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<TITLE>PIONEER CORPORATION</TITLE>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
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<DIV align="center" style="font-size: 14pt; margin-top: 3pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>WASHINGTON, D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 6pt"><B>FORM 20-F</B>
</DIV>

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    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)<BR>
OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
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</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>OR</B></DIV>

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    <TD align="center"><FONT face="Wingdings">&#254;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)<BR>
OF THE SECURITIES EXCHANGE ACT OF 1934<BR><BR>
For the fiscal year ended March&nbsp;31, 2005</B></TD>
</TR>
</TABLE>
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<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>OR</B></DIV>

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    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)<BR>
OF THE SECURITIES EXCHANGE ACT OF 1934
</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>OR</B></DIV>

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    <TD width="7%">&nbsp;</TD>
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    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)<BR>
OF THE SECURITIES EXCHANGE ACT OF 1934<BR><BR>
Date of event requiring this shell company report ________________________<BR><BR>
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).&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes&nbsp;<FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No&nbsp;<FONT face="Wingdings">&#254;</FONT></B></TD>
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<DIV align="center" style="font-size: 10pt; margin-top: 6pt">Commission file number 1-7616</DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 6pt"><B><U>PIONEER KABUSHIKI KAISHA</U></B>
</DIV>

<DIV align="center" style="font-size: 10pt">(Exact name of Registrant as specified in its charter)</DIV>


<DIV align="center" style="font-size: 24pt; margin-top: 6pt"><B><U>PIONEER CORPORATION</U></B>
</DIV>

<DIV align="center" style="font-size: 10pt">(Translation of Registrant&#146;s name into English)</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><U><B>JAPAN</B></U><BR>
(Jurisdiction of incorporation or organization)</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><U><B>4-1, MEGURO 1-CHOME, MEGURO-KU, TOKYO 153-8654, JAPAN</B></U><BR>
(Address of principal executive offices)</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt">Securities registered pursuant to Section&nbsp;12(b) of the Act.</DIV>

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<TR valign="bottom">
    <TD align="center" valign="bottom">Title of each class
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Name of each exchange on which registered</TD>
</TR>
<TR style="font-size: 1px">
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
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<TR style="font-size: 3pt"><!-- Blank Space -->
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
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    <TD align="center" valign="top">Common Stock, each represented by<BR>
one American Depositary Share
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">New York Stock Exchange</TD>
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<DIV align="center" style="font-size: 10pt; margin-top: 9pt">Securities registered pursuant to Section&nbsp;12(g) of the Act.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt">None</DIV>

<DIV align="center" style="font-size: 10pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 1pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV></DIV>


<DIV align="center" style="font-size: 10pt">(Title of Class)</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt">Securities for which there is a reporting obligation pursuant to<BR>
Section&nbsp;15(d) of the Act.</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt">None</DIV>

<DIV align="center" style="font-size: 10pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 1pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV></DIV>


<DIV align="center" style="font-size: 10pt">(Title of Class)</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 3pt">Indicate the number of outstanding shares of each of the issuer&#146;s classes of capital or common
stock as of the close of the period covered by the annual report.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
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    <TD width="47%">&nbsp;</TD>
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<TR valign="bottom">
    <TD align="center" valign="bottom">Title of class
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Outstanding as of<BR>
March&nbsp;31, 2005<BR>
(Japan time)</TD>
</TR>
<TR style="font-size: 1px">
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 3pt"><!-- Blank Space -->
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">Common Stock
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">174,428,646</TD>
</TR>
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</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 3pt">Indicate by check mark whether the registrant (1)&nbsp;has filed all reports required to be filed by
Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12&nbsp;months (or for
such shorter period that the registrant was required to file such reports), and (2)&nbsp;has been
subject to such filing requirements for the past 90&nbsp;days.
</DIV>
<DIV align="center" style="font-size: 10pt; margin-top: 3pt">Yes <FONT face="Wingdings">&#254;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No <FONT face="Wingdings">&#111;</FONT></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 3pt">Indicate by check mark which financial statement item the registrant has elected to follow.
</DIV>
<DIV align="center" style="font-size: 10pt; margin-top: 3pt">Item&nbsp;17 <FONT face="Wingdings">&#254;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item&nbsp;18 <FONT face="Wingdings">&#111;</FONT></DIV>


<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>



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<A name="tocpage"></A>
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<DIV align="center" style="font-size: 10pt; margin-top: 18pt">TABLE OF CONTENTS
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    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#101">Certain Defined Terms</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
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    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#102">Cautionary Statement with Respect to Forward-Looking Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
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    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#103">PART I</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#104">Item&nbsp;1. Identity of Directors, Senior Management and Advisers</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#105">Item&nbsp;2. Offer Statistics and Expected Timetable</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#106">Item&nbsp;3. Key Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#107">Item&nbsp;4. Information on the Company</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#108">Item&nbsp;5. Operating and Financial Review and Prospects</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#109">Item&nbsp;6. Directors, Senior Management and Employees</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#110">Item&nbsp;7. Major Shareholders and Related Party Transactions</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#111">Item&nbsp;8. Financial Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#112">Item&nbsp;9. The Offer and Listing</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#113">Item&nbsp;10. Additional Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#114">Item&nbsp;11. Quantitative and Qualitative Disclosures About Market Risk</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#115">Item&nbsp;12. Description of Securities Other than Equity Securities</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#116">PART II</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#117">Item&nbsp;13. Defaults, Dividend Arrearages and Delinquencies</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#118">Item&nbsp;14. Material Modifications to the Rights of Security Holders and Use of Proceeds</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#119">Item&nbsp;15. Controls and Procedures</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#120">Item&nbsp;16. &#091;Reserved&#093;</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#121">Item&nbsp;16A. Audit Committee Financial Expert</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#122">Item&nbsp;16B. Code of Ethics</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#123">Item&nbsp;16C. Principal Accountant Fees and Services</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#124">Item&nbsp;16D. Exemptions from the Listing Standards for Audit Committees</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#125">Item&nbsp;16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#126">PART III</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#127">Item&nbsp;17. Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#128">Item&nbsp;18. Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#129">Item&nbsp;19. Exhibits</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92</TD>
    <TD>&nbsp;</TD>
</TR>
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<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k00993exv1w01.htm">EX-1.01 REGULATIONS OF THE BOARD OF DIRECTORS, AS AMENDED AND CURRENTLY IN EFFECT</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k00993exv1w02.htm">EX-1.02 REGULATIONS OF THE BOARD OF CORPORATE AUDITORS, AS AMENDED AND CURRENTLY IN EFFECT</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k00993exv2w01.htm">EX-2.01 SHARE HANDLING REGULATIONS, AS AMENDED AND CURRENTLY IN EFFECT</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k00993exv12w01.htm">EX-12.01 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k00993exv12w02.htm">EX-12.02 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k00993exv13w01.htm">EX-13.01 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</A></FONT></TD></TR>
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">3
</DIV>

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<DIV align="left">
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</DIV>
<DIV align="left">
<A name="101"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Certain Defined Terms</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As used herein, the term &#147;Pioneer&#148; refers to Pioneer Corporation, the registrant, and &#147;we&#148;
and &#147;our&#148; refer to Pioneer and its consolidated subsidiaries as a group, unless the context
otherwise indicates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">References in this annual report to fiscal years refer to the 12-month periods ended March&nbsp;31
of each calendar year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Billion is used in the American sense of one thousand million.
</DIV>
<DIV align="left">
<A name="102"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Cautionary Statement with Respect to Forward-Looking Statements</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Statements made in this annual report with respect to our current plans, estimates, strategies and
beliefs, and other statements that are not historical facts are forward-looking statements about
our future performance. Forward-looking statements include but are not limited to those statements
using words such as &#147;believe,&#148; &#147;expect,&#148; &#147;intend,&#148; &#147;plan,&#148; &#147;aim,&#148; &#147;forecast,&#148; &#147;estimate,&#148;
&#147;project,&#148; &#147;anticipate,&#148; &#147;strategy,&#148; &#147;prospects,&#148; &#147;may,&#148; &#147;might&#148; or &#147;will&#148; and words of similar
meaning in connection with a discussion of future operations, financial performance, events or
conditions. From time to time, oral or written forward-looking statements may also be included in
other materials released to the public. These statements are based on our management&#146;s assumptions
and beliefs in light of the information currently available to it. We caution that a number of
important risks and uncertainties could cause actual results to differ materially from those in the
forward-looking statements, and therefore you should not place undue reliance on them. You also
should not believe that it is our obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise. We disclaim any such
obligation. Risks and uncertainties that might affect us include, but are not limited to, (i)
general economic conditions in the markets in which we sell our products, particularly levels of
consumer spending; (ii)&nbsp;exchange rates, particularly between the yen and the U.S. dollar, euro, and
other currencies in which we make significant sales or in which our assets and liabilities are
denominated; (iii)&nbsp;our ability to continue to design and develop and win acceptance of our products
and services, which are offered in highly competitive markets characterized by continual new
product introductions, rapid developments in technology, severe price competition and subjective
and changing consumer preferences; (iv)&nbsp;our ability to implement successfully our business
strategies; (v)&nbsp;our ability to compete and develop and implement successful sales and distribution
strategies in light of technological developments in and affecting our businesses; (vi)&nbsp;our
continued ability to devote sufficient resources to research and development, and capital
expenditure; (vii)&nbsp;our ability to continuously enhance our brand image; (viii)&nbsp;the success of our
joint ventures and alliances; and (ix)&nbsp;the outcome of contingencies.
</DIV>
<DIV align="left">
<A name="103"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART I</B>
</DIV>

<DIV align="left">
<A name="104"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;1. Identity of Directors, Senior Management and Advisers</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>
<DIV align="left">
<A name="105"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;2. Offer Statistics and Expected Timetable</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>

<P align="center" style="font-size: 10pt">4
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="106"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;3. Key Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>A. Selected financial data</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table presents selected consolidated financial data as of the dates and for the
periods indicated. We derived the consolidated statements of operations data for each of the three
years in the period ended March&nbsp;31, 2005 and the consolidated balance sheet data as of March&nbsp;31,
2004 and 2005 from our audited consolidated financial statements included elsewhere herein. We
derived the consolidated statement of operations data for each of the two years in the period ended
March&nbsp;31, 2002 and the consolidated balance sheets data as of March&nbsp;31, 2001, 2002 and 2003 from
our audited consolidated financial statements which are not included herein. Our audited
consolidated financial statements are prepared in accordance with accounting principles generally
accepted in the United States of America (&#147;U.S. GAAP&#148;), except for segment data which is prepared
in accordance with the regulations under the Securities and Exchange Law of Japan.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000">Year ended March 31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2001</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2002</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2003</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18">(In millions of yen, except per share data)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Consolidated Statements of Operations Data:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating revenue (Note 4) (Note 5)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">610,171</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">629,777</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">677,259</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">700,885</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">733,648</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;from continuing operations
before income taxes (Note 5)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,216</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,472</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,079</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,848</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(187</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;from discontinued operations,
net of tax (Note 5)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(53</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">565</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,475</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,298</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,047</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,078</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,789</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Per share of common stock and
per American Depositary Share (ADS):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Income (loss)&nbsp;from continuing operations:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41.56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89.48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(50.11</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89.48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(50.11</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net income (loss):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101.76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">141.58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(50.11</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">140.52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(50.11</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Consolidated Balance Sheets Data:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">605,156</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">645,129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">647,029</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">722,542</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">725,167</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Short-term borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,571</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,867</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,893</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,152</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current portion of long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,996</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,551</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">974</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,510</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,276</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term debt, less current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,677</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,196</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89,691</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81,219</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">336,995</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">347,003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">318,393</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">332,938</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">332,239</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,843</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,049</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,049</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,049</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,049</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of shares issued (in thousands)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">179,894</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">180,064</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">180,064</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">180,064</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">180,064</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">5
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000">Year ended March 31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2001</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2002</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2003</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18">(In millions of yen,
except per share data and percentage amounts)</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Other Data:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital expenditures (Note 5)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">41,944</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">46,909</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">40,493</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">57,978</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">63,866</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Research and development (R&#038;D) expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,105</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,050</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,388</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51,483</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,897</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash flows from operating activities (Note 5)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51,141</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,358</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,509</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,378</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,946</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash flows from investing activities (Note 5)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(41,481</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(51,396</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(35,228</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(52,754</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(93,516</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash flows from financing activities (Note 5)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(46,567</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,207</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(34,680</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51,827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,019</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Return on equity (Note 1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">7.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.6</TD>
    <TD nowrap>%)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Return on assets (Note 2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">3.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.2</TD>
    <TD nowrap>%)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash dividends declared per share of common
stock and per ADS (Note 3):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:45px; text-indent:-15px">Interim&nbsp;&nbsp;&nbsp;&nbsp;(in yen)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:97px; text-indent:-15px">(in U.S. dollars)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Year-end (in yen)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:97px; text-indent:-15px">(in U.S. dollars)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.11</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="84%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="top">Notes:&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1. </TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Net income (loss)&nbsp;as a percentage of average shareholders&#146; equity.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Net income (loss)&nbsp;as a percentage of average total assets.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3.</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Cash dividends in U.S. dollars are based on the noon buying rate in yen for cable transfers
in New York City as certified for customs purposes by the Federal Reserve Bank of New York on
the date of the dividend payment.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">In fiscal 2003, we adopted EITF (Emerging Issues Task Force) 01-9 &#147;Accounting for
Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor&#146;s
Products).&#148; The adoption resulted in a reduction in net sales and a corresponding decrease in
selling, general and administrative expenses. Previously reported amounts have been
reclassified accordingly.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">5.</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">As a result of the sale of subsidiaries in the audio/video software business in fiscal 2004,
the gain on such sale, as well as the operating results of the discontinued operations, are
presented as a separate line item in the consolidated statements of operations in accordance
with Statement of Financial Accounting Standards No.&nbsp;144, &#147;Accounting for the Impairment or
Disposal of Long-Lived Assets.&#148; Previously reported amounts have been reclassified
accordingly.</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">6
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Exchange rates (yen per U.S. dollar)</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The exchange rate between the yen and the U.S. dollar, based upon the noon buying rate in yen for
cable transfers in New York City as certified for customs purposes by the Federal Reserve Bank of
New York, was &#165;xxx.xx = US$1.00 on September XX, 2005.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Year ended March 31</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Average</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">High</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Low</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Period-end</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">111.65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">104.19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">125.54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">125.54</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125.64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115.89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134.77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132.70</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118.07</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104.18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107.28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">114.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107.22</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><U>2005</U></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">March</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103.87</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107.49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">April</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104.64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108.67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">May</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104.41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">June</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">106.64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">110.91</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">July</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">110.47</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">August</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">109.37</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112.12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For purposes of preparing our financial statements, we use rates obtained from the Tokyo foreign
exchange market, which differ from the rates listed above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Capitalization and indebtedness</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Reasons for the offer and use of proceeds</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Risk factors</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This section describes some of the risks that could affect our business. The factors listed below
should be considered in connection with any forward-looking statements given in this annual report
and should be read in conjunction with &#147;Item&nbsp;5. Operating and Financial Review and Prospects.&#148;
They are subject to the &#147;<U>Cautionary Statement with Respect to Forward-Looking Statements</U>&#148;
appearing elsewhere in this annual report. This list is necessarily incomplete, as some risks may
be as yet unknown to us. Any risk factor has the potential to adversely affect our business
results, share price and financial condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Economic conditions may adversely affect our sales and profitability</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Demand for consumer electronics products, which account for a significant proportion of our
worldwide operating revenue, may be affected by general economic trends in the countries or regions
in which our products are sold. Purchases of our products are, to a significant extent,
discretionary. Similarly, demand for our business use products and for components we manufacture
that go into products of third parties is affected by general economic trends in the various
markets in which we sell our products. Economic downturns and resulting declines of demand in our
major markets, including Japan, North America, Europe and Asia, may thus adversely affect our sales
and profitability.
</DIV>

