015 2016

1. ICT infrastructure service 3,200 3,600 4,000

2. System integration of 　　core functions 1,000 1,100 1,200

3. Collaboration with 　　the Panasonic Group 500 600 800

4. Creation of something new 300 700 1,000

Total 5,000 6,000 7,000

ICT infrastructure service

System integration of core functions

Collaboration with the Panasonic

Group

Creation of something new“

Key

Bus

ines

s A

reas

”

l General marketl Panasonic Group

l IT infrastructure construction/operationl ERP system constructionl IT collaboration with the Panasonic Groupl New products/services

Client orientation

Product orientation

1

3

2

4

Develop along a “Key Business Areas” Orientation

Growth Target: Achieve ¥7,000 Million in Net Salesby the Fiscal Year Ending March 31, 2016

Targets for Key Business Areas

One important initiative targeting customers in the general

market is to foster even stronger relationships with the

customers that have had a business connection with us.

We will make a thoroughgoing effort in two areas.

First, rather than our business being over once we have

delivered the requested systems and equipment, while

launching additional services we will work consistently to

contribute to our clients by uncovering potential needs. In

addition, we will continue to provide services until business

issues are resolved. In this manner, we will promote a

business model that broaden and deepen value our

relationships with customers.

Furthermore, we will endeavor to attract new clients

by enhancing our IT service menu. In order to respond

to clients’ needs across a wider range of businesses of

different scales, we will offer a more flexible and diverse

lineup of superior services and solutions and deepen and

broaden our client base.

Our product development efforts will involve creating

solutions that combine the products and services of the

Panasonic Group with our own group’s IT services. By

leveraging the strengths of each of these, we will provide

new value to clients and work to cultivate new markets.

In addition, we will pursue more vigorously our growth

businesses to date, namely constructing and operating IT

infrastructure and building core systems. Furthermore, we

will deploy technology and product strategies that will link

to the creation of new markets.

Our medium-term management plan positions these

initiatives, “ICT infrastructure service,” “system integration

of core functions,” “collaboration with the Panasonic

Group” and “creation of something new,” as key business

areas, through which we aim to generate net sales of

¥7,000 million.

Business Deployment Centering on Clients and Products


Propose Optimal Solutions to Meet Individual Clients’ Needs

Strengthen the General Market


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Expand B to B Cloud Service

Target Further Progress from the Customer’s Perspective

Overview of Key Business AreasICT Infrastructure ServiceAchieve ¥4,000 Million in Net Sales by the Fiscal Year Ending March 31, 2016

System Integration of Core FunctionsAchieve ¥1,200 Million in Net Sales by the Fiscal Year Ending March 31, 2016

So far, we have taken advantage of the experience and expertise we have cultivated to date to propose infrastructure integration

and virtualization and the construction of public clouds. These offerings mainly targeted mission-critical systems at large

companies.

Cloud services have expanded rapidly over the past

year or two, and an increasing number of companies

have introduced so-called public cloud services. The

“anyone can use” convenience of these services,

however, prompted concern on the security front, so

many companies hesitated to introduce them. In other

words, the scope of the cloud services being offered in

Japan is more limited than their demand would suggest.

Consequently, we have begun providing high-quality B

to B cloud services with an even more reasonable pricing

structure than has been available to date, and we intend

to expand the systems and clients these services target.

We are assisting in core system reform, based on our

“GRANDIT” and “MetaForce” ERP packages. We spent

from 2012 to 2013 renovating “GRANDIT,” which now

offers multiple-language support (English and Chinese) and

is compatible with smart devices. In these ways, we have

upgraded the package from a customer’s perspective

even more than in the past.

Going forward, we will develop and provide our own

proprietary templates, create links with business systems,

and make compound proposals that include our operation

services, thereby expanding our offerings from the

standpoint of ERP solution “services.”

“MetaForce,” which is being employed mainly by

Panasonic Eco Solutions’ distributors, currently occupies a

corner of the market as a sales support and management

system for the electrical equipment and materials

industries. We plan to increase the package’s convenience

by forging links among various types of data and devices.

Expand B to B Cloud Service

Coverage to expand in the future

Current service coverage of Panasonic IS

Public clouds

ICT Infrastructure Service

Infrastructure integration/virtualization,

private cloud

Small companies

Medium-sized companies

Large companies

Sys

tem

sca

le

High-quality and reasonable cloud

servicesP

rog

ress

of

Pan

aso

nic

IS

GRANDIT consortium inaugurated

2003 2008 2009 2010 2011 2012 2013

Prime partners: 13 companies

Companies introducing GRANDIT surpassed 500

Multiple language support(English, Chinese)compatible with smart devices, etc.

GRANDIT v2.1 released

Coordination with various business systems

Accelerated comprehensive IT business for medium-sized companies

Released unique business type/business-speci�c template

Project of the Year 2011

Net Sales(Millions of Yen)

Pro

gre

ss o

f G

RA

ND

IT

Joined the consortium

60

180

350

470

Other systems

Orders Received・Order・Sales・Purchase・

Stock・Receivable・ClaimsClaw-back・

Accounts payable-trade etc.

Network infrastructureSupplying

manufacturerClient

Via the InternetInternet

Internet

E-mail

Mobile

Fax and telephone

Real-time connection

Co

ord

inat

ion

of

vari

ou

s ty

pes

of

dat

a

Co

ord

inat

ion

of

vari

ou

s ty

pes

of

dat

a

Fax and telephone

Core system


Further increase added value・Product linkage・Business linkage

as a serviceIT

business linking

equipment

EcoCute monitoring

IT know-how

Plug-in station

monitoring

eneview environmental

monitoring

Remote monitoring of storage batteries

Promoting Further Collaboration

Aiming to Provide New Value

Collaboration with the Panasonic Group Achieve ¥800 Million in Net Sales by the Fiscal Year Ending March 31, 2016

Creation of Something New Achieve ¥1,000 Million in Net Sales by the Fiscal Year Ending March 31, 2016

We launched our “eneview” environmental monitoring software in December 2010. Using data gathered from Panasonic’s

energy monitors and sensors, eneview provides a “visualization” mechanism to heighten awareness of energy savings. This

software is currently in use by customers across a broad range of sectors and industries, including rail companies and nursing

care and welfare institutions. Using the

know-how gained through eneview, we

are expanding our lineup to include plug-

in station monitoring, EcoCute (energy-

efficient electric heat pump) monitoring and

the remote monitoring of storage batteries,

and now we are rolling out a linked-facility

IT solution.

