Panasonic 2010 Annual Report Download - page 53

Once a year, Panasonic implements a Groupwide risk assessment survey to identify potential risks in an
integrated and comprehensive manner. By identifying, evaluating and prioritizing these risks, Panasonic specifies
risks at 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, Panasonic 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 Panasonic’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
Demand for Panasonic’s products and services may be
affected by general economic trends in the countries or
regions in which Panasonic’s products and services are sold.
Economic downturns and resulting declines in demand in
Panasonic’s major markets worldwide may thus adversely
affect the Company’s business, operating results and financial
condition. Triggered by the financial crisis in fiscal 2009,
Panasonic’s business environment rapidly deteriorated due to
declines in global consumption and business activities and due
to intensified price competition. Regarding the business envi-
ronment for fiscal 2011, ending March 31, 2011, the Company
currently anticipates market conditions to remain unpredictable
due to various factors including the yen’s appreciation and
ever-intensified global competition, despite a gradually recov-
ering global economy. Panasonic may 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
Panasonic’s operating results
Foreign exchange rate fluctuations may adversely affect
Panasonic’s business, operating results and financial condi-
tion, 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
Panasonic’s investments in overseas assets and liabilities
because Panasonic’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 Panasonic’s operating results.
Meanwhile, a depreciation of the yen against the aforemen-
tioned major currencies may have a favorable impact on
Panasonic’s operating results. The global financial crisis,
which occurred in 2008, caused the rapid appreciation of the
yen against other major currencies, which adversely and sig-
nificantly affected Panasonic’s operating results in fiscal 2009
and fiscal 2010. 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 Panasonic’s
financial condition, etc.
Panasonic 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.
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 Panasonic’s financial results
Panasonic holds mostly Japanese stocks as part of its invest-
ment securities. The value of such stocks has dropped signifi-
cantly due to the world financial crisis and the recession in
Japan in fiscal 2009, causing Panasonic to record losses on
the valuation of its investment securities in fiscal 2009 and
fiscal 2010. Further decreases in the value of stocks may
cause additional losses due to decreases in the valuation of
investment securities, thereby adversely affecting Panasonic’s
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Panasonic Corporation 2010
Risk Factors