<P align="center" style="font-size: 10pt">7
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Additionally, our operations may be indirectly affected by the economic conditions of regions where
our competitors manufacture their products. For example, if a competitor enjoys lower local labor
costs, it may be able to offer similar products at a lower price. As a result, our sales may be
adversely affected. Also, a decrease in the value of the local currency in a region that produces
parts and raw materials may lead to a decrease in production costs (on a yen or a U.S. dollar
basis) not only to us but to other manufacturers as well. Such a trend may in turn bring about
vigorous export competition and price-cutting, both of which could adversely affect our sales and
profitability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Fluctuations in foreign currency exchange rates may adversely affect our business results and
financial condition</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our operations involve the global production and distribution of products. Revenue and expense
items that are denominated in local currency, such as sales, expenses and assets in each region,
are translated into yen in preparing our consolidated financial statements. Depending on the rate
of exchange at the time of currency translation, the values of such items in yen may be affected,
even if their value has not changed in their original currency. Also, fluctuations in exchange
rates may affect the local prices of our products and negatively impact their competitiveness in
local markets. Generally, an appreciation of the yen against other currencies, particularly the
yen against the U.S. dollar and the euro, in which we make significant sales, may adversely affect
our business results and financial condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">An increase in the value of currencies in regions where we operate and produce may lead to an
increase in the costs of manufacturing and procurement in those regions. Such an increase could
accordingly adversely affect our profit margins and reduce our price competitiveness, thereby
adversely affecting our business results. We engage in currency hedging transactions to attempt to
minimize the negative effects of short-term fluctuations of foreign exchange rates among major
currencies such as the U.S. dollar, euro and yen. However, as a result of mid-to-long-term
exchange rate volatility, we cannot execute planned procurement, production, logistics, and sales
activities with any certainty and, consequently, fluctuations in exchange rates may adversely
affect our business results and financial condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>If we are unable to innovate and to develop attractive new products, our future growth and
profitability may be adversely affected</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We derive a substantial portion of our revenues from sales of innovative new products. We expect
that sales of our new products &#151; currently including DVD-related products, plasma and organic
light-emitting diode (&#147;OLED&#148;) displays and car navigation systems &#151; will continue to account for a
substantial portion of our revenues, and we expect our future growth and profitability to rely
primarily on the continued development and sale of innovative new products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">While we believe that we are capable of continuing to develop innovative and attractive new
products, the industry in which we operate is characterized by rapid changes, including
technological changes. The process of developing and marketing new products is inherently complex
and uncertain, and there are a number of risks, including the following:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We may be unable to obtain adequate funding and resources
necessary for investments in new products and technologies.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our long-term investments and commitment of significant resources
may not result in successful new products or technologies. For
example, we have invested substantial resources in the expansion
of our production capacity for plasma display panels (&#147;PDPs&#148;) to
meet anticipated demand, but such demand may not materialize.</TD>
</TR>



</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">8
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We may not be able to anticipate successfully the new products and
technologies which will gain market acceptance and that such
products can be successfully marketed.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our newly developed products or technologies may not be
successfully protected as proprietary intellectual property
rights.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our products may become obsolete earlier than expected due to
rapid advancements in technology and changes in consumer
preferences.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A delay in commercializing new technologies now under development
may prevent us from keeping up with market demand. For
example, if we lag behind our competitors in the commercialization
of active-matrix full-color OLED displays, which are now under
development in our affiliated company, ELDis, Inc., we may not
secure a significant share of this market.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our failure to anticipate adequately changes in the industry and the market, and to develop
attractive new products, including any of the risks described above, may reduce our future growth
and profitability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Our exposure to the plasma display market has increased significantly as a result of our recent
substantial investments in the plasma display business</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We are focusing on the plasma display business to establish it as the core of our business. In
order to achieve this goal, we have recently built a new production line for plasma display panels
and acquired a plasma display manufacturing company, which has significantly increased our plasma
display production capacity. If the plasma display market does not grow as we expect, or our
products do not acquire market acceptance, we may not be able to utilize this increased production
capacity efficiently and our sales and profitability could be adversely affected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Competition generally, and especially on the basis of price and standardization of products,
may adversely affect our results of operations</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The electronics industry, including the audio, video and car electronics industry, is intensely
competitive. We expect to face increased competition in the various product and geographic markets
in which we operate. Our competitors include manufacturers and distributors, some of which have
greater capital resources available for research, development, production and marketing. In
addition, as new technology develops and as new electronics products gain increased market
acceptance, it is possible that new competitors or alliances among existing competitors may emerge
and rapidly acquire significant market share. While we believe we are one of the leading
innovators of advanced, high-quality and value-added electronics products, we may not be able to
compete effectively in the future. Pricing pressures or loss of potential customers resulting from
our failure to compete effectively may adversely affect our results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For example, competitors in the plasma display market may substantially increase their production
capabilities or introduce alternative products at a lower price and cause market competition to
intensify further. Moreover, due to standardization and the relative ease of imitation of products
such as DVD players, competition from manufacturers in emerging markets may also continue to
intensify. Our research into the development of new products generally requires large costs that
competitive imitators may not need to incur. In an aggressive price-cutting environment we may
find it difficult to maintain or increase our market share or remain profitable against low-cost
and low-budget competitors.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Failure of our next generation optical disc format to gain broad market acceptance may
adversely affect our business and results of operations</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Currently, there are two generally recognized competing formats for the next generation optical
discs, Blu-ray Disc and HD DVD. Each of the recording disc formats makes use of its own distinct
technology and is incompatible with other format.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We are focusing on the Blu-ray Disc format as the next generation optical discs and are developing
products that are compatible with such format.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The question of which format will prevail as the industry standard is not yet settled. Should our
adopted format fail to be accepted as the <I>de facto </I>industry standard, or otherwise fail to gain
wide acceptance, our business strategy and results of operations may be adversely affected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>A substantial decline in our royalty revenue as a result of the expiration of many of our
existing patents relating to laser optical disc technologies may adversely affect our
profitability</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The licensing of our patent and other intellectual property rights makes a significant contribution
to our net income since costs related to patent licensing are limited principally to amortization
of patent rights and expenses for licensing activities. The legal protections afforded to these
rights have a limited duration under applicable laws, and the length of protection varies from
country to country or region. A significant portion of our patent rights have expired in Europe
and Japan. As a result, our royalty revenue will continue to decline in the future. This decline
in royalty revenue may in turn have an adverse impact on our profitability. Royalty revenue from
patent licensing also depends to a material degree on the sales of patented products by our
licensees, making it hard for us to predict actual royalty revenue amounts. For a discussion of
our patent licensing business, see &#147;Item&nbsp;4.B. Business overview&#151;Nature of operations.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>If we are unable to successfully manage the risks inherent in our international activities and
our overseas expansion, our results of operations and production capacity could be adversely
affected</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A substantial portion of our manufacturing and marketing activity is conducted outside Japan,
including in the United States, Europe, and in developing and emerging markets in Asia. There are
a number of risks inherent in doing business in such overseas markets, including the following:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Unexpected legal or regulatory changes;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Unfavorable political or economic factors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Difficulties in recruiting and retaining personnel;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Labor disputes including strikes;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Less developed technological infrastructure, which can affect our production or other activities or result in lower
customer acceptance of our products and services;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Potentially adverse tax consequences; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Social, political or economic turmoil due to terrorism, war, or other factors.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In order to produce our products competitively and to reduce costs, we aim to continue expanding
our production and parts procurement in the Shanghai and Guang Dong areas of the People&#146;s Republic
of China (&#147;China&#148;). Nevertheless, we may experience difficulties in managing a production facility
and entering into business arrangements in China in light of unexpected events, including political
or legal changes, labor shortages or strikes or changes in economic conditions in China.
Furthermore, the outbreaks of epidemics may, depending on how they develop, adversely impact our
operations in China,
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">including delays in production due to travel restrictions on employees, as well as disruptions in
parts procurement and factory operations. Accordingly, such incidents could have an adverse impact
on our results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Our dependence on certain third-party manufacturers and suppliers for parts and components
could adversely affect our production capacity and results of operations</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">While we strive to produce key components and parts such as laser pickups internally, we are
dependent on a number of outside manufacturers and suppliers. Third parties manufacture some of
our most important components and parts, including semiconductors. Our arrangements with
third-party manufacturers and suppliers are generally on a renewable short-term basis. While we
have sought to secure supply where necessary through strategic alliances and other measures, we may
face shortages of key components, reflecting changes in the market trend. We may also experience
shortages or other material disruptions in our supply of components and parts due to natural
disasters or other events beyond our control. Shortages of key components may prevent us from
producing enough products on a timely basis, which would cause us to lose sales opportunities or
lead to strained relationships with our original equipment manufacturing (&#147;OEM&#148;) customers. Such
condition may adversely affect our sales and profitability. See &#147;Item&nbsp;4.B. Business overview&#151;Raw
materials and sources of supply&#148; for a discussion of our outside manufacturers and suppliers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Our performance in the OEM business is substantially dependent on the performance of our
customers&#146; businesses</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We provide our OEM business to automobile manufacturers, electronics manufacturers, personal
computer (&#147;PC&#148;) makers and other large-scale businesses worldwide. The products we supply include
car stereo products, car navigation systems, recordable DVD drives, DVD-ROM drives, plasma displays
and OLED displays. Sales to business customers in these areas are significantly affected by the
respective customers&#146; business results and by factors that are beyond our control. Further,
price-cutting to meet customer demands may cause a reduction in our profit margin. The
under-performance of a customers&#146; business, the unexpected termination of contracts, changes in the
purchasing practices of our OEM customers or aggressive price-cutting to satisfy a large business
customer&#146;s demands may adversely affect our results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Because our products and technologies are dependent on the service of capable engineers and
other key personnel, difficulty in recruiting and developing key personnel could have an adverse
impact on our future growth</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our products and technologies are complex, and our future growth and success depend to a
significant extent on the service of capable engineers and other key personnel, and hiring and
training additional highly-skilled engineers and other competent personnel are important for our
success.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Failure to recruit and develop key personnel may adversely affect our future growth. On the other
hand, aggressive hiring of, among others, capable engineers who are experienced with the latest
technology, may increase, sometimes substantially, both recruiting and actual labor costs. In
addition, continued re-training of currently employed personnel, which may introduce higher costs,
might also be necessary to maintain a superior level of innovation and technological advance. Such
increased costs could have an adverse impact on our profitability.
</DIV>