In the future, as well as adding to

solutions from a service perspective we

plan to increase added value by linking

them with Panasonic products and

businesses.

As the first foray into this new business, in April 2013 we

began providing a core system reform solution employing

the Oracle Exadata Database Machine. This system

represents the commercialization of the expertise we

cultivated by consolidating 22 database servers into just

two units, reducing annual worker-hours by approximately

60%. As a forward-thinking reform following on from the

infrastructure integration we have proposed to date, we

will propose database integration using this solution.

Launching and cultivating new businesses requires time.

We will approach this business with the understanding

that speed is of the essence, adopting the keywords “Let’s

start acting” rather than “Let’s start thinking.”



Developing Business in New Markets While Maintaining High Profitability

Bolster Management Constitution Business Overview

Financial Section

Corporate G

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Consolidated

Financial Highlights

Message from

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Stock Inform

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Thoughts on the New Medium-Term Management Plan

Column

There is an endless well of interest in using new

information technology in businesses that make use

of smart devices and big data. That being said, in

corporate IT investment there is a clear tendency

for companies to invest as little as possible in fixed

IT assets, leading to a marked increase in the use

of cloud-type IT services. We have deployed the

strength in on-site capabilities that we have cultivated

with the Panasonic Group to extend our offerings

into the general market, and we have steadily earned

the trust of the companies in this market as well.

As we work to forge even stronger relationships

with clients going forward, I believe that extending

our menu of IT offerings as services will deepen and

enhance our contributions to their businesses. One

of the challenges we will take up is using the revenue

sharing method* to provide services. This approach

enables us to develop direct relationships with clients’

businesses and share in their risks and rewards.

Becoming this sort of true business partner is one of

our aims under the new medium-term management

plan. Since last year, we have deepened our sense

of solidarity with the Panasonic Group in this way

while strengthening links on the business front.

Our IT solutions are employed in many of

Panasonic’s products and businesses, and we also

strive to create new value for Panasonic.*Revenue sharing methodRather than outsourcing agreements based on set payments, under this arrangement we work as partners in a project, sharing risk with our clients. The revenue generated through mutual cooperation is shared between us according to a predetermined ratio.

Maki OkajimaVice President and Representative Director

The Panasonic Group is our largest client, accounting

for 80% of sales. In the past, we have contributed to the

Panasonic Group by using IT to improve the efficiency of

its business processes.

Going forward, we will accelerate efforts to link products

and IT solutions (see page 10), contributing to the

Panasonic Group on the business front. This approach

should foster stronger and deeper relationships.

The Group will make the investments necessary to achieve

this growth and development, while at the same time

maintaining our capacity to earn high profits. Consequently,

we expect to further enhance corporate value.

As an IT service business, cultivating human resources

is an important part of enhancing our value, as people are

the resources essential to an IT services company. Well

aware of that fact, we cultivate employees who are not

only accomplished on the technical front but also have

strong people skills. By developing human resources who

contribute to client management, we aim to go beyond

satisfying customers, to delighting them.

We will persevere with initiatives designed to maintain

our capacity to earn high profits. During the fiscal year

ended March 31, 2013, these efforts led to a record-

high 12.6% ratio of operating income to net sales. Going

forward, we will make thorough use of leading-edge IT

technologies as we pursue rationalization and streamlining

by cultivating expertise and putting it into practice.

Contributing to Our Largest Client’s Business Processes and Businesses

Reinforce Partnerships with the Panasonic Group


23,789 23,045 22,155 22,244 22,009

（Millions of Yen / %）Net Sales/Gross Margin

2009 2010 2011 2012 2013

20.3 20.7 19.9 20.7

23.2

Net Sales (Millions of Yen)Gross Margin (%)

System Services ● System operation services at data centers● Cloud services● Network services

In an era when swift and accurate decisions determine the course of corporate management, information systems are essential to business continuity and their operation is extremely important.

From two data center locations, the Osaka IDC and Osaka Central Data Center, the Group maintains the safety and security of customer systems while providing operation services that meet customer needs, through cloud and other services.

Hisashi KuronoManaging Director

Business Overview

Business Model

System proposal

System Services

System Solutions

System and Communications Equipment*

● System operation services at data centers● Cloud services● Network services

● Core system architecture solutions● IT infrastructure architecture solutions● Commissioned system development● Development and provision of package software

● Sales of computers, servers, and communications equipment● Network and facility construction

Solution proposal

New customers

Enhancing Stock-Typed Business

Offering Multivendor Services

Build stronger relationships

Existingcustomers

The Year in Review

During the year, Japanese companies made increased use of data centers as one aspect of their disaster countermeasures and electricity conservation measures. In addition, from the standpoint of IT investment restraints and convenience, the use of cloud services has become a typical element of IT strategy.

In the general market, we acquired new large-scale projects, notably involving “Nextructure” and IT operation services. Operational efficiency at the Osaka Central Data Center thus increased, and the provision of disaster recovery services and high-value-added operation services led to increased sales. We also commenced business in the new domain of IT operations consulting.

Targeting the Panasonic Group, thoroughgoing efforts to improve the efficiency of IT infrastructure operations through IT collaboration contributed to cost reductions.

Outlook for the Upcoming Fiscal Year

Going forward, we expect Japanese companies to expand their use of cloud services to make use of advanced functions in diverse system domains.

In the general market, we will extend our offerings of private cloud services that have typically aimed at large companies, based on our mainstay ICT infrastructure service, “Nextructure.” We will offer a lineup of private cloud (middle range) and public cloud services targeting small and medium-sized companies, further enhancing our IT operations service and responding to diverse client needs.

Following on from infrastructure integration, we will begin offering a new vertical integration service for databases as an advanced reform solution. As a result, we aim to attract new customers and offer higher-value-added service to existing customers.