<P align="center" style="font-size: 10pt">11
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Limits on intellectual property protection may make us vulnerable to competition from third
parties that use our technology and expertise</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">While we have developed technology and expertise which differentiate our products from those of our
competitors, some of our unique technology and expertise is either not fully capable of being
protected by intellectual property rights or protected only to a limited extent pursuant to legal
limitations in certain jurisdictions. Although we have the ability to diminish illegal imports of
such products into certain jurisdictions through exercise of our legal rights, we may be unable to
effectively prevent third parties from using our intellectual property rights to produce products
similar to ours. In addition, we may be unable to prevent third parties from developing
technologies that are similar or superior to our technology, or from designing around or reverse
engineering our patents and trade secrets. Moreover, our future products and technology might
later be found to infringe upon a third party&#146;s intellectual property rights.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Product defects resulting in a large-scale product recall or successful products liability
claims against us could result in a significant cost or a negative impact on our reputation and
adversely affect our business results and financial condition</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We manufacture various products at our plants worldwide in accordance with internationally accepted
quality-control standards. We cannot be certain, however, that all of our products are defect-free
and may not be recalled at some later date. Furthermore, although we maintain insurance against
product liability claims, we cannot be certain that such insurance can adequately satisfy the
liabilities ultimately incurred. In addition, insurance may not continue to be available on terms
acceptable to us. A large-scale product recall or a successful products liability claim against us
could result in significant costs or have a negative impact on our reputation, which may in turn
lead to a decrease in sales, adversely affecting our results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Failure to achieve the goals of collaborations, tie-ups, and joint ventures with third parties
may adversely affect our results of operations and future growth</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As part of our technological development process, we conduct many joint activities with other
companies in the form of collaborations, technological tie-ups, or joint ventures intended to
optimize management resources and utilize the synergy of combined technologies. We expect to
continue to adopt an active approach to exploiting these opportunities. If differences arise among
the participants of these joint activities due to managerial, financial or other reasons, we may
not achieve the goals of these development projects, which may in turn adversely affect our results
of operations and future growth.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Governmental regulation may limit our activities or increase our costs of operations</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our business and operations are subject to various forms of government regulation in countries in
which we do business, including required business/investment approvals, as well as export
regulations based on national security or other reasons and other export/import regulations such as
tariffs. In addition, commercial, antitrust, patent, consumer, taxation, exchange control and
environment/recycling laws and regulations also apply. If we are unable to comply with these
regulations, they can serve to limit our activities. In addition, compliance with these
regulations could result in increased costs. Accordingly, these regulations could adversely affect
our results of operations. See &#147;Item&nbsp;4.B. Business overview&#151;Governmental regulation&#148; for a
discussion of certain government regulations applicable to us.
</DIV>

<P align="center" style="font-size: 10pt">12
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Damage to our production facilities as a result of disasters, power outages or similar events
may significantly reduce our production capacity</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We periodically carry out disaster prevention checks and facility maintenance at all of our
facilities to minimize potential negative impact caused by disruptions on our manufacturing lines.
However, we may not completely prevent or mitigate the effect of a disaster, outage or other
disruption at our production facilities. For example, our plasma display products are currently
manufactured at our Shizuoka and Yamanashi plants, and we are in the process of expanding our
manufacturing lines there. Accordingly, our plasma display panel production capacity could be
significantly reduced in the event of a major earthquake or other disruption of operations at the
Shizuoka and Yamanashi plants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Employee retirement benefit costs and obligations may adversely affect our results of
operations</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pioneer is obligated to pay certain employee retirement benefit costs and obligations to qualified
employees upon their retirement. The amount of such employee retirement benefit costs and
obligations are dependent on assumptions used in the relevant actuarial calculations. These
assumptions include discount rates, future compensation levels, return on assets, retirement rates
and mortality rates, which are based upon current statistical data, as well as long-term returns on
pension plan assets and other factors. If actual results differ from the assumptions or
assumptions are changed, the resulting effects are accumulated and systematically recognized over
future periods and, therefore, generally affect recognized expense and recorded obligations in
future periods. Our pension benefit costs have been increasing in recent fiscal years due to
declining discount rates and negative returns on pension plan assets, and further declines of
discount rates and lower returns on pension plan assets may adversely affect our results of
operations.
</DIV>
<DIV align="left">
<A name="107"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;4. Information on the Company</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>A. History and development of the Company</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>History</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pioneer was incorporated under the Commercial Code of Japan (the &#147;Commercial Code&#148;) as a joint
stock company (Kabushiki Kaisha) in May&nbsp;1947, with the name Fukuin Denki Kabushiki Kaisha,
succeeding to the business founded in January&nbsp;1938 by the late Mr.&nbsp;Nozomu Matsumoto. The present
name, Pioneer Kabushiki Kaisha, was adopted in June&nbsp;1961. Its English name was changed from
&#147;Pioneer Electronic Corporation&#148; to &#147;Pioneer Corporation&#148; in June&nbsp;1999.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our business dates from January&nbsp;1938 when we began the manufacture of audio speakers. In June&nbsp;1955
we commenced the manufacture of audio amplifiers. During the 1960s, we expanded our line of
products to include hi-fi stereo sets and components, hi-fi car stereos, as well as
telephone-related equipment. Since the early 1960s we have established business offices and
subsidiaries in and outside Japan to support our expanding manufacturing and sales activities.
During the 1970s we expanded our business to include equipment related to cable TV systems.
Pioneer&#146;s shares of common stock were listed on the Tokyo Stock Exchange and Osaka Securities
Exchange in October&nbsp;1961 and April&nbsp;1968, respectively. In addition, Pioneer&#146;s American Depositary
Shares (&#147;ADSs&#148;) were listed on the New York Stock Exchange (&#147;NYSE&#148;) in December&nbsp;1976.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the 1980s, we began to expand our business base to include audio/video (&#147;AV&#148;) equipment. We
started marketing laser disc (&#147;LD&#148;) players and LDs, and commenced our own music and video software
business in Japan. Also, we introduced the world&#146;s first car compact disc (&#147;CD&#148;) players. We also
</DIV>

<P align="center" style="font-size: 10pt">13
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">broadened our business base in commercial and industrial markets with such products as optical
memory disc drives for use in computers, laser karaoke (sing-along) systems and multiscreen video
systems.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the 1990s, we released to the Japanese consumer market the world&#146;s first car navigation system
incorporating the Global Positioning System (&#147;GPS&#148;). In addition, we introduced DVD players and
thin-profile color plasma displays and began supplying digital direct-broadcast satellite (&#147;DBS&#148;)
decoders to a European pay-TV company. Our other recent industry firsts include four-color OLED
displays and DVD recorders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In fiscal 2001, we started supplying to PC makers recordable DVD drives that can record up to seven
times as much data as conventional CD-R/RW drives. In fiscal 2002, we introduced to the Japanese
consumer market hard disk drive (&#147;HDD&#148;) car navigation systems with faster search and display of
routes to designated destinations. In fiscal 2003, we launched in Japan DVD recorders equipped
with large-capacity HDDs, as well as car navigation systems incorporating a data communication
module for access to the latest map data. Also, in June&nbsp;2003, we began introducing recordable DVD
drives for PC use, which are compatible with DVD-R, -RW, &#043;R and &#043;RW discs, to worldwide markets.
In fiscal 2004, we started supplying passive-matrix full-color OLED display panels in cellular
phones. In fiscal 2005, we introduced recordable DVD drives for PC use, which are compatible with
dual layer DVD-R discs and DVD&#043;R double layer discs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Registered office</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pioneer&#146;s registered office is located at 4-1, Meguro 1-chome, Meguro-ku, Tokyo 153-8654, Japan.
Pioneer&#146;s telephone number is 81-3-3494-1111.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Principal capital expenditures, investments and divestitures</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In fiscal 2003, 2004 and 2005, our capital expenditures consisted principally of facilities and
molds for production and totaled &#165;40,493&nbsp;million, &#165;57,978&nbsp;million and &#165;63,866&nbsp;million,
respectively. They were paid principally out of our internally generated working capital. The
facilities for production comprised those for OLED displays and DVD pickups, and plants and
machinery for plasma displays. See the table in &#147;Item&nbsp;4.D. Property, plants and equipment,&#148; for a
list of our principal plants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In fiscal 2005, we invested &#165;27&nbsp;billion in building a new manufacturing line for plasma displays at
the Yamanashi Plant, which started its operation in September&nbsp;2004. On September&nbsp;30, 2004, we
acquired 100% of the issued common stock of NEC Plasma Display Corporation (&#147;NPD&#148;), a plasma
display manufacturing subsidiary of NEC Corporation, and the intellectual property rights of NPD
for cash in an aggregate amount of &#165;35&nbsp;billion. NPD changed its name to Pioneer Plasma Display
Corporation on September&nbsp;30, 2004. These investments resulted in increasing our plasma display
production capacity to about 1.1&nbsp;million units a year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Business overview</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Strategy</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We aim to be a leading provider of advanced, high-quality, value-added electronics products
worldwide for consumer and business use. Our corporate philosophy is to &#147;Move the Heart and Touch
the Soul,&#148; with products that are designed to increase satisfaction, comfort and convenience in
everyday life.
</DIV>

<P align="center" style="font-size: 10pt">14
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To achieve our goals, we are pursuing the following strategies:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>develop innovative, technologically-advanced products that meet and stimulate market
demand;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>enhance our brand recognition and promote customer satisfaction;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>leverage our leadership position in the car electronics business;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>focus on our strategic products targeting global markets; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>adopt optimal production methods to maximize profitability.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Develop innovative, technologically-advanced products that meet and stimulate market demand</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe our core strength is our ability to innovate. Throughout our history, we have focused
on the development of unique products, and have attempted to be the front-runner and market leader
in our product areas. Such areas have included dynamic speakers, car audio, LD and car navigation
systems. Consistent with our strategy, we have introduced into the market several cutting-edge
products, such as plasma displays and DVD products. In the DVD market, we were the first to
commercialize a DVD recorder. We were also the first to introduce a four-color OLED display to the
market. We intend to continue to take advantage of this strategy and attract customers by
introducing differentiated products into the market ahead of our competitors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Enhance our brand recognition and promote customer satisfaction</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The cornerstone of our business foundation lies in the quality of our products and their ability to
inspire consumer confidence. Accordingly, we focus on the enhancement of our brand image and
customer satisfaction. In addition to the extensive quality control and assurance measures on the
production side, we invest in various marketing campaigns to maintain and enhance the value of our
brand. Combined with our worldwide brand slogan of &#147;<I>sound. vision. soul</I>,&#148; we aim to establish
Pioneer as a brand driven by innovation and clearly differentiating ourselves from our competitors.
We believe customer satisfaction is based not only on reliability and technology, but also on the
impact of the quality of sound or vision delivered by our products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Leverage our leadership position in the car electronics business</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe one of our strengths lies in our core business segment, the car electronics business.
We are one of the leading manufacturers in the world consumer market for car audio products and car
navigation systems. We were the first in the industry to introduce car navigation systems to the
Japanese consumer market in fiscal 1991 and have maintained a leading position by offering
affordably priced and easy-to-operate DVD-ROM and advanced HDD-equipped models. In addition, in
November&nbsp;2002 we released in the consumer market the world&#146;s first car navigation system that
incorporates a data communication module for access to the latest map data. We intend to integrate
functions for car navigation, audio/video control and information technologies. Sales in this
category are gradually shifting from the consumer market to the OEM market as automobile
manufacturers place greater emphasis on differentiation of their cars, and we intend to expand our
market share by increasing OEM sales.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Focus on our strategic products targeting global markets</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We focus on our strategic products where we are more likely to secure the &#147;first-mover advantage&#148;
as a means of establishing market leadership. As part of our efforts to secure these leading
market positions, we strive to play a major role in setting product standards. For example, we are
promoting the DVD-RW format in DVD recorders and recordable DVD drives. This format has already
gained support from other major consumer electronics companies. We also aim to differentiate
ourselves by introducing to targeted markets innovative plasma displays, OLED displays and car
navigation systems. We market
</DIV>

<P align="center" style="font-size: 10pt">15
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">these
strategic products on a global basis. Although certain technological customization is required,
most of our key products are currently sold in virtually all major markets in the world.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Adopt optimal production methods to maximize profitability</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We strive to adopt ideal production methods catered to each type of product and market demand.
While we focus on reducing manufacturing and operating costs, our goal is to achieve overall
efficiency in production by taking into account, for example, the proximity of the end-market,
production facilities and labor costs. Consequently, we have increased the proportion of our
production in China. To meet the fast-growing demand for plasma displays, we have built a more
efficient production system at our plasma display panel manufacturing subsidiary. Moreover, the
acquisition of NPD was completed in September&nbsp;2004. Following these measures, we established in
fall 2004 an overall production system capable of yielding more than one million panels annually.
To enhance cost competitiveness and achieve economies of scale, we sell our key products on an OEM
basis to other manufacturers. In addition, we introduced supply chain management to optimize
efficiency of inventory control worldwide.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Strategic Focus</U>&#151;<I>&#147;Pioneer Group Vision&#148;</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Consistent with the strategies described above, in fiscal 1999 we announced &#147;Pioneer Group Vision,&#148;
a medium-term initiative, with the intent of revitalizing Pioneer and its business through the
achievement of two financial targets by the end of March&nbsp;2006, as well as four business targets.
They are as follows.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Financial targets for the fiscal year ending March&nbsp;2006:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#165;1.2 trillion of consolidated operating revenue</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>ROE (Return on Equity) in excess of 10%</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Business targets:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>No.1 in DVD worldwide</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Establishing a business foundation for plasma displays and OLED displays</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>From stand-alone to network</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Toward the key-device, key-technologies business</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The midterm plan above has been guiding our management and business direction up to the present.
But we foresee that financial targets will be difficult to achieve due to the following factors:
sales of karaoke business and audio/video software business, and withdrawal from cable TV set-top
box business in North America, all of which dragged down the increase in our consolidated operating
revenue, harsher competition and lower prices than we projected. Considering the situation, we are
working hard to take action for early recovery, while we seek a new midterm business plan to get
back on the track to future growth.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Nature of operations</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We develop, design, manufacture and sell electronics products such as audio, video and car
electronics on a global scale. We are one of the leading innovators of DVD products and plasma
displays. We are also one of the leading manufactures of car audio products and car navigation
systems in the consumer market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our principal production activities are carried out in Asia, including Japan. Our products are
generally sold under our own brand names, principally &#147;Pioneer.&#148; Our primary markets are Japan,
North America,
</DIV>

<P align="center" style="font-size: 10pt">16
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Europe and Asia and we sell our products to customers in consumer and business
markets through sales
offices in Japan, and through sales subsidiaries of Pioneer and independent distributors outside of
Japan. In addition, on an OEM basis, we market certain products, such as car electronics products,
recordable DVD drives, plasma displays and OLED displays to other companies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As a result of the sale of subsidiaries in the audio/video software business in fiscal 2004, the
gain from such sale, as well as the operating results of the discontinued operations, are presented
net of tax as a separate line item in the consolidated statement of operations in accordance with
Statement of Financial Accounting Standards No.&nbsp;144, &#147;Accounting for the Impairment or Disposal of
Long-Lived Assets.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Also, in fiscal 2004, we changed our business segment classification for certain businesses.
Results related to DVD drives for PCs have been moved from &#147;Others&#148; to &#147;Home Electronics,&#148; and
results related to plasma displays for business use have been moved from &#147;Home Electronics&#148; to
&#147;Others.&#148; Corresponding figures for the previous fiscal years have been restated accordingly.
(The consolidated financial statements included in this annual report and the financial information
are prepared in accordance with U.S. GAAP, except for segment data which is prepared in accordance
with relevant regulations under the Securities and Exchange Law of Japan. Specifically, such
segment information is required to be reported by reportable industrial segment, whereas segment
information is required to be reported by reportable operating segment under U.S. GAAP.)
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The profit margins in the &#147;Patent Licensing&#148; segment are substantially higher than those in the
other three segments, since costs related to patent licensing are limited principally to
amortization of patent rights and expenses for licensing activities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth our operating revenue from unaffiliated customers by business
segment for the respective periods indicated:
</DIV>

<P align="center" style="font-size: 10pt">17
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U>Operating Revenue from Unaffiliated Customers by Business Segments</U>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000">Year ended March 31</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2003</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2005</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22">(In millions of yen, except for percentage amounts)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Home Electronics</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Domestic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">86,766</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">12.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">78,798</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">11.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">87,954</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">12.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Overseas</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">191,202</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">202,684</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">213,274</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">277,968</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">41.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">281,482</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">40.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">301,228</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">41.1</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Car Electronics</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Domestic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">105,736</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">15.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">121,708</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">17.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">120,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">16.4</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Overseas</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">175,354</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">170,479</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">183,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">281,090</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">41.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">292,187</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">41.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">303,410</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">41.4</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Domestic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">62,137</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">9.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">62,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">9.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">53,935</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">7.3</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Overseas</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,603</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64,838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">105,617</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">15.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">115,395</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">16.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">118,773</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">16.1</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Patent Licensing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">12,584</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">11,821</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">10,237</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1.4</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Operating Revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">677,259</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">700,885</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">733,648</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" nowrap align="left" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" nowrap align="left" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" nowrap align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Home Electronics:</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This segment includes DVD players, DVD recorders, recordable DVD drives, DVD-ROM drives, home-use
plasma displays, stereo systems, individual stereo components, equipment for cable TV systems and
telephones.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Plasma displays worldwide accounted for the largest sales in this segment for fiscal 2005. In
addition, recordable DVD drives and DVD recorders also contributed significantly to sales in this
segment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe the traditional home audio markets of Japan, North America and Europe have matured and
accordingly, price competition in these markets is strong. We do not expect the traditional home
audio markets in these regions to grow substantially. We believe growth will come from new
products, such as DVD-related products and plasma displays. In our DVD business, we are
emphasizing higher value-added DVD recorders with hard disk drives and DVD home theater systems.
Moreover, our DVD-related products such as computer peripherals have shifted from DVD-ROM drives to
recordable DVD drives. In our plasma display business, we continue to promote vigorously 40-inch
and larger models of high-definition plasma displays in the worldwide market. We are also
expanding our plasma display business on an OEM basis.
</DIV>

<P align="center" style="font-size: 10pt">18
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Car Electronics:</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This segment includes car stereos, car AV systems, car speakers and car navigation systems.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Overall, car stereos accounted for the largest sales in this segment for fiscal 2005. In Japan,
our car navigation systems accounted for the largest sales. In overseas, car stereos accounted for
the largest sales, while car navigation systems also contributed to sales in this segment. Sales
based on OEM accounted for 35.7% in this segment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Both in Japan and outside Japan, sales in this group are generally made in the consumer market and
to automobile manufacturers on an OEM basis for installation in new cars on production lines or as
optional parts. Sales in this category are gradually shifting from the consumer market to the OEM
market, as automobile manufacturers place greater emphasis on differentiation of their cars. Our
strong brand recognition is helping us maintain our leading market share of car electronics
products in a global consumer market. We became the first manufacturer in the world to introduce
car navigation systems for the consumer market when we launched our first car navigation systems to
the Japanese market in fiscal 1991, and since then have maintained a leading position in the
consumer market in Japan by offering affordably-priced and easy-to-operate DVD-ROM and advanced
HDD-equipped models. We have started this business in Europe and North America, where the markets
are expanding recently, and plan to expand it in China. In the car audio business, we also strive
to widen our market share with new products and innovations, such as car CD players with OLED
displays and in-car entertainment systems. As we keep introducing innovative car electronics
products, we will continue to seek to distinguish our products from our competitors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Patent Licensing:</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This segment includes the licensing of patents related to laser optical disc technologies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Most of the royalty revenue from this segment is obtained from licensing patents relating to laser
optical disc technologies that are held by Discovision Associates (&#147;DVA&#148;), our wholly-owned U.S.
partnership. The legal protections afforded these rights have a limited duration under applicable
laws, and the length of protection varies from country to country or by region. Although a
significant portion of these patents have expired in certain countries/regions such as Japan and
Europe, some have not expired and DVA continues to collect royalty revenue.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Revenue from the Patent Licensing segment is substantially less than from our other segments,
constituting approximately 1.4% of operating revenue for fiscal 2005. However, the contribution of
this segment to our income is significant compared to its contribution to our operating revenue.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Others:</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This segment includes products primarily for business use, such as business-use plasma displays,
business-use AV systems, OLED display panels, factory automation systems and electronics devices
and parts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Electronics devices and parts, including devices for cellular phones and semiconductors related to
laser pickups, accounted for the largest sales in this segment for fiscal 2005. Factory automation
systems also contributed materially to sales in this segment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">OLED displays, which are particularly well-suited for small size displays, such as cellular phone
displays are expected to become the next generation display. In fiscal 2000, we were the first in
the world to
</DIV>

<P align="center" style="font-size: 10pt">19
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">mass-produced
four-color OLED displays. In fiscal 2004, we started supplying passive-matrix full-color OLED display panels in cellular phones.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Principal markets</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth our operating revenue from unaffiliated customers by geographic
market for the respective periods indicated:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U>Operating Revenue by Geographic Market</U>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000">Year ended March 31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2003</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22">(In millions of yen, except for percentage amounts)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Japan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">254,639</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">37.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">263,298</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">37.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">262,149</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">35.7</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">North America</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">190,147</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">170,711</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">174,120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Europe</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,977</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">146,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,770</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other Regions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99,496</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120,626</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">146,609</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">677,259</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">700,885</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">733,648</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">Note: </TD>
    <TD>&nbsp;</TD>
    <TD>Operating revenue by geographic market represents revenue from unaffiliated customers, based
on the geographic location of each unaffiliated customer.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Seasonality</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Global sales of the consumer electronics products are seasonal. Sales for the third quarter
(ending December&nbsp;31) of each fiscal year are generally higher than those of other quarters of the
same fiscal year, due to increased demand during the year-end holiday season. In Japan, sales of
car electronics products generally increase in the summer months, due to increased car usage for
summer vacations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Marketing channels</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We sell our products to a large number of retailers and distributors through our sales offices in
Japan and through Pioneer&#146;s sales subsidiaries and independent distributors outside Japan. In
addition, we market certain products, such as car electronics products and recordable DVD drives,
on an OEM basis to other manufacturers for resale under their own brand names. Our business is not
materially dependent upon any particular customer or group of customers. Most of our sales are
made from inventory rather than against customer orders. Our products are generally sold under our
own brand names, principally &#147;Pioneer.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>After-sales service</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We maintain a policy of providing repair and other services in the countries where our products are
sold. In Japan, after-sales service is provided through Pioneer&#146;s wholly-owned service subsidiary,
Pioneer Services Network Corporation (&#147;PSN&#148;), and authorized servicing companies. Pioneer
established PSN in April&nbsp;2000 to enhance the efficiency of our operations for after-sales services
and to offer such services with higher quality. In countries where Pioneer&#146;s subsidiaries are
located, such as the United States and certain European countries, after-sales services are
provided by such subsidiaries or through their authorized independent servicing companies. In
other countries, such services are generally performed by our local distributors.
</DIV>

<P align="center" style="font-size: 10pt">20
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In line with general industry practice, most of the products we sell to consumers are provided with
a warranty for free repair work, generally for a period of one year from the date of purchase.
Parts are kept available for after-sales service for a period ranging generally from two to eight
years after discontinuation of production, depending on the characteristics of the parts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Raw materials and sources of supply</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We purchase a variety of raw materials and parts for use in the manufacture of our products. We
maintain two or more suppliers in principle to prevent a shortage of raw materials and parts.
Furthermore, in accordance with corporate policy, we develop and/or manufacture certain key parts
internally for our products, including plasma display panels, laser pickups and certain integrated
circuits (&#147;ICs&#148;) and large-scale integrations (&#147;LSIs&#148;). We also purchase certain completed
products, then sell them under our own brand names.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">No single source accounted for more than 10% of total supply purchases in fiscal 2005. We have not
experienced any material difficulties in obtaining raw materials, parts and products and believe
that we will continue to be able to obtain them to meet our needs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Semiconductors account for the largest percentage of parts purchased in fiscal 2005 (on a yen
basis), representing approximately 40% of our total purchases. We purchase semiconductors from
various suppliers, mainly pursuant to the terms of our basic supply agreement. Our basic supply
agreement generally has a term of one year, with an automatic renewal clause. Where we depend on a
single supplier, we seek to strengthen our partnership with such supplier to reduce the risk of
shortages of key parts and, if necessary, other measures such as placing our order earlier than our
usual practice. We purchase a portion (approximately 5%) of our semiconductor parts, which are
custom-made for our needs in accordance with our designs and specifications, from
STMicroelectronics N.V. While we do not currently have an alternative source for the type of
semiconductors supplied by STMicroelectronics N.V., we have entered into a strategic alliance with
STMicroelectronics N.V. to secure a stable source of supply at favorable prices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The rising price of crude oil has caused an increase in the price of plastic materials used in our
products. In addition, the rapid economic growth in China has caused a shortage of steel materials
and nonferrous metals. Although these conditions have not made a significant impact on our current
operations, we are continuing our efforts to procure a stable supply of these materials and
maintain costs at appropriate levels.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Patents and licenses</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We hold a variety of patents, including those relating to laser optical disc technology, in Japan
and other countries, while we in turn are licensed to use a number of patents owned by third
parties. We consider certain patents licensed from third parties to be important to our business.
In particular, the patents licensed from Dolby Laboratories Licensing Corporation, U.S.A. for such
devices as noise reduction, from Koninklijke Philips Electronics N.V., the Netherlands for CD
products and LD products, from Thomson Licensing S.A., France for CD products and LD products, from
MPEG LA, L.L.C., U.S.A. for digital video products, from Fujitsu Limited, Japan for plasma display
panels and Gemstar-TV Guide International, Inc., U.S.A. for electronic program guide are utilized
in products accounting for a substantial portion of our net sales. Termination of such license
agreements would have a material adverse effect on our business, although we have no reason to
believe that such termination will occur.
</DIV>

<P align="center" style="font-size: 10pt">21
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Competition</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our products, especially plasma displays and DVD-related products, are exposed to intense
competition in Japan and overseas. Our competitors, which vary in size, area of distribution,
range of products and financial resources, are principally companies based in Japan, Europe and
South Korea, some of which are large, integrated home electric or electronic appliance
manufacturers having substantially larger capital resources than us. The electronics industry in
general has been subject to substantial price competition as part of efforts by electronics
manufacturers to increase their market share. In addition, electronics companies in Asia,
particularly those from China, pose a severe threat through price competition. To counter this
intense competition, we place great emphasis on extensive marketing to stimulate demand for
innovative and value-added products. Furthermore, we concentrate our efforts on technological
research, quality control, sales promotion and the lowering of production costs by increasing
procurement of parts and products made outside Japan and other measures. See also &#147;Item&nbsp;3.D. Risk
factors&#151;Competition generally, and especially on price and standardization of products, may
adversely affect our results of operations&#148; and &#147;Item&nbsp;4.B. Business overview&#151;Strategy.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Import restrictions</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In certain areas of the world, our products encounter tariffs and other import restrictions.
Tariffs applied to our products vary depending upon the classification of such products and the
countries into which such products are imported. Import restrictions, such as prohibitions on
imports of certain products, vary from nation to nation. To respond to this situation, we
manufacture our products in certain locations outside Japan as well as commissioning their
production to independent manufacturers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Governmental regulation</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our business activities are subject to various governmental regulations in countries in which we
operate, including regulations relating to business/investment approvals, export regulations
including those related to national security considerations, tariffs, antitrust, intellectual
property, consumer and business taxation, exchange controls, and environmental and recycling
requirements.
</DIV>

<P align="center" style="font-size: 10pt">22
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Organizational structure</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our basic corporate structure, including some but not all of our operating subsidiaries, is shown
in the following chart:
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><IMG src="k00993k0099300.gif" alt="(FLOW CHART)">
</DIV>