62.6%

22.1%

15.3%

Our

Cus

tom

ers

Breakdown of Net Sales




2009 2010 2011 2012 2013

7,5806,958

6,367

8,004 7,794

20.2 18.4

24.9

17.619.2



2009 2010 2011 2012 2013

6,6475,951 5,699 5,376

6,125

15.017.2 17.9 16.616.2



System Solutions

System and Communications Equipment*

● Core system architecture solutions● IT infrastructure architecture solutions● Commissioned system development● Development and provision of package software

● Sales of computers, servers, and communications equipment● Network and facility construction

With global competition growing increasingly fierce and the operating environment undergoing major changes as a result of advances in IT, the focus of corporate IT demand is shifting, from the enhancement of operational efficiency to contribution to management.

The Group meets the needs of these clients by proposing solutions that employ IT to address corporate transformation and s tructural reform.

The Group offers a multi-vendor approach to propose the most suitable system configurations for its customers. We leverage the track record we have cultivated over our long history of operations in Japan and overseas by testing every device on the market available for adoption. Based on our own experience, we confidently propose flexible combinations not tied to specific manufacturers.

Akira HisanoManaging Director

The Year in Review

In the general market, we targeted vigorous medium-sized companies with businesses tailored to specific industries and sectors. In the business of system integration for core functions, we created industry-specific templates for the medical equipment and telecommunications sectors, aiming to develop solutions that fit customers’ needs more precisely.

We also provided IT support for business startups by energetic customers in environmental businesses and those that are aiming for IPOs. Our sales of sales management solut ions for leisure facilities targeted operators of art museums, natural history museums, aquariums and amusement facilities. We combined our leisure facility ticketing system with the Panasonic Group’s products to maximize synergies and promote solutions.

The Year in Review

During the year, sales of stand-alone equipment dropped sharply, causing net sales to fall below the previous year’s level. Our gross margin rose year on year.


We expect the use of clouds to accelerate on a number of fronts and across a host of industries and sectors.

The Company strives to maintain high customer satisfaction through approaches ranging from proposing solutions to supporting IT operation to offering IT as a service. Specifically, we will propose a service model that connects directly to client businesses.

For instance, among our menu of solutions for leisure facilities we have begun offering new services to adjust usage fees depending on visitor numbers and charges that adjust to seasonal sales variations.

Going forward, we will propose service models that meet the business characteristics of such customers. We plan to offer a variety of new solutions that will lead to true customer satisfaction.


Smartphones and tablets have become essential items of business, and we expect multi-device compatibility to accelerate in line with business system reforms.

We plan to make proposals designed to meet customers’ needs, and we expect to maintain a high level of profitability as a result of these high-value-added offerings.

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*Owing to a change in the division of products handled, the system and communications equipment business has been combined into the system solutions business, effective from the fiscal year ending March 31, 2014.


Compliance (Corporate Ethics)

Corporate Citizenship Activities

Risk Management

Increasing Information Security and Quality

CSR

We hone our corporate sense of ethics, and have introduced

and are developing a corporate ethics program to conduct our

work on the basis of a shared conscientiousness, common

sense and a spirit of fairness and sincerity (corporate ethics

management).

■Corporate Ethics Program・Creating a Compliance Guidebook and distributing it to

ensure universal awareness

・Employing e-learning for thorough ethics training・Establishing a business ethics program promotion structure

centered on the Corporate Ethics Committee, chaired by

the president

・Establishing a corporate ethics hotline・Making submission of a commitment to corporate ethics

document mandatory for all employees

We encourage all our employees to take part in voluntary

corporate citizenship activities.

■Primary Activities・Recycling Activities (PET Bottle Cap Collection)・Fund-Raising Activities・Blood Donations and Bone Marrow Bank Registration・Community Cleanup Activities

We define risk as “factors that could impair efforts to achieve

our business plans” and “the gap between social expectations

and corporate reality,” and we conduct risk management

initiatives accordingly. These activities are also positioned as

one aspect of the Panasonic Group’s global and across-the-

Group risk management activities.

■Overview of Risk Management Activities・Creation of a companywide structure centered on the Risk

Management Committee, chaired by the president

・Formulation of business plans and related semi-annual risk management and monitoring of each division and related function

・Formulation of a business continuity plan (BCP) to counter the risk of large-scale natural disasters

The Company maintains a particular focus on the appropriate

management of information, which we recognize as an

important social responsibility. In addition, through ongoing

quality improvement efforts on both the operational and

developmental fronts, we are working to strengthen our

structure to ensure that customers feel comfortable entrusting

their information systems to us.

■Certifications Acquired・Privacy Mark (companywide)・ISO/IEC 27001 (companywide)・ISO/IEC 20000 (IDC division)・CMMI® Level 3 (development process)

As a member of the Panasonic Group, we have worked with the spirit of the words of its founder, Konosuke Matsushita: “An enterprise is a public institution” and “All for the customer.” This spirit serves as the origin of our corporate social responsibility (CSR) activities.

Based on the Panasonic Group management philosophy, we look beyond just complying with laws, ordinances and rules to conduct fair and honest business activities according to conscience and good sense. In addition, throughout our business activities we consistently strive for our customers advantages through IT.

As a Public Institution—Promoting CSR Activities through Our Services


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Tatsuo YoshikawaDirector

Shuichi TakazakiDirector

Nowadays, corporate social

responsibility and corporate

ethics are more important

than ever before.

Based on the philosophies of our founder, Konosuke

Matsushita, of “an enterprise is a public institution” and

“contributing to society through our business activities,”

the foundation of our activities is to contribute to society

through our core business of providing IT services.

The origin of our services is the pursuit of “All for the

customer,” and rather than being satisfied by customer

In manufacturing, the origin

of Panasonic’s business,

quality improvement requires

tireless dedication. We have

inherited this DNA, which in software development

is evident from our attention to process. We use the

CMMI® model for software development process

improvement to define directions and procedures and

create templates for administrative materials. Through

such efforts to document and standardize processes

throughout the organization, we continue making

improvements even today. We achieved CMMI® Level 3

CSR Initiatives

～ Remaining a Human Resource Cluster That Aims to Delight～

Efforts to Reinforce Quality

～ Carrying Forward Our Manufacturing DNA and Aiming for Further Improvements to Development and Operational Quality～

“satisfaction,” we aim to take a step beyond, to delight

them. To achieve this goal, it is of utmost importance

to recognize that while each of our employees is a free

individual, we share a sense of ethics and discipline,

acting as the “human resource cluster” that delights our

customers.