<P align="center" style="font-size: 10pt">23
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth the principal subsidiaries owned, directly or indirectly, by
Pioneer.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Ownership</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Country of</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">interest and voting</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Name of subsidiary</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">incorporation</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">interest</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Principal business</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tohoku Pioneer<BR>
Corporation
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Japan
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">67.0</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Manufacture of car electronics
products, factory automation
systems and OLED display panels</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Pioneer Display Products Corporation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Japan</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Manufacture of plasma displays</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Pioneer Plasma Display<BR>
Corporation
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Japan
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Manufacture of plasma displays
</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Pioneer North America,
Inc.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">U.S.A.
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Coordination of the activities of Pioneer&#146;s North American
subsidiaries and affiliates</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Pioneer Electronics
(USA)&nbsp;Inc.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">U.S.A.
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Distribution of electronics products</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Pioneer Electronics
Capital Inc.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">U.S.A.
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Financing to Pioneer and its
subsidiaries</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Discovision Associates*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">U.S.A.
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Licensing of worldwide patents
relating to laser optical disc
technologies</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Pioneer Europe NV
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Belgium
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Coordination of the activities of
Pioneer&#146;s European subsidiaries and
affiliates, and distribution of
electronics products</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Pioneer Electronics
Asiacentre, Pte. Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Singapore
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Coordination of the activities of
Pioneer&#146;s Asian subsidiaries and
affiliates, and manufacture and
distribution of electronics
products</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Pioneer China Holding
Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">China
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Coordination of the activities of
Pioneer&#146;s Chinese subsidiaries and
affiliates and distribution of
electronics products</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Discovision Associates is a general partnership organized under the laws of the State of
California in the United States.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">24
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Property, plants and equipment</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our manufacturing operations are conducted principally in Japan, Southeast Asia and China. The
following table sets forth information, as of March&nbsp;31, 2005, with respect to our principal plants.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="25%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center">Name of plant</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Floor space</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center">(Name of company</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(square feet)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">which owns the plant)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Location</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">&#091;leased space&#093;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Principal products</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Japan</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kagoshima
Plant<BR>(Pioneer Plasma<BR>Display Corporation)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Izumi, Kagoshima
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1,197,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Plasma displays</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Yamanashi Plant<BR>
(Pioneer Display<BR>
Products Corporation)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Nakakoma, Yamanashi
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">874,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Plasma displays</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Shizuoka Plant<BR>
(Pioneer Display<BR>
Products Corporation)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Fukuroi, Shizuoka
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">730,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Plasma displays</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kawagoe Plant<BR>
(Pioneer Corporation)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Kawagoe, Saitama
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">553,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Car stereos, Car navigation systems</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tokorozawa Plant<BR>
(Pioneer Corporation)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Tokorozawa, Saitama
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">522,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">DVD recorders</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tendo Plant<BR>
(Tohoku Pioneer<BR>
Corporation)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Tendo, Yamagata
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">479,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Car stereos, Car speakers,<BR>
Loudspeakers</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Yonezawa Plant<BR>
(Tohoku Pioneer<BR>
Corporation)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Yonezawa, Yamagata
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">243,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">OLED displays</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kokubo Plant<BR>
(Pioneer Micro<BR>
Technology<BR>
Corporation)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Kofu, Yamanashi
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">194,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">ICs, LSIs</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tendo the 2nd Plant<BR>
(Tohoku Pioneer<BR>
Corporation)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Tendo, Yamagata
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">186,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Factory automation systems</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Mogami Plant<BR>
(Mogami Denki<BR>
Corporation)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Mogami, Yamagata
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">141,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Speaker cone</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">25
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="42%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center">Name of plant</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Floor space</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center">(Name of company</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(square feet)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">which owns the plant)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Location</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">&#091;leased space&#093;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Principal products</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Outside Japan</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Shanghai Plant<BR>
(Shanghai Pioneer
Speakers Co., Ltd.)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Shanghai, China
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">458,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Car speakers</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Mexico Plant<BR>
(Pioneer Speakers,
S.A. de C.V.)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Baja California,<BR>
Mexico
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">397,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Car speakers</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Shanghai Plant<BR>
(Pioneer Technology
(Shanghai) Co.,
Ltd.)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Shanghai, China
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">374,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">DVD Recorders, Car AV systems, Car stereos</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Thailand Plant<BR>
(Pioneer
Manufacturing
(Thailand) Co.,
Ltd.)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Ayutthaya, Thailand
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">300,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Car stereos, Stereo systems</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Guang Dong Plant<BR>
(Pioneer Technology
(Dongguan) Co.,
Ltd.)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Guang Dong, China</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">295,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Recordable DVD drives</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Guang Dong Plant<BR>
(Dongguan Monetech
Electronic Co.,
Ltd.)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Guang Dong, China
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">237,000<br>
&#091;237,000&#093;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Speaker systems</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Malaysia Plant<BR>
(Pioneer Technology
(Malaysia) Sdn.
Bhd.)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Johor, Malaysia
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">262,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Stereo systems, Car stereos</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">California Plant<BR>
(Pioneer
Electronics
Technology, Inc.)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">California, U.S.A.
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">186,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Plasma displays, Speaker systems</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">U.K. Plant<BR>
(Pioneer Technology
(U.K.) Ltd.)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">West Yorkshire,<BR>
United Kingdom
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">184,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Plasma displays</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Ohio Plant<BR>
(Pioneer Automotive
Technologies, Inc.)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Ohio, U.S.A.
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">157,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Car stereos</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">26
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Most of the buildings of these plants and the land on which they are located are owned by us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of March&nbsp;31, 2005, we owned our headquarters&#146; buildings in Tokyo having an approximate aggregate
floor space of 336,000 square feet. We lease approximately 34,000 square feet as additional head
office space in Tokyo.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We also own an employee training center in Tokyo with an approximate floor space of 17,000 square
feet, and R&#038;D facilities with an approximate aggregate floor space of 298,000 square feet.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our sales office buildings in Japan and outside Japan are mainly leased. The head office buildings
of some distribution subsidiaries outside Japan are owned by us. Land and buildings for the Ohio
Plant and one of our headquarters&#146; buildings with an aggregate book value of &#165;5,999&nbsp;million were
pledged as collateral for certain loans on March&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In fiscal 2005, we invested &#165;27&nbsp;billion in building a new manufacturing line for plasma displays at
the Yamanashi Plant, which started its operation in September&nbsp;2004. On September&nbsp;30, 2004, we
acquired 100% of the issued common stock of NPD and the intellectual property rights of NPD for
cash in an aggregate amount of &#165;35&nbsp;billion. NPD changed its name to Pioneer Plasma Display
Corporation on September&nbsp;30, 2004. These investments resulted in increasing our plasma display
production capacity to about 1.1&nbsp;million units a year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We are reviewing our global production systems. For the past several years, we have been
accelerating the shift to overseas production. We currently plan to shift from our emphasis on
overseas manufacturing and focus more on an efficient response to fast-changing markets. We plan
to consolidate our production sites and aim to reduce the number of production sites from 39 to
approximately 30 worldwide.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We are constantly engaged in upgrading, modernizing and revamping the operations of our
manufacturing facilities, based on our assessment of market needs and prospects. As a result, it
would be unreasonably difficult to track the exact productive capacity and the extent of
utilization of each of our manufacturing facilities. We believe that our manufacturing facilities
are generally operating in the aggregate within normal operating capacity and not substantially
below capacity. Additionally, we believe that there does not exist any material environmental
issues that may affect the utilization of our assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe that our properties are adequate to carry on our current business, though additional
investment in plant and equipment is being made to support continued growth.
</DIV>

<P align="center" style="font-size: 10pt">27
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="108"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;5. Operating and Financial Review and Prospects</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Overview</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We develop, design, manufacture and sell home electronics products such as audio, video and car
electronics products on a global scale. We are one of the leading innovators of DVD products,
plasma displays and car navigation systems. We are also one of the leading manufacturers in the
world consumer market of car audio products and car navigation systems. In addition, we derive
revenue from the manufacture and sale of industrial electronics, such as factory automation systems
and parts and from the licensing of patents that we own.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During fiscal 2005, the global economy continued steady growth by strong consumer spending in the
U.S. and expanding economic growth in China, despite uncertainties in political situations and
rising crude oil prices. In Japan, where we have the largest sales, the economy showed favorable
growth in the first half of fiscal 2005 due to increased consumer spending. However, in the second
half, the economy exhibited signs of slowdown. In the consumer electronics market, the popularity
of newer products, such as flat panel TVs and DVD recorders, rose, due to the Athens Olympics,
while price competition for these products intensified worldwide. In foreign exchange markets, the
average value of the yen during fiscal 2005 was approximately 5% higher against the U.S. dollar and
approximately 2% lower against the euro compared with fiscal 2004. In these economic conditions,
our operating revenue for fiscal 2005 was &#165;733.6&nbsp;billion, up 4.7% from fiscal 2004. However, we
recorded a net loss of &#165;8.8&nbsp;billion, compared with net income &#165;24.8&nbsp;billion posted in fiscal 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We classify our business groups into four segments: &#147;Home Electronics,&#148; &#147;Car Electronics,&#148; &#147;Patent
Licensing&#148; and &#147;Others.&#148; Main products in each segment are as follows: &#147;Home Electronics&#148; includes
the manufacture and sale of audio/video equipment for home use, home telephones, computer
peripheral equipment, devices and others. &#147;Car Electronics&#148; includes the manufacture and sale of
car audio products, car navigation systems, and others. &#147;Patent Licensing&#148; includes the licensing
of patents related to optical disc recording and playback equipment, and others. &#147;Others&#148; includes
manufacture and sale of factory automation system, parts, and others. The following are operating
revenue and operating income by business segment for the three years ended March&nbsp;31, 2005.
</DIV>

<P align="center" style="font-size: 10pt">28
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U>Operating Revenue by Business Segments</U>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000">Year ended March 31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2003</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22">(In millions of yen, except for percentage amounts)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating Revenue:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Home Electronics</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">277,968</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">41.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">281,482</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">40.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">301,228</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">41.1</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Car Electronics</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">281,090</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">292,187</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">303,410</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Patent Licensing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,584</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,821</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,237</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">105,617</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115,395</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118,773</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">677,259</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">700,885</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">733,648</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">Note:&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Operating revenue represents revenue from unaffiliated customers.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our products are generally sold under our own brand names, principally &#147;Pioneer.&#148; Our primary
markets are Japan, North America, Europe and Asia. We sell our products to customers in consumer
and business markets through sales offices in Japan, and through sales subsidiaries of Pioneer and
independent distributors outside of Japan. In addition, on an OEM basis, we market certain
products, such as car electronics products, recordable DVD drives, plasma displays and OLED
displays to other companies. The following are operating revenue from unaffiliated customers by
geographic market for the three years ended March&nbsp;31, 2005.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U>Operating Revenue by Geographic Market</U>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000">Year ended March 31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2003</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22">(In millions of yen, except for percentage amounts)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Japan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">254,639</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">37.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">263,298</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">37.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">262,149</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">35.7</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">North America</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">190,147</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">170,711</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">174,120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Europe</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,977</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">146,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,770</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other Regions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99,496</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120,626</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">146,609</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">677,259</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">700,885</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">733,648</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">Note:</TD>
    <TD>&nbsp;</TD>
    <TD>Operating revenue by geographic market represents revenue from unaffiliated customers, based
on the geographic location of each unaffiliated customer.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">29
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Home Electronics, Car Electronics and Others</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In our home electronics business, we are exposed to significant price competition for DVD-related
products and plasma displays, which adversely affects our profitability, although we continue to
see strong growth in demand for DVD recorders, recordable DVD drives and plasma displays in
worldwide markets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In our car electronics business, severe worldwide competition has led to strong downward pressure
on prices. However, the popularity of our car navigation systems, which we believe is a major area
of our operations, continues to increase.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The electronics industry is characterized by rapid technological changes, and our ability to
introduce attractive new products to the market significantly affects the operating results of our
electronics businesses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The electronics industry is also characterized by continuing sales price decreases in most product
categories, making it important for us to continually improve the efficiency of our manufacturing,
distribution, service and administrative functions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Also, in fiscal 2004, we changed our business segment classification for certain businesses.
Results related to DVD drives for PCs have been moved from &#147;Others&#148; to &#147;Home Electronics,&#148; and
results related to plasma displays for business use have been moved from &#147;Home Electronics&#148; to
&#147;Others.&#148; Corresponding figures for the previous fiscal year have been restated accordingly.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Patent Licensing</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our royalty revenue from Patent Licensing depends to a material extent on the sales of patented
products by our licensees, making it difficult for us to predict actual royalty revenue each year.
Therefore, trends in the PC market have an influence on our royalty revenue. In addition, a
significant portion of our patent rights in Japan and Europe relating to laser optical disc
technologies has expired. Accordingly, we have started to experience a substantial decrease in
operating revenue and segment income from this segment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Currency fluctuations</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We are affected to some extent by fluctuations in foreign currency exchange rates. We are
principally exposed to fluctuations in the value of the Japanese yen against the U.S. dollar, euro
and, to a much lesser extent, other currencies of countries where we conduct our business. Our
consolidated financial statements, which are presented in Japanese yen, are affected by foreign
currency exchange fluctuations through both translation risk and transaction risk.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Translation risk is the risk that our consolidated financial statements for a particular period or
for a particular date will be affected by changes in the prevailing exchange rates of the
currencies in which our subsidiaries prepare their financial statements against the Japanese yen.
The functional currency for all of our significant foreign operations is the local currency.
Generally, all asset and liability accounts of foreign operations are translated into Japanese yen
using the exchange rates at the balance sheet date and all revenue and expense accounts are
translated using the weighted average exchange rates for the periods. Even though the fluctuations
of currencies against the Japanese yen can be substantial and, therefore, significantly impact
comparisons with prior periods and among various geographic markets, the translation effect is a
reporting consideration, included in the other comprehensive income, and does not reflect our
underlying results of operations.
</DIV>

<P align="center" style="font-size: 10pt">30
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Transaction risk is the risk that the currency structure of our costs and liabilities will deviate
from the currency structure of sales proceeds and assets. Transaction risk mainly derives from the
fact the currencies of the countries where we manufacture our products may be different from the
currencies where we sell our products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Derivative financial instruments are utilized by us to reduce the risks from fluctuations in
foreign exchange rates but are not held or issued for trading purposes. To hedge certain purchase
and sale commitments anticipated and not yet committed transactions denominated other than
functional currencies, we enter into forward exchange contracts and purchases and writes currency
options. Written options are entered into only with purchased options in order to reduce the
hedging cost.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Critical accounting policies and estimates</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following analysis of financial conditions and results of operations discusses our consolidated
financial statements, which have been prepared in accordance with accounting principles generally
accepted in the United States of America, except for segment data which is prepared in accordance
with the regulations under the Securities and Exchange Law of Japan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The preparation of the financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. On an ongoing basis, management evaluates its estimates and
judgments, including those related to customer incentives, bad debts, inventories, investments,
income taxes, warranty obligations, retirement benefits, and contingencies and litigation.
Management bases its estimates and judgments on historical experience and on various other factors
that are believed to be reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities and the reported amount of
revenue and expenses that are not readily apparent from other sources. Actual results may differ
from these estimates due to the inherent uncertainty involved in making estimates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe the following critical accounting policies, among others, affect our more significant
judgments and estimates used in the preparation of our consolidated financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Revenue recognition</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Sales are generally recorded when merchandise is shipped or delivered to customers. Recognition of
sales occurs when the title and risks and rewards of ownership are transferred to customers based
on sales contracts. In circumstances where sales are recorded when merchandise is shipped to
customers, the shipment date is equivalent to the delivery date because of a short delivery time.
In certain cases, terms of the contract require the product to pass customer inspection after
delivery and we record the sale upon satisfactory customer acceptance. Royalty revenue is
recognized based on royalty statements from licensees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We normally do not accept returns except for warranty issues, noncompliance with purchase order
specifications and returns from end-users to certain dealers. The financial impact of the future
returns are estimated based on historical experience and adequately reserved.
</DIV>

<P align="center" style="font-size: 10pt">31
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Estimated reductions of revenue are recorded for cost incurred by us in connection with sales
incentive related to the customers&#146; purchase or promotion of our products. Such costs include the
estimated cost of promotional discounts, dealer price protection, dealer rebates, consumer rebates,
cash discounts, and support for dealers&#146; promotion of our products, although the terms of sales
incentive programs may be different by product, market and terms of sales contracts. Sales
incentives that are dependent on future customer performance are estimated and recorded at the
later of when the original sale is recorded or when the incentive is offered. Estimates of future
customer performance such as purchase volume, early payments and consumer rebate redemption rate
are based on historical experience. Should a greater proportion of customers redeem incentives than
we estimate, additional reductions of revenue may be required.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Promotional discounts are offered on specified products for specified periods. A price protection
discount, which is the discount for the dealers&#146; inventory at the time of the announcement of the
promotional discount, to compensate for the difference between the discounted prices and higher
prices the dealers paid for their inventory, is often offered when the promotional discount program
is announced. Costs for a price protection program are accrued when the program is announced by
estimating discounts to be claimed by the dealers. Such estimates are based on forecasted order
quantities during the promotional period and assumptions as to the amount of inventory that dealers
have on hand. Dealer rebates include fixed-rate contractual rebates and volume-based rebates.
Contractual rebates are recorded at the time of sale. Volume-based rebates, for which the rebate
rate is dependent on the amount of the dealer&#146;s purchase during the specified period, are accrued
at the time of original sale, estimating the rebate rate the dealer will eventually achieve. We
occasionally offer incentives directly to consumers in the form of mail-in rebates. Consumer
rebates are accrued at the later of when the related sales are recognized or when the program is
announced. The actual amounts of consumer rebates are dependent on consumers&#146; future actions, and
our estimates are based on assumptions as to quantities to be purchased by consumers during the
program period and consumer redemption rates, which is determined based on historical experience
about consumer response to consumer rebate programs. Cash discounts are given for early payments in
accordance with terms of the contract with customers and are recorded as a reduction of revenue at
the time of original sale. The estimate of the cash discounts is based upon information about
customers&#146; payment histories. Also, we provide reimbursements for the purpose of supporting
dealers&#146; sales promotions of our products. The cost mainly includes subsidies for advertising,
displays, cost of other sales promotion materials, and salaries of temporary floor sales personnel.
We account for all the subsidy reimbursements to dealers as reductions from sales. Certain
promotional allowances, such as co-op advertising, are determined as certain percentages of the
respective sales amount and are recorded at the time of sale. Although reimbursement for such
incentives requires dealers to perform sales promotions of our products, we assume, based on
historical experience, that almost all dealers will eventually perform such sales promotions and
submit claims for reimbursement. Other allowances, whose amounts are not determined by sales
factors, are recorded when the subsidy is offered and the amount becomes reasonably determinable.
Examples for this type of allowance are display allowances determined by the number of units
displayed on the sales floor, and allowances based on agreements to share costs incurred by dealers
for items such as new signboards, new display racks and salaries of temporary floor sales
personnel.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Warranties</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We provide for the estimated cost of product warranties at the time revenue is recognized. While we
engage in extensive product quality programs and processes, including actively monitoring and
evaluating the quality of our component suppliers, our warranty obligation is affected by product
failure rates and service costs including parts and labor that may be incurred in correcting a
product failure. The estimate of warranty cost is based on historical information, and should
actual product failure rates or service costs differ from our estimates, revisions to the estimated
warranty liability may be required. Warranty reserve as of March&nbsp;31, 2005 is &#165;5.7&nbsp;billion.
</DIV>

<P align="center" style="font-size: 10pt">32
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Inventories</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The majority of our products are produced for the consumer electronics market, and our inventory is
susceptible to quickly changing demands and selling prices. For the purpose of properly valuing our
inventory, we record inventory reserves for excess, slow-moving and obsolete inventory. Inventory
with no potential for future sale or potential use by us is subject to write-off and, inventory
which is considered to be obsolete or slow-moving, but salable at reduced prices, is written down
to estimated net realizable value. Estimating net realizable value requires assumptions as to
uncertain matters such as selling prices and salable quantities to be made based upon judgment
about future market prices of competing products and customer demand, taking current market
conditions into consideration. As of March&nbsp;31, 2005, an inventory reserve of &#165;10.3&nbsp;billion included
a &#165;6.6&nbsp;billion reserve for inventories to be written off
and a &#165;3.7 billion reserve for inventories
written down to net realizable value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth the changes in inventory reserve during fiscal 2005. Reversal was
made in connection with sale or disposal of the related inventory.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="right">Beginning</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Provision</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Reversal</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Other</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">End</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="16">(In billions of yen)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="right">8.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Impairment of long-lived assets</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset group may not be recoverable. This review is performed using
estimates of future cash flows. If the carrying amount of an asset group is considered impaired, an
impairment loss is recorded for the amount by which the carrying amount of the asset group exceeds
its estimated fair value. Fair value is determined using the present value of estimated cash flows.
A weighted average cost of capital, which is derived from our capital structure, is used as a
discount rate for calculating the present value of the estimated cash flows. In fiscal 2005, we
recorded &#165;4.5&nbsp;billion impairment charges for plasma display production facilities of a domestic
subsidiary, production facilities of a foreign subsidiary to be closed and assets used for
manufacture of cable TV set-top boxes as the result of the review. While we believe that the
estimates of future cash flows and fair value are reasonable, changes in estimates resulting in
lower future cash flows and fair value would affect the valuations of those long-lived assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Deferred tax assets</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We record a valuation allowance to reduce deferred tax assets to the amount that we believe is more
likely than not to be realized. While we have considered future taxable income and ongoing prudent
and feasible tax planning strategies in assessing the need for the valuation allowance, in the
event that we determine that we will not be able to realize all or part of the net deferred tax
assets in the future, an adjustment to the deferred tax assets would be charged to income in the
period such determination is made. Likewise, should we determine that we will be able to realize
deferred tax assets in the future in excess of the net recorded amount, an adjustment to the
deferred tax assets would increase income in the period such determination was made.
</DIV>

<P align="center" style="font-size: 10pt">33
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Pension benefit costs</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Employee retirement benefit costs and obligations are dependent on assumptions used in the
actuarial calculations. These assumptions include discount rates, future compensation levels,
retirement rates and mortality rates which are based upon current statistical data, as well as
long-term returns on plan assets and other factors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For pension plans of the parent company and domestic subsidiaries, the discount rates are
determined by using information about rates of return on currently available high-quality
fixed-income bonds. The expected long-term rate of return on pension plan assets is based on
weighted average of expected long-term returns on various categories of plan assets, reflecting the
current and target allocations of pension plan assets. Expected long-term return by asset category
is derived from historical studies by investment advisors. If actual results differ from the
assumptions or assumptions are changed, the resulting effects are accumulated and systematically
recognized over future periods and, therefore, generally affect recognized expense and the recorded
obligations in future periods.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of March&nbsp;31, 2005, the actual asset allocation was equity securities 53%, debt securities 34%,
other 13%, compared with target asset allocation of equity securities 56%, debt securities 41%,
other 3%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth the effects of assumed changes in discount rates and the expected
long-term rate of return for pension plans in Japan.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Effect on shareholders&#146; equity</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Net periodic pension cost</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">as of March 31, 2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">for fiscal 2006</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">(In billions of yen)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Discount rare:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">0.5% increase</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.7</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">0.5% decrease</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected long-term rate of return:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">0.5% increase</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">0.5% decrease</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">34
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>A. Operating results</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Fiscal 2005 compared with fiscal 2004</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Operating revenue</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net sales amounted to &#165;723.4&nbsp;billion, a 5.0% increase over fiscal 2004. Net sales in Japan came to
&#165;262.1&nbsp;billion, down 0.4% from fiscal 2004, and overseas net sales increased 8.3% to &#165;461.3
billion. Royalty revenue decreased 13.4% from fiscal 2004 to &#165;10.2&nbsp;billion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Home Electronics </I>net sales increased 7.0% over fiscal 2004, amounting to &#165;301.2&nbsp;billion, primarily
as a result of increased sales of plasma displays and DVD recorders, while sales of recordable DVD
drives for PCs, DVD players, cable TV set-top boxes and audio products decreased. Sales of plasma
displays grew both in Japan and overseas, and sales of DVD recorders increased overseas. In Japan,
sales rose 11.6% to &#165;88.0&nbsp;billion, primarily due to a large increase in sales of plasma displays.
The increase was largely attributable to expansion of OEM product sales resulting from acquisition
of a plasma display production subsidiary, Pioneer Plasma Display Corporation (&#147;PPD&#148;). Pioneer
brand plasma display sales to consumer market increased as well. Sales of recordable DVD drives,
DVD recorders and audio products decreased in Japan. Sales decrease of recordable DVD drives and
DVD recorders were mainly attributable to the impact of a price decline resulting from intensified
competition. Overseas sales also rose 5.2% to &#165;213.3&nbsp;billion, due to an increase in sales worldwide
of plasma displays and DVD recorders, despite a decrease in sales of audio products and DVD players
worldwide, recordable DVD drives in Europe and North America and DVD-ROM drives in Europe, as well
as our decision to no longer sell cable TV set-top boxes in North America. In general, the market
is shifting from DVD players to DVD recorders worldwide.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Car Electronics </I>net sales rose 3.8% to &#165;303.4&nbsp;billion, primarily as a result of sales growth of car
navigation systems overseas. In Japan, net sales decreased 1.2% to &#165;120.3&nbsp;billion, mainly
influenced by slow demand for car navigation systems in the consumer market, reflecting shifting
demand from the consumer market to the OEM market, although car navigation systems for automobile
manufacturers increased. Overseas net sales increased 7.4% to &#165;183.2&nbsp;billion, primarily due to
increased sales of car audio products for the OEM market and car navigation systems, despite
decreased sales of car audio products for the consumer market in Europe and North America. Sales of
car navigation systems for the consumer market, particularly map-type DVD models grew in North
America and Europe. Also, sales of car audio products for the consumer market increased in Russia
and South and Central America.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Royalty revenue from <I>Patent Licensing </I>decreased 13.4% to &#165;10.2&nbsp;billion, compared to that of fiscal
2004. This was attributable to expiration of patents included in a larger portfolio of patents
licensed to the optical disc industry.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net sales for <I>Others </I>increased 2.9% over fiscal 2004 to &#165;118.8&nbsp;billion, reflecting primarily
increased sales of factory automation (FA)&nbsp;systems and component parts for cellular phones. In
Japan, net sales decreased 14.1% to &#165;53.9&nbsp;billion. This primarily resulted from decrease in sales
of organic light-emitting diode (OLED)&nbsp;display panels, mainly for cellular phone manufacturers, and
semiconductors for laser pickups, despite an increase in sales of FA systems. Decrease in sales of
semiconductors for laser pickups is due to a sales shift from Japan to China. Overseas, net sales
were up 23.3% over fiscal 2004 to &#165;64.8&nbsp;billion. The increase is primarily due to increased sales
in China of devices for cellular phones and semiconductors for laser pickups, and in Asia of
speaker devices for cellular phones, while sales of plasma displays for business use decreased in
North America and Europe.
</DIV>