Remaining an organization of this nature requires

each of us to further hone his or her sense of ethics,

and we will act with a sense of individual responsibility

and seek to cultivate a transparent corporate culture.

To maintain and cultivate this sort of climate, we actively

promote CSR activities, conducting environmental

protection activities and social and community

contribution activities, observing compliance and

supporting volunteer activities.

in 2008 and 2011, and we are aiming for CMMI® Level 4

in 2014.

To ensure quality and reduce risk during upstream

software development, we hold sales discussion

review meetings and have established a PMO group

that monitors development projects and targets

overall optimization, auditing and systematizing priority

development projects. As a result, we have reduced

the number of issues affecting quality, cost and delivery

at the software development stage. Furthermore, we

continue to pursue operational quality improvement

based on ISO 20000, and the number of interruptions

to service operations has fallen.

We will continue in our initiatives to enhance quality,

to ensure that we provide high-quality solutions and

services that live up to the Panasonic Group name.


1. Business Execution and Supervision

2. Auditing

3. Controls

Corporate Governance

The Board of Directors meeting is held

regularly once a month and irregularly as

required to report on significant operating

policies, decisions on substantive matters,

and the execution of business and duties,

as well as statutory matters. Also, to

provide neutral and impartial supervision, two

of the eight directors are outside directors.

Ac tu a l bus i ne s s i s exe cu te d by

execut i ve d i rectors and execut ives

under the leadership of the president in

accordance with policies that have been

decided by the Board of Directors to

clarify the responsibility and to sufficiently

demonstrate supervisory functions. Also,

for the purpose of uniting the whole

Company as one through the discussion

and sharing of information necessary

for the smooth and rational execution of

business, we have established business

strategy meetings and management

study groups.

The Company’s auditing system is made

up of auditors and the Board of Auditors,

an interna l audi t uni t as wel l as an

accounting auditor, and is conducted as

follows: to implement a varied and effective

audit, each carries out the management

audit from a different point of view together

with appropriate coordination.

(1) Board of Auditors and

the Auditors’ Inspection

The Board of Auditors is comprised of

auditors, audit plans, methods and so

forth, and reports on the implementation

status of the audit. The audit is mostly

taken from the point of view of legality

and is conducted on operations and the

financial condition by auditors based on

plans determined by the Board of Auditors.

Auditors also attend important meetings

such as that of the Board of Directors and

give recommendations and advice from

an independent standpoint. To strengthen

the functions of the auditors, we also

established an audit office to support the

auditors’ professional duties, and we consult

with auditors regarding the assessment of

the office and its personnel changes.

(2) Internal Audit

The Company established the division

with the aim to execute fair and efficient

business and maintenance of an internal

check system to preempt and prevent

any fraudulences. The division conducts

its audit in line with the annual plan, and

the results are reported to the Board of

Directors.

(3) Accounting Auditor

Concerning the audit under the Companies

Act and F inanc ia l Ins truments and

Exchange Law, the Company has entered

into an audit contract with Deloitte Touche

Tohmatsu LLC.

We believe developing a sound business

and mainta ining customers’ trust in

our business are indispensible to the

growth of the Company, so with the

goal of establishing a regulated business

environment, we have assigned a board

member to take charge of internal controls

(CSRM*). We have also established such

groups as corporate ethics and information

security management committees that will

deploy concrete measures companywide

based on the content of discussions.*CSRM: Combining CSR (Corporate Social Responsibility) and Risk Management.

Officers of the Company (As of July 1, 2013)

Achieving Swift and Appropriate Decision Making and Supervisory and Auditing Functions, as well as Business Controls

Auditor Yuji Nakabayashi

Auditor Makoto Iwahashi*1,*2 (JFE Systems, Inc.)

Auditor Eiji Furusawa*1 (Panasonic Corporation)

Executive Officer Keisuke TanakaExecutive Officer Hajime OnishiExecutive Officer Takashi MaedaExecutive Officer Mitsuru MaekawaExecutive Officer Hiroyoshi Maruyama*1 Outside auditor*2 Appointed as an independent executive who meets the

requirement stipulated by the Tokyo Stock Exchange Group, Inc., that there be no danger of conflict of interest with general shareholders.


Kazuhiro MaegawaPresident and Representative Director

Shuichi TakazakiDirector

Maki OkajimaVice President and Representative Director

Tatsuo YoshikawaDirector

Akira HisanoManaging Director

Hisashi KuronoManaging Director

Takahiro NakagawaOutside Director(Panasonic Corporation)

Hidenori FurutaOutside Director(FUJITSU LIMITED)

Appointment and Dismissal

Appointment and Dismissal Appointment and Dismissal

Appointment and Dismissal

Cooperation

CooperationAccounting Audit

Audit

Assistance

Supervision / Instruction

Supervision / InstructionInstruction

Control

Control

Internal Audit

General Meeting of Shareholders

Board of Directors Auditors Room

Internal Audit Division (Auditing)

Business Strategy Meeting

Business Review Meeting

Director in Charge of CSRM and Internal Control

Company-wide CommitteeCorporate Ethics Committee,

Information Security Management Committee, Other Committee

Accounting Auditors

President

Executive Division

Executive Directors Executive Officers

Board of Auditors

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Board of Auditors Initiatives

Corporate governance is variously described as a “decision-

making framework for listed companies” and an “effective

system of checks and balances for managing a listed

company.” Like applying the brakes on an automobile

at certain times and pressing the accelerator at others,

corporate governance is designed to prevent misconduct and

keep management from going out of control on the one hand,

and on the other hand to encourage a company to develop

and augment its corporate performance. We believe that the

Board of Auditors is an organization designed to serve these

specific functions. The Company’s Board of Directors defines

its audit policy as “playing a role in corporate governance as

an independent body by fulfilling the duty of conducting audits

in accordance with laws and regulations, seeking to answer

the shareholders’ mandate through the effective verification

of internal control systems, striving to maintain or increase

the level of trust society places in us, and contributing to the

healthy development and sustainable growth of Panasonic

Information Systems Co., Ltd.” The Company’s Board of

Auditors comprises three auditors, two of whom are outside

auditors. In principle, the Board of Auditors meets once each

month. At these meetings, the board decides the division

of responsibilities among the auditors, reports on various

activities and provides information, conducts hearings of

various related parties, attends accounting audit reviews

given by the accounting auditor, and pre-screens Board of

Governance Structure

Directors proposals.