<P align="center" style="font-size: 10pt">35
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Other revenues (Revenues excluding net sales and royalty revenue)</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Other revenues include interest income and other income. Interest income increased from &#165;1.4
billion to &#165;1.9&nbsp;billion due to increased return on short-term investment of proceeds from
convertible bonds issued in March&nbsp;2004. Other income increased from &#165;0.5&nbsp;billion to &#165;3.4&nbsp;billion,
mainly due to a &#165;2.3&nbsp;billion gain on sale of available for sale securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Net loss from transfer of the substitutional portion of employee welfare pension plan</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In fiscal 2005, we transferred the benefit obligation of the substitutional portion of employee
welfare pension plan in Japan and related portion of the plan assets to the Japanese government.
The transfer resulted in recording of a &#165;48.7&nbsp;billion gain as subsidy from the government. At the
same time, we recognized an expense of &#165;49.5&nbsp;billion mainly for settlement loss of the
substitutional portion, and allocated &#165;25.3&nbsp;billion to cost of sales and &#165;24.2&nbsp;billion to selling,
general and administrative (SGA)&nbsp;expenses. Note 10 of the notes to consolidated financial
statements provides detailed information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Cost and expenses</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Cost of sales </I>increased to &#165;584.1&nbsp;billion from fiscal 2004&#146;s &#165;487.3&nbsp;billion. After excluding &#165;25.3
billion of one-time pension cost recognized as a result of the transfer of the substitutional
portion of employee welfare pension plan to the Japanese government, cost of sales represented
76.2% of operating revenue, up by 6.7&nbsp;percentage points from fiscal 2004&#146;s 69.5%. The increase is
primarily due to the adverse effects of harsh price competition, particularly for Home Electronics
products such as plasma displays, DVD recorders and recordable DVD drives. We estimate that the
average selling prices for these products dropped 20&#151;30% during fiscal 2005. Clearing out inventory
for cable TV set-top boxes in North America at reduced prices also had an adverse effect on gross
profit margin. Gross profit margin in the Car Electronics business also decreased. Gross profit
margin decreased for car navigation systems in the consumer market in Japan, and the decline in
sales prices of car CD players worldwide decreased gross profit margin as well. Increased provision
for inventory reserve, mainly for excess stock of Home Electronics products, was another reason for
the higher cost of sales.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>SGA expenses </I>increased to &#165;195.7&nbsp;billion from fiscal 2004&#146;s &#165;166.4&nbsp;billion. The difference was &#165;5.1
billion after excluding &#165;24.2&nbsp;billion one-time pension cost resulting from the transfer of the
substitutional portion of employee welfare pension plan. Increase in shipping and handling cost and
warranty cost accounted for the majority of the increase. Shipping and handling cost increased by
&#165;1.5&nbsp;billion in line with the increase in shipment of the number of plasma display units. Provision
for warranty reserve increased by &#165;2.0&nbsp;billion due to extension of warranty period for plasma
displays as a part of a sales promotion measure.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>R&#038;D expenditures</I>, which are included in cost of sales and SGA expenses, increased 8.6% to &#165;55.9
billion, representing 7.6% of operating revenue. The increase reflected R&#038;D activities to enhance
our technological advantage in our strategic products such as car navigation systems, plasma
displays, DVD recorders and OLED displays.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Loss on sale and disposal of fixed assets </I>decreased by &#165;3.4&nbsp;billion. The decrease was attributable
mainly to losses recorded in fiscal 2004 for relocation and replacement of production facilities
for the purpose of improving production efficiencies, mainly in DVD products and plasma display
panels.
</DIV>

<P align="center" style="font-size: 10pt">36
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Other deductions </I>increased from &#165;1.6&nbsp;billion to &#165;6.3&nbsp;billion. The difference is mainly due to &#165;4.5
billion impairment losses recognized in fiscal 2005. An impairment loss of &#165;3.4&nbsp;billion was
recorded for production facilities of PPD due to the downward revision of sales forecast for PPD&#146;s
products after the acquisition. This downward revision resulted from decreased orders from our
main OEM customers in the second half of fiscal 2005, reflecting changes in business circumstances.
We also recorded a &#165;0.6&nbsp;billion impairment loss on assets used in manufacturing cable TV set-top
boxes as a result of our decision to no longer sell cable TV set-top boxes in North America. Also,
an impairment loss of &#165;0.5&nbsp;billion was recorded for production facilities of a foreign subsidiary,
for which closure is planned as a part of reorganization of overseas production sites. Another
reason for the difference was the losses incurred in connection with our decision not to sell cable
TV set-top boxes in North America any longer. &#165;1.8&nbsp;billion was recorded for asset disposal, employee
termination benefits and contract termination costs, in addition to the impairment loss discussed
above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Income (loss)&nbsp;before income taxes</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As a result of factors discussed above, we posted &#165;0.2&nbsp;billion loss before income taxes in fiscal
2005, compared with income of &#165;41.8&nbsp;billion in fiscal 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Income taxes</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In fiscal 2005, the provision for income taxes was &#165;4.8&nbsp;billion against &#165;0.2&nbsp;billion loss before
taxes. The relationship between loss before taxes and tax expense was distorted mainly due to
valuation allowance set up for deferred tax assets of the subsidiaries which posted losses. In
fiscal 2004, income taxes as a percentage of pre-tax income was 44.4%, which was 2.4% higher than
the normal statutory tax rate of 42.0% in Japan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Equity in losses of affiliated companies</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Equity in losses of affiliated companies was &#165;3.1&nbsp;billion in fiscal 2005, compared with &#165;2.2
billion in fiscal 2004. The increase in loss is mainly attributable to the increase in loss
incurred by ELDis, Inc., which manufactures and markets thin film transistor substrates for
active-matrix OLED display panels.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Net income (loss)</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net loss in fiscal 2005 was &#165;8.8&nbsp;billion, compared with net income of &#165;24.8&nbsp;billion posted in
fiscal 2004. Basic net loss per share of common stock in fiscal 2005 was &#165;50.11, compared with net
income per share of &#165;141.58 in fiscal 2004.
</DIV>

<P align="center" style="font-size: 10pt">37
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Fiscal 2004 compared with fiscal 2003</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Operating revenue</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net sales amounted to &#165;689.1&nbsp;billion, a 3.7% increase over fiscal 2003. Net sales in Japan came to
&#165;263.3&nbsp;billion, up 3.4% from fiscal 2003, and overseas net sales increased 3.8% to &#165;425.8&nbsp;billion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Home Electronics </I>net sales increased 1.3% over fiscal 2003, amounting to &#165;281.5&nbsp;billion, primarily
as a result of increased sales of plasma displays, DVD recorders and recordable DVD drives for PCs,
while sales of DVD players, set-top boxes and audio products decreased. Sales of plasma displays
grew overseas while sales in Japan decreased. Sales of DVD recorders, particularly models with a
hard disk drive, increased both in Japan and overseas to more than twice the levels in fiscal 2003
in terms of units sold, while the amount of net sales did not grow so fast because of declining
average selling prices. Sales of recordable DVD drives increased overseas. In Japan, Home
Electronics sales decreased by 9.2% to &#165;78.8&nbsp;billion as a result of decreased sales of plasma
displays and DVD players, although sales of DVD recorders increased. Overseas, sales increased by
6.0% to &#165;202.7&nbsp;billion. This primarily reflects a large increase in the sale of plasma displays in
each overseas market, DVD recorders in North America and Europe, and recordable DVD drives in
Europe and Asia, offsetting sales declines of digital cable TV set-top boxes in North America,
digital broadcast set-top boxes in Europe and audio products in North America and Europe.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Car Electronics </I>net sales rose 3.9% to &#165;292.2&nbsp;billion, primarily as a result of sales growth of car
navigation systems. In Japan, net sales increased 15.1% to &#165;121.7&nbsp;billion, mainly due to increased
sales of car navigation systems in the consumer market and to automobile manufacturers. Sales of
car audio products to automobile manufacturers increased as well. Overseas net sales decreased 2.8%
to &#165;170.5&nbsp;billion, primarily due to decreased sales of car audio products to automobile
manufacturers in North America. Sales of car navigation systems rose in North America and Europe,
and sales of car audio products increased in other regions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Royalty revenue from <I>Patent Licensing </I>decreased 6.1% to &#165;11.8&nbsp;billion, compared to that of fiscal
2003. This was attributable to expiration of our optical disc-related patents in certain regions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net sales for <I>Others </I>rose 9.3% over fiscal 2003 to &#165;115.4&nbsp;billion, reflecting primarily increased
sales of FA systems, OLED display panels and other component parts. In Japan, net sales increased
slightly by 1.1% to &#165;62.8&nbsp;billion. This primarily resulted from increased sales of cellular
phone-related devices, mainly OLED display panels, partially offset by a decrease in sales of
commercial karaoke products resulting from the sale of karaoke business subsidiaries in fiscal
2003. Overseas, net sales were up 21.0% over fiscal 2003 to &#165;52.6&nbsp;billion, primarily due to
increased sales of FA systems, mainly optical disc manufacturing systems in Asia. The increasing
popularity of DVDs as recording media is a major factor of increased orders for the optical disc
manufacturing systems. Sales of semiconductors related to laser pickups in China and business-use
plasma displays worldwide increased as well.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Other revenues (Revenues excluding net sales and royalty revenue)</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Interest income decreased from &#165;2.2&nbsp;billion to &#165;1.4&nbsp;billion reflecting lower interest rates on
short-term investment, mainly in the United States of America. Also, other revenues in fiscal 2003
included a &#165;0.8&nbsp;billion gain on sale of subsidiaries&#146; stock resulting from the sale of karaoke
business subsidiaries in fiscal 2003.
</DIV>

<P align="center" style="font-size: 10pt">38
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Cost and expenses</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Cost of sales </I>increased to &#165;487.3&nbsp;billion from fiscal 2003&#146;s &#165;473.2&nbsp;billion, consistent with the
increase in net sales. However, cost of sales as a percentage of operating revenue declined 0.4
percentage points to 69.5%, despite the adverse effects of keen price competition, particularly for
Home Electronics products such as plasma displays and DVD recorders. Gross profit margin in the Car
Electronics business improved as a result of cost reductions in car navigation systems. For
recordable DVD drives, gross profit margin improved as well. Also, exchange rate fluctuations
favorably affected gross profit margin. A weaker yen against the euro increased net sales in terms
of yen, and a stronger yen against currencies in Asian countries, where our major production
facilities are located, reduced production costs in terms of yen.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>SGA expenses </I>decreased by 1.4% or &#165;2.3&nbsp;billion over fiscal 2003 to &#165;166.4&nbsp;billion. This primarily
reflected decreases in personnel-related expenses, special retirement allowances and various
operating expenses. Personnel-related expenses decreased by &#165;1.9&nbsp;billion, reflecting the sale of
karaoke business subsidiaries in fiscal 2003. The decrease of special retirement allowances was due
to &#165;1.4&nbsp;billion special termination benefits recorded by Tohoku Pioneer Corporation for its
voluntary early retirement plan implemented in June&nbsp;2002. Such benefits were not incurred in fiscal
2004. In addition to these decreases, reductions in various operating expenses caused an overall
decrease of SGA expenses, offsetting the unfavorable impact of a $14&nbsp;million one-time payment to
Gemstar-TV Guide International, Inc. to resolve pending litigation, &#165;2.0&nbsp;billion provided for
estimated costs for free inspection and repair of certain plasma displays, and a &#165;1.7&nbsp;billion
increase in advertising expenses. The ratio of SGA expenses to operating revenue decreased by 1.2
percentage points to 23.7%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>R&#038;D expenditures</I>, which are included in cost of sales and SGA expenses, increased 13.4% to &#165;51.5
billion, representing 7.3% of operating revenue. The increase primarily reflected R&#038;D activities to
enhance our technological advantage in our strategic products such as car navigation systems,
plasma displays, DVD recorders and OLED displays.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Loss on sale and disposal of fixed assets </I>decreased by &#165;1.1&nbsp;billion. The decrease was mainly
attributable to losses recorded in fiscal 2003 for the conversion of optical disc production
facilities at the Yamanashi Plant, Japan into plasma display panel production facilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Other deductions </I>decreased from &#165;3.4&nbsp;billion to &#165;1.6&nbsp;billion. Foreign exchange loss decreased by
&#165;0.8&nbsp;billion to a &#165;1.2&nbsp;billion loss from &#165;2.0&nbsp;billion loss in fiscal 2003. The losses in fiscal
2004 primarily arose from conversion of U.S. dollar receivables into yen due to the yen&#146;s
appreciation against the U.S. dollar during fiscal 2004, although such losses decreased when
compared with losses incurred in fiscal 2003. Write-down of investments decreased by &#165;1.2&nbsp;billion
to &#165;0.2&nbsp;billion from &#165;1.4&nbsp;billion losses recorded in fiscal 2003. During fiscal 2004, the prices of
stock in our portfolio recovered, and significant write-downs were not recorded.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Income before income taxes</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Income before income taxes in fiscal 2004 increased 49.0% to &#165;41.8&nbsp;billion from &#165;28.1&nbsp;billion in
fiscal 2003, mainly due to increased operating income.
</DIV>

<P align="center" style="font-size: 10pt">39
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Income taxes</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Income taxes as a percentage of pre-tax income (the effective tax rate) was 44.4%, an increase of
12.2&nbsp;percentage points compared with 32.2% in fiscal 2003 and was 2.4% higher than the normal
statutory tax rate of 42.0% in Japan. In fiscal 2003, valuation allowances, which had been provided
for a tax benefit, the realization of which had been judged as unlikely, were reversed as
profitability of subsidiaries particularly in Japan improved. The reversal was the main reason for
the lower effective tax rate for fiscal 2003. The 2.4% deviation from the normal statutory tax rate
was due mainly to &#165;0.7&nbsp;billion in charges resulting from the settlement of a proposed assessment
from U.S. tax authorities, and losses incurred at certain subsidiaries. Meanwhile, a 1.0% reduction
of the tax rate in Japan effective from fiscal 2005 had an effect of increasing deferred income
taxes by &#165;0.4&nbsp;billion and by &#165;0.8&nbsp;billion in fiscal 2004 and 2003, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Equity in losses of affiliated companies</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Equity in losses of affiliated companies was &#165;2.2&nbsp;billion in fiscal 2004 compared with &#165;3.1&nbsp;billion
in fiscal 2003. The decrease in loss is mainly attributable to the decrease of research and
development costs incurred by ELDis, Inc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Income from continuing operations</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Income from continuing operations in fiscal 2004 increased 27.7% to &#165;20.4&nbsp;billion from &#165;15.9
billion in fiscal 2003 mainly due to the increase in operating income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Income from discontinued operations, net of tax</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Income from discontinued operations, net of tax, of &#165;4.5&nbsp;billion in fiscal 2004 is comprised mainly
of a &#165;1.8&nbsp;billion gain on the sale of discontinued operations and &#165;2.3&nbsp;billion tax benefit
primarily in connection with loss on investments in stocks of subsidiaries sold. &#165;0.1&nbsp;billion in
fiscal 2003 solely represented net income of the subsidiaries sold.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Net income</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net income in fiscal 2004 was &#165;24.8&nbsp;billion, a 54.5% increase compared with fiscal 2003&#146;s &#165;16.1
billion. Basic net income per share of common stock in fiscal 2004 was &#165;141.58, compared with
&#165;90.24 in fiscal 2003. Diluted net income per share in fiscal 2004 was &#165;140.52 compared with &#165;90.24
in fiscal 2003.
</DIV>