Auditors attend the

Board of Directors

meetings, and when

necessary comment

on deliberations from

their various specialized

viewpoints. Although

a u d i t o r s d o n o t

have voting rights at the Board of Directors meetings, we

believe that we do influence the deliberation of proposals.

The Company also appoints two outside directors, whose

proactive remarks at the Board of Directors meetings are

aimed at protecting the interests of general shareholders.

A draft outline of amendments to Japan’s Companies

Act was released in August 2012, which is slated for

enforcement following Diet deliberations, and revisions to

securities exchange regulations are also being considered.

In the interest of strengthening corporate governance and

protecting general shareholders, companies are being called

on to increase their level of supervision from external and

independent parties.

The Board of Auditors fully understands the purport of

these revisions, and we believe that the corporate governance

structure will require revision.

Auditor Yuji Nakabayashi (left) Makoto Iwahashi (center) Eiji Furusawa (right)


23,21125,146

27,31729,012

31,355(Millions of Yen)Total Assets

2009 2010 2011 2012 2013

(Millions of Yen)Equity

2009 2010 2011 2012 2013

17,604

19,65921,359

22,85924,838

(%)Equity Ratio

2009 2010 2011 2012 2013

75.7 78.2 78.2 78.879.2

1. Financial Position

2. Assets, Liabilities and Equity

Financial Section / Management’s Discussion and Analysis

Net Sales and Gross Profit

During the fiscal year ended March 31,

2013 (April 1, 2012 to March 31, 2013), the

Company concentrated on increasing

sales to customers outside the Panasonic

Group, as well as ef forts to create and

fortify its partnership with the Panasonic

Group with the aim of receiving orders for

systems. However, part of the IT system

reorganization project in line with the

Panasonic Group’s restructuring in January

2012 slipped into the year under review,

af fecting ef forts to secure new orders.

Accordingly, net sales declined 3.3% year

on year, to ¥35,179 million. Meanwhile, we

pushed forward on rationalization activities,

centered on system operation, in an effort to

enhance quality. Cost of sales consequently

fell 4.9%, to ¥27,805 million, and gross profit

increased 3.4%, to ¥7,374 million.

Selling, General and Administrative

Expenses

We continued working to hold down

costs and boost the efficiency of business

processes, while implementing sales

promotion measures aimed at future order

generation. As a result, selling, general and

administrative (SG&A) expenses rose 2.4%

from the preceding term, to ¥2,949 million.

The ratio of SG&A expenses to net sales

rose from 7.9% in the year ended March 31,

2013, to 8.4% during the year under review.

Operating Income and Income before

Income Taxes and Minority Interests

Operating income expanded 4.0% from

the previous term, to ¥4,425 million. The

operating margin amounted to 12.6%,

reaching a histor ic high. This f igure

stemmed from income before income taxes

and minority interests of ¥4,411 million, after

adding interest income (of ¥29 million) and

subtracting interest expense (of ¥13 million)

and other items.

Net Income

Net income rose 21.3% from the previous

fiscal year, to ¥2,702 million, after subtracting

total income taxes (of ¥1,709 million) from

income before income taxes and minority

interests of ¥4,411 million. The net margin

was 7.7%.

Assets

Current assets amounted to ¥25,730 million

as of March 31, 2013, up ¥3,431 million, or

15.4%, from a year earlier, due mainly to an

increase of ¥2,237 million in deposits paid

to Panasonic Corporation and others and

a rise of ¥713 million in notes and accounts

receivable–trade owing to increasing sales.

Net property and equipment totaled

¥3,306 million at year-end, down ¥708

million, or 17.6%, compared with March 31,

2012. This decrease was mainly attributable

to the depreciation of hardware and other

noncurrent assets.

Investments and other assets as of year-

end were ¥2,319 million, down ¥380 million,

or 14.0%, from a year earlier.

As a result of these factors, total assets

increased ¥2,343 million, or 8.1%, during the

year, to ¥31,355 million on March 31, 2013.

Liabilities

Current liabilities increased ¥578 million, or

10.1%, from one year earlier, to ¥6,295 million

as of March 31, 2013. The main reason for

this rise was a ¥406 million increase in notes

and accounts payable–trade, stemming

from the purchase of goods and equipment

in March 2013.

Due to factors such as progress in the

repayment of lease obligations, long-term

liabilities fell ¥214 million, or 49.1%, from the

end of the previous year, to ¥222 million.

Equity

At the end of the fiscal year, total equity

was ¥24,838 million, up ¥1,979 million, or

8.7%, from a year earlier, due to a ¥2,009

million rise in retained earnings.


(%)ROE

2009 2010 2011 2012 2013

16.8

13.812.6

10.111.3

(%)ROA

2009 2010 2011 2012 2013

21.3

18.2

16.315.2 14.6

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3. Cash Flows

4. Forecast for the Fiscal Year Ending March 31, 2014

7. Capital Investment

6. Research and Development

5. Order Backlog

ROE/ROA

Return on equity (ROE) for the year was

11.3%, due to the rise in net income.

Re tu rn on asse ts (ROA), howeve r,

amounted to 14.6%, owing to the increase

in total assets.

Cash Flows from Operating Activities

Net cash provided by operating activities

amounted to ¥4,670 million, ¥836 million

more than in the preceding year. Principal

factors include cash provided by income

before income taxes and minority interests

of ¥4,411 million, and depreciation and

amortization of ¥1,817 million. Income

taxes paid used ¥1,888 million.

Cash Flows from Investing Activities

Net cash used in investing activ it ies

was ¥12,299 mil l ion, compared with

¥6 ,9 0 8 m i l l i o n p rov i d e d by t h e s e

activities in the previous term. Primary

reasons included net deposits paid to

Panasonic Corporation of ¥11,000 million

and payments of ¥1,232 million for the

purchases of property and equipment.

Cash Flows from Financing Activities

During the year, net cash used in financing

activities totaled ¥940 million, ¥37 million

more than was used in these activities in

the preceding fiscal year. The principal uses

of cash were dividends paid of ¥693 million

and ¥247 million for the repayment of lease

obligations.

Free Cash Flows

The aforement ioned operat ing and

investing activities resulted in negative free

cash flows of ¥7,629 million, compared

with positive free cash flows of ¥10,742

million in the previous year.

The Company’s forecast of consolidated

operating performance for the fiscal year

ending March 31, 2014 (April 1, 2013 to

March 31, 2014) is shown below.

2013(Millions of Yen)

2014(Millions of Yen)

Year-on-YearIncrease

(%)

Net sales 35,179 36,000 2.3

Operating income 4,425 4,450 0.6

Net income 2,702 2,720 0.7

As of March 31, 2013, our order backlog

stood at ¥2,597 million, up 16.2% from a

year earlier. This rise stemmed from an

increase in orders for system development

projects related to the new growth strategy

of the Panasonic Group, centering on

Panasonic Corporation Eco Solutions

Company.

The Group’s research and development

activities are mainly conducted at its R&D

Center. During the fiscal year ended March

31, 2013, R&D expenditures amounted

to ¥135 million, largely for verifying the

functionality of new technologies and

commercial licenses.

The recently formulated Medium-Term

Management Plan prioritizes R&D on

new businesses and the creation of new

technologies. Accordingly, we anticipate an

investment of ¥500 million over the three

years of the plan.

Capital investment in the year to March 31,

2013, amounted to ¥893 million. Principal

investments were for the acquisition of

mainframes and various other hardware,

and for the development of an integrated IT

asset management system.


Risks Related toEconomic Conditions

Risks Related to the Group’s Business Activities

Risks Related to Legal Restrictions and Litigation

Risks Related to Future Plans, etc.

Financial Section / Risk Factors

Items in this annual report concerning business conditions and financial conditions that may strongly affect investor decisions include the following risks. However, these do not cover all risks with respect to the Group and there may be other hard-to-predict risks not detailed in the material. The Group's business, performance and financial status may be adversely affected by various significant risk factors. Items regarding the future were determined by the Group as of the financial statement filing date (June 24, 2013).

I

Fluctuations in the Economic EnvironmentDemand for the Group’s products and serv ices may be affected by genera l economic trends mainly in Japan. Economic downturns and resulting declines in demand in the Japanese market may thus adversely affect the Group’s f inancial condit ion, operating results and cash flows.

Interest Rate FluctuationsIn terest rate f luctuat ions may affect operating expense, interest expense and interest income, as well as the value of financial assets and liabilities, and may have an adverse impact on the Group’s business, performance and financial position.

Stock Price FallsThe Group holds Japanese stocks as investment securities, and decreases in their market value may necessitate the recognition of valuation losses. Furthermore, a decline in the valuation difference on available-for-sale securities may reduce net assets.

Competitive EnvironmentThe Group faces d i f f e ren t t ypes o f competitors in the information services industry, ranging from large international companies to relatively small, rapidly growing companies. The Group actively makes investments and takes initiatives in strategic products and services. However, investments or sales initiatives for a particular product or service may fail in comparison with

competitors in terms of quantity, quality and speed. Furthermore, competitors may have greater financial, technological and marketing resources than the Group.

Price CompetitionThe Group is subject to intense price competition in the information services industry, and this may make it difficult for the Group to determine prices for products and services to secure adequate profits. This downward pressure on prices may have a serious effect on the Group’s profits, and becomes especially noticeable when demand for products and services decreases.

Competition in New TechnologiesThe Group may lose the ability to compete in new markets if it fails to correctly predict and develop the new technologies, products and services to meet future market needs.

Securing Capable Human ResourcesThe Group’s future success depends largely on its ability to retain skilled employees in the technical and management fields. The Group expects that it will be necessary to hire more personnel in the information serv ices bus iness f ie ld, but industry demand for skilled employees exceeds the supply, making competition for attracting and retaining these employees intense. Because of this severe competition for skilled employees, the Group may be unable to retain existing personnel or attract new talent. If this should happen, the Group’s business, performance and financial position could be adversely affected.

Business Alliances with Other Companies, etc.The Group develops its business by forming all iances with or strategic investments in other companies, and the strategic importance of partnering with third parties is increasing. In some cases, such partnerships are crucial to achieving the Group’s goal of introducing new products and services, but the Group may not be able to successfully collaborate or achieve expected synergies with its partners. In addition, these partners may change their business strategies and it may become difficult for the Group to maintain these business partnerships. If any

of the foregoing should happen, the Group’s businesses, performance and financial status could be adversely affected.

Procurement of Raw Materials, etc., and Purchase Price SurgesThe Group’s opera t ions depend on obtaining high-quality products and services in a timely manner and in the necessary quantities, and we therefore select reliable suppliers. However, it may be difficult to change or increase suppliers, or switch to other products and services if the supply is interrupted or industry demand increases. This may adversely affect the Group’s businesses. Moreover, although the Group and suppliers decide purchase prices by contract, purchase prices may increase significantly due to changes in demand or for other reasons. Furthermore, some products and services are only available from a limited number of suppliers. If the Group is unable to procure such products and services, its businesses, performance and financial status may be adversely affected.

Capital Status and Financial Conditions of CustomersSome of the Group’s customers purchase products and services from the Group on payment terms that do not provide for immediate payment. If customers for whom the Group has substantial accounts receivable encounter financial difficulties and are unable to make payments on time, the Group’s businesses, performance and financial status may be adversely affected.

The Group has announced its new medium-term management plan, which covers the period from April 1, 2013 through March 31, 2016 and an earnings forecast for the fiscal year ending March 31, 2014. However, the Group may fail to achieve all of the goals announced and/or the expected results.