<P align="center" style="font-size: 10pt">40
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Segment information</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following segment information was prepared pursuant to relevant regulations under the
Securities and Exchange Law of Japan, which has been disclosed in Japan, and is not in accordance
with U.S. GAAP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Business Segments</I>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000">Year ended March 31, 2005</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Corporate and</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Home Electronics</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Car Electronics</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Patent Licensing</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Others</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Eliminations</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Consolidated</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22">(In millions of yen)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating revenue:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unaffiliated customers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">301,228</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">303,410</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">10,237</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">118,773</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">733,648</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Inter-segment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,960</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,321</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,362</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,725</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(44,368</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">303,188</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">304,731</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">11,599</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">158,498</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(44,368</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">733,648</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Segment income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(22,127</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">18,591</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">9,389</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(272</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(2,989</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,592</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Identifiable assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">227,567</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">167,346</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,852</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">106,101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">221,301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">725,167</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Depreciation and
amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">21,388</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">12,514</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">311</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">9,299</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3,478</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">46,990</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital expenditures
(additions to fixed assets)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">32,261</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">12,358</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">10,299</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">9,568</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">64,486</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000">Year ended March 31, 2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Corporate and</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Home Electronics</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Car Electronics</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Patent Licensing</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Others</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Eliminations</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Consolidated</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22">(In millions of yen)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating revenue:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unaffiliated customers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">281,482</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">292,187</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">11,821</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">115,395</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">700,885</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Inter-segment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,399</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,460</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,057</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,860</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(42,776</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">282,881</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">294,647</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">13,878</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">152,255</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(42,776</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">700,885</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Segment income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3,247</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">29,963</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">11,398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,273</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">292</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">47,173</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Identifiable assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">182,001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">158,913</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3,447</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">109,582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">268,599</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">722,542</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Depreciation and
amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">15,858</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">13,798</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">362</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">8,272</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">40,911</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital expenditures
(additions to fixed assets)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">32,783</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">13,648</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">248</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">7,340</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">4,434</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">58,453</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">Note:&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Effective from fiscal 2005, the Company presented segment income (loss)&nbsp;as operating revenue
less cost of sales, selling, general and administrative expenses and subsidy from the
government recognized in fiscal 2005 in connection with transfer of substitutional portion of
employee welfare pension plan to Japanese government. Previously reported amounts for fiscal
2004 have been reclassified accordingly.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">41
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Income (loss)&nbsp;by business segments</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Home Electronics </I>segment recorded a loss of &#165;22.1&nbsp;billion, compared to income of &#165;3.2&nbsp;billion in
fiscal 2004.&nbsp;Despite increased sales, mainly for plasma displays and DVD recorders, lowered prices for DVD
products, AV systems and plasma displays worsened gross profit margins. Clearing out inventory for
cable TV set-top boxes in North America at reduced prices also had an adverse effect to gross
profit margin.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Car Electronics </I>segment recorded a profit of &#165;18.6&nbsp;billion, down 38.0% from &#165;30.0&nbsp;billion in fiscal
2004. Worsened gross profit margin was the main reason. Gross profit margin decreased for car
navigation systems in the consumer market in Japan, and prices of car CD players fell worldwide.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Patent licensing </I>posted &#165;9.4&nbsp;billion profit, down 17.6% from &#165;11.4&nbsp;billion in fiscal 2004. Decrease
in royalty revenue is the reason for the drop in profit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Others </I>recorded a loss of &#165;0.3&nbsp;billion, compared with &#165;2.3&nbsp;billion profit in fiscal 2004. Although
profit for factory automation systems increased due to increased sales, profitability for
business-use plasma displays and organic light-emitting diode display panels suffered from
decreased sales.
</DIV>

<P align="center" style="font-size: 10pt">42
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Geographic Segments</I>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23" style="border-bottom: 1px solid #000000">Year ended March 31, 2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Corporate and</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Japan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">North America</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Europe</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Other Regions</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Eliminations</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Consolidated</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22">(In millions of yen)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating revenue:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unaffiliated customers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">300,722</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">171,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">149,117</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">111,848</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">733,648</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Inter-area</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">294,922</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,405</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">805</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">176,198</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(477,330</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">595,644</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">177,366</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">149,922</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">288,046</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(477,330</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">733,648</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Segment income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(9,010</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(1,716</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(308</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">7,029</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,597</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,592</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Identifiable assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">315,252</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">60,799</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">60,463</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">112,312</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">176,341</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">725,167</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Depreciation and
amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">31,880</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,394</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,444</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,794</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3,478</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">46,990</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital expenditures
(additions to fixed assets)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">44,730</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,953</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">7,230</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">9,568</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">64,486</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23" style="border-bottom: 1px solid #000000">Year ended March 31, 2004</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Corporate and</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Japan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">North America</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Europe</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Other Regions</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Eliminations</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Consolidated</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22">(In millions of yen)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating revenue:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unaffiliated customers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">294,198</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">168,194</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">145,390</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">93,103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">700,885</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Inter-area</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">278,071</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,082</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">967</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">182,929</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(470,049</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">572,269</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">176,276</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">146,357</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">276,032</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(470,049</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">700,885</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Segment income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">22,003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">11,487</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,015</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">9,511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,157</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">47,173</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Identifiable assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">233,601</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">46,034</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">61,754</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">99,237</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">281,916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">722,542</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Depreciation and
amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">26,014</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,450</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,130</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">7,696</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">40,911</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital expenditures
(additions to fixed assets)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">40,314</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">8,942</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">4,434</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">58,453</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>



<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="84%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->

<TR valign="top">
    <TD nowrap align="left">Notes:</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">1.</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Operating revenue reported in geographic segment information above represents that of
Pioneer and its domestic subsidiaries in Japan, and each subsidiary in North America, Europe,
and Other Regions.</TD>
</TR>

<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Effective from fiscal 2005, the Company presented segment income (loss)&nbsp;as operating revenue
less cost of sales, selling, general and administrative expenses and subsidy from the
government recognized in fiscal 2005 in connection with transfer of substitutional portion of
employee welfare pension plan to Japanese government. Previously reported amounts for fiscal
2004 have been reclassified accordingly.</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">43
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Liquidity and capital resources</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Cash flows</U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U>Summarized Consolidated Statements of Cash Flows</U>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Year ended March 31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">(In millions of yen)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">60,378</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">19,946</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(52,754</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(93,516</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by (used in) financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51,827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,019</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of exchange rate changes on cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,512</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,851</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net increase (decrease)&nbsp;in cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">49,939</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(75,738</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net cash provided by operating activities in fiscal 2005 was &#165;19.9&nbsp;billion, a decrease of &#165;40.4
billion compared to fiscal 2004. Net loss and changes in operating assets and liabilities were the
primary cause for the decreased cash flows from operating activities. Among operating assets and
liabilities, trade receivables increased due to increases in net sales. Inventories decreased
primarily for plasma displays, AV systems, recordable DVD drives for PCs and factory automation
systems, reflecting our effort to control and reduce inventories.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net cash used in investing activities was &#165;93.5&nbsp;billion for fiscal 2005, an increase of &#165;40.8
billion compared to &#165;52.8&nbsp;billion in fiscal 2004. The difference was mainly the result of payments
for an acquisition of a plasma display production subsidiary, and an increase in the investments
for expansion of plasma display production facilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net cash used in financing activities was &#165;4.0&nbsp;billion, compared with &#165;51.8&nbsp;billion cash provided
in fiscal 2004. Financing activities in fiscal 2004 included issuance of zero coupon convertible
bonds (bonds with stock acquisition rights) due 2011 with net proceeds of &#165;60.5&nbsp;billion. In fiscal
2005, cash was used primarily for reducing long-term debt, payment of dividends and repurchase of
shares of Pioneer&#146;s common stock. On the other hand, short-term borrowings increased. Cash used in
reducing long-term debt including capital lease obligations was &#165;6.2&nbsp;billion. Cash used in dividend
payments amounted to &#165;4.4&nbsp;billion, almost the same level of fiscal 2004. Also, &#165;2.0&nbsp;billion was
used for repurchase of shares of Pioneer&#146;s common stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As a result of these activities and the effect of changes in exchange rate on cash and cash
equivalents of overseas subsidiaries, cash and cash equivalents decreased by &#165;75.7&nbsp;billion to
&#165;116.7&nbsp;billion at the end of fiscal 2005, from &#165;192.4&nbsp;billion at the end of fiscal 2004.
</DIV>

<P align="center" style="font-size: 10pt">44
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Capital requirements</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our requirements for operating capital primarily are for the purchase of raw materials and parts
for manufacturing our products. Also, operating expenses, including manufacturing expenses and
selling, general and administrative expenses, require a substantial amount of operating capital.
Payroll and payroll-benefits, and marketing expenses, such as those for advertising and sales
promotion, account for a primary portion of operating expenses. Our expenditure for R&#038;D is recorded
as a part of various operating expenses, and payroll for R&#038;D-related personnel accounts for a
material portion of R&#038;D expenses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe that our ability to generate positive operating cash flows and liquidity discussed in
the following financial management section provide sufficient resources to fund future operating
capital requirements and capital expenditures.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Financial management</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At present, funds required for operating capital and capital expenditure are generally financed
through internally generated cash and debt or equity financing. With regard to debt financing,
short-term debt financing with maturity of one year or less is utilized to fund operating capital
requirements. Short-term borrowing is generally arranged locally by each consolidated subsidiary
based on its capital requirements. As of March&nbsp;31, 2005, short-term borrowings of &#165;33.2&nbsp;billion
were principally in Japanese yen, U.S. dollar, and euro. On the other hand, to finance long-term
funding requirements such as investment in production facilities, financing through debt and equity
securities markets are arranged in Japan, and long-term borrowing from financial institutions is
arranged locally by each consolidated subsidiary. As of March&nbsp;31, 2005, substantially all of the
long-term debt of &#165;100.5&nbsp;billion, including the portion due within one year, was comprised of &#165;61.8
billion zero coupon convertible bonds due 2011 including &#165;1.8&nbsp;billion unamortized issue premium,
&#165;15.0&nbsp;billion unsecured bonds due 2005, &#165;10.0&nbsp;billion unsecured bonds due 2008, and capital lease
obligations and other loans arranged locally.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During fiscal 2004, we issued zero coupon convertible bonds due 2011 in aggregate principal amount
of &#165;60.0&nbsp;billion to finance capital requirements for expansion of plasma display business and
enhancement of distribution channels.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During fiscal 2005, we repurchased 1,000,000 shares of Pioneer&#146;s common stock in the market for
&#165;2.0&nbsp;billion pursuant to the resolution of the board of directors in March&nbsp;2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe that our sound financial position and ability to generate positive operating cash flows,
together with uncommitted and unused credit lines of &#165;235.1&nbsp;billion, provide sufficient resources
to fund future requirements for operating capital and for capital expenditures to sustain the
growth of Pioneer. Also, the parent company and its four subsidiaries in Japan and China have
entered a three-year global credit facility agreement for the amount of &#165;70.0&nbsp;billion effective
from May&nbsp;2005. This will ensure that these companies in Japan and China have an efficient and
stable financing for their operational funding needs.
</DIV>

<P align="center" style="font-size: 10pt">45
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Research and development, patents and licenses, etc.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our R&#038;D activities have played a crucial role in the development of our business. Our R&#038;D program
currently centers on high-density recording, flat-panel displays, digital signal processing,
information/communications, and core LSIs. In fiscal 2003, 2004 and
2005, our R&#038;D expenses were
&#165;45,388&nbsp;million, &#165;51,483&nbsp;million and &#165;55,897&nbsp;million, respectively, or 6.7%, 7.3% and 7.6%,
respectively, of our operating revenue. We currently plan to continue to spend more than 6% of
operating revenue on R&#038;D each year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our research and development of new technologies is carried out mainly in Japan at the Corporate
Research &#038; Development Laboratories, as well as the Optical Disc &#038; Systems Development Center,
Information &#038; Communication Development Center, PDP Development Center and Mobile Systems
Development Center. At Pioneer Research Center USA, Inc. (&#147;PRA&#148;), one of our overseas wholly-owned
subsidiaries, we are also actively engaged in research of new technologies, and development of
system software related to digital TV and of digital network technologies. At another wholly-owned
overseas subsidiary in the United Kingdom, Pioneer Digital Design Centre, Ltd., we are researching
cutting-edge technologies related to digital TV for use in Europe. Product development and
production improvement activities are the responsibility of each business unit, and are carried out
in our various manufacturing facilities both in Japan and overseas.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Venturing to Innovate Flexible Displays</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Integrative Industry-Academia Partnership, including Mitsubishi Chemical Corporation, Rohm Co.,
Ltd. and Pioneer Corporation, with Kyoto University at the core, has developed two components for
flexible displays: an organic light-emitting transistor (OLET)&nbsp;and the world&#146;s first transparent
substrate made of Bio Nanofiber with a low thermal expansion coefficient. Pioneer&#146;s expertise in
organic electronics devices has greatly contributed to this development.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The OLET has an electroluminescence (EL)&nbsp;function built into an organic transistor. Due to its
embedded driver transistors and light-emitting devices, a display device comprised