Direct or Indirect Costs Related to Product Liability or Warranty Claims Due to Defects in Products or Services The Group pays due attention to ensuring

2.Assets, Liabilities and Net Assets


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Risks Related to Disasters or Unpredictable Events

Other Risks

the quality of its products and services. However, the occurrence of defects in products or services could make the Group liable for damages, including indirect damages, that are not completely covered by liability insurance and the Group could incur significant expenses. Moreover, negative publicity concerning these problems could impair the Group’s corporate image, and the Group’s businesses, performance and financial status may be adversely affected.

Intellectual Property Right ProtectionThe Group works to secure a competitive edge for its businesses by protecting intellectual property rights (IPRs) related to the technologies, products and services it develops. However, rights may not be granted to provide adequate protection based on IPRs.

Furthermore, the Group may be unable to use or be forced to use on disadvantageous terms the technologies, products and services of third parties protected by IPRs when needed. As of March 31, 2013, the Group was using the IPRs of third parties under license from third parties for some of its products and services. However, in the future the Group may not be able to obtain the necessary licenses from third parties or may be able to obtain licenses only under disadvantageous terms.

Lit igation may also be necessary to defend the Group against IPR infringement claims brought by third parties or to enforce the Group’s IPRs. The Group may incur significant expenses and use significant management resources for such lawsuits. Furthermore, if third-party claims that the Group infringed on IPRs are upheld, the Group may cease to be able to use specific technologies, products and/or services, or be able to supply specific technologies, products and/or services, and may be liable for significant damages.

Changes in Account Standards and Tax SystemsThe Group’s business, performance and financial status may be adversely affected by the unforeseen appl icat ion of new accounting standards and tax systems. Furthermore, differences in views with tax authorities on the Group’s tax returns could result in the Group being liable for more taxes than expected.

Information LeaksIn the normal course of business, the Group obtains information (including personal information) about customers and the like relating to privacy and creditworthiness. The Group pays due attention to safeguarding the confidentiality of this information and has implemented the greatest possible measures to prevent information leaks. However, the Group cannot rule out the possibility that such information may be leaked due to an accident or other inevitable cause. Such a leakage of information may result in the Group being held liable for damages to affected parties and may impair the Group’s corporate image. Moreover, there is a risk that the Group’s trade secrets may be misused by external parties. In such a case, the Group’s businesses, performance and financial status may be adversely affected.

Losses Due to Other Legal Restrictions, etc.The Group is subject to governmental regulations in Japan and other countries and regions in which it conducts its business. These include government approvals required for conducting business and investments, laws and regulations governing national security, and export/import laws and regulations, as well as commercial, antitrust, intellectual property, financial transactions, worker protection, subcontractor protection, and business taxation laws and regulations. Tighter laws and regulations or stricter interpretations of them than in the past by authorities could place restrictions on the Group’s businesses or result in increased expenses for complying with them. The Group has taken measures to ensure that it is prepared to handle a compliance violation or other emergency through such efforts as establishing networks of emergency contacts and organizational bodies responsible for responses. However, the Group’s corporate image could be impaired and the Group’s businesses, performance and financial status could be adversely affected if its response is inadequate.

Effects of Disasters or Unpredictable EventsThe headquarters and major bases of the Group are located in Japan. The occurrence of a natural disaster such as an earthquake, flood or other unexpected event such as a fire, war or terrorist attack, infectious disease outbreak, industrial accident,

malicious computer virus, breakdown or malfunction in the Group’s information system or communications network as a result of such events may result in serious damage to Group facilities, and the Group may have to stop operations at certain facilities and delay the provision of products and services.

The Group may incur considerable expenses for restoring damaged facilities, which could adversely affect the Group’s businesses, performance and financial position.

Pension LiabilitiesThe Group has contributory, funded benefit pension plans covering substantially all employees in Japan who meet eligibility requirements. Revisions to experience assumptions and pension asset performance could result in an increase in unrecognized actuarial losses, leading to an increase in future net periodic benefit costs of these pension plans.

Fixed Asset ImpairmentThe Group has many fixed assets, such as property and equipment. All Group companies periodically review the recorded value of fixed assets on the balance sheets to determine if future cash flows to be derived from these assets will be sufficient to recover the residual values in accordance with accounting standards governing the impairment of fixed assets. If these assets cannot generate sufficient cash flows, impairment losses may have to be recognized.

Recognizing Uncertainties in Deferred Tax Assets and Income Taxes, etc.The Group evaluates the l ikel ihood of recognizing the tax benefits of deferred tax assets, based on taxable income forecasts and the evaluation of uncertainty, in considering the recoverability of deferred tax assets and evaluation of income tax uncertaint ies. However, deter iorat ing economic conditions, tax audits and other factors may result in temporary variances and net losses being carried forward beyond the period during which tax benefits can be recognized. In such a case, the Group would be required to recognize greater taxable income than had been anticipated, resulting in the possibility of higher corporate taxes.


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

2013 2012 2013

Current Assets:

Cash and deposits (Notes 3 and 13) ¥ 269 ¥ 176 $ 2,862Accounts receivable - trade (Notes 13 and 15) 7,582 6,869 80,660Inventories (Note 4) 383 152 4,074Deposits paid (Notes 3, 13, and 15) 16,236 13,999 172,723Deferred tax assets (Note 10) 498 408 5,298Other current assets (Note 15) 762 695 8,106

Total current assets 25,730 22,299 273,723

Property and Equipment:

Buildings 969 947 10,309Tools, furniture, and fixtures 7,766 6,629 82,617Lease assets (Note 12) 712 802 7,574Construction in progress 143 746 1,521

Total 9,590 9,124 102,021Accumulated depreciation (6,284) (5,110) (66,851)

Net property and equipment 3,306 4,014 35,170

Investments and Other Assets:

Investment securities (Notes 5 and 13) 231 279 2,457Goodwill (Note 6) 13 29 138Software 435 586 4,628Development cost of software in progress 52 56 553Long-term deposits paid 252 254 2,681Long-term prepaid expenses 600 550 6,383Prepaid pension cost (Note 8) 680 844 7,234Deferred tax assets (Note 10) 42 24 447Other assets (Note 12) 14 83 150Allowance for doubtful receivables (0) (6) (0)

Total investments and other assets 2,319 2,699 24,671

Total ¥31,355 ¥29,012 $333,564See notes to consolidated financial statements.

Consolidated Balance Sheet Panasonic Information Systems Co., Ltd. and consolidated subsidiariesAs of March 31, 2013


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

2013 2012 2013

Current Liabilities:

Accounts payable - trade (Notes 13 and 15) ¥ 2,253 ¥ 1,847 $ 23,968Accounts payable - other (Notes 13 and 15) 1,659 1,555 17,649Income taxes payable (Note 13) 948 1,015 10,085Consumption taxes payable 259 121 2,755Deposits received (Note 7) 18 7 191Accrued expenses 858 853 9,128Other current liabilities (Note 12) 300 319 3,192

Total current liabilities 6,295 5,717 66,968

Long-Term Liabilities:

Long-term deposits received (Note 7) 35 44 373Deferred tax liabilities (Note 10) ̶ 23 ̶Long-term lease obligations (Notes 12 and 13) 176 362 1,872Liability for retirement benefits (Note 8) 11 7 117

Total long-term liabilities 222 436 2,362

Commitments Liabilities (Note 12)

Equity (Notes 9 and 16):

Common stock -

authorized：40,000,000 shares; issued ：10,656,000 shares 1,040 1,040 11,064Capital surplus 871 871 9,266Retained earnings 22,900 20,891 243,617Treasury stock - at cost

372 shares in 2013 and 320 shares in 2012 (1) (1) (11)Accumulated other comprehensive income -

Unrealized gain on available-for-sale securities 28 58 298

Total equity 24,838 22,859 264,234

Total ¥31,355 ¥29,012 $333,564


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

2013 2012 2013

Net Sales (Note 15) ¥35,179 ¥36,373 $374,245

Cost of Sales (Notes 11 and 15) 27,805 29,238 295,798Gross profit 7,374 7,135 78,447

Selling, General and Administrative Expenses (Notes 11 and 15) 2,949 2,880 31,373Operating income 4,425 4,255 47,074

Other Income (Expenses):

Interest income (Note 15) 29 58 309Interest expense (13) (14) (138)Restructuring expense ̶ (451) ̶Other - net (30) (6) (319)

Other expense - net (14) (413) (148)

Income before Income Taxes and Minority Interests 4,411 3,842 46,926

Income Taxes (Note 10):

Current 1,823 1,808 19,394Deferred (114) (193) (1,213)

Total income taxes 1,709 1,615 18,181

Net Income before Minority Interests 2,702 2,227 28,745

Net Income 2,702 2,227 28,745

Net Income before Minority Interests 2,702 2,227 28,745

Other Comprehensive Income (Note 14)

Unrealized gain on available-for-sale securities (30) (34) (319)

Comprehensive Income (Note 14) ¥ 2,672 ¥ 2,193 $ 28,426

Total Comprehensive Income Attributable to (Note 14):

Owners of the parent 2,672 2,193 28,426Minority interests ̶ ̶ ̶

Yen U.S. Dollars

Per Share of Common Stock (Notes 2.o and 16):

Basic net income ¥253.56 ¥209.02 $ 2.70Cash dividends applicable to the year 65.00 65.00 0.69

See notes to consolidated financial statements.

Consolidated Statement of Income and Comprehensive Income

Panasonic Information Systems Co., Ltd. and consolidated subsidiariesYear Ended March 31, 2013


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Millions of Yen

Number of Shares of

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Accumulated Other Comprehensive

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CapitalSurplus

RetainedEarnings

Treasury Stock

Unrealized Gain on Available-for-sale

SecuritiesTotal

Equity

Balance, April 1, 2011 10,656,000 ¥1,040 ¥871 ¥19,356 ¥(0) ¥92 ¥21,359

Net income ̶ ̶ ̶ 2,227 ̶ ̶ 2,227

Cash dividends, ¥65 per share ̶ ̶ ̶ (692) ̶ ̶ (692)

Purchase of treasury stock ̶ ̶ ̶ ̶ (1) ̶ (1)

Net changes in the year ̶ ̶ ̶ ̶ ̶ (34) (34)

Balance, March 31, 2012 10,656,000 ¥1,040 ¥871 ¥20,891 ¥(1) ¥58 ¥22,859

Net income ̶ ̶ ̶ 2,702 ̶ ̶ 2,702

Cash dividends, ¥65 per share ̶ ̶ ̶ (693) ̶ ̶ (693)

Purchase of treasury stock ̶ ̶ ̶ ̶ (0) ̶ (0)

Net changes in the year ̶ ̶ ̶ ̶ ̶ (30) (30)

Balance, March 31, 2013 10,656,000 ¥1,040 ¥871 ¥22,900 ¥(1) ¥28 ¥24,838

Thousands of U.S. Dollars (Note 1)

Accumulated Other Comprehensive

Income

CommonStock

CapitalSurplus

RetainedEarnings

Treasury Stock

Unrealized Gain on Available-for-sale

SecuritiesTotal

Equity

Balance, March 31, 2012 $11,064 $9,266 $222,244 $(11) $ 617 $243,180

Net income ̶ ̶ 28,745 ̶ ̶ 28,745

Cash dividends, $0.69 per share ̶ ̶ (7,372) ̶ ̶ (7,372)

Purchase of treasury stock ̶ ̶ ̶ (0) ̶ (0)

Net changes in the year ̶ ̶ ̶ ̶ (319) (319)

Balance, March 31, 2013 $11,064 $9,266 $243,617 $(11) $ 298 $264,234See notes to consolidated financial statements.

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Annual Report 2013 - パナソニックインフォメーションシス …Annual Report 2013...

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Annual Report 2013 - パナソニック インフォメーションシス …Annual Report 2013...

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Transcript of Annual Report 2013 - パナソニック インフォメーションシス …Annual Report 2013...

Annual Report 2013 - パナソニックインフォメーションシス …Annual Report 2013...

Transcript of Annual Report 2013 - パナソニックインフォメーションシス …Annual Report 2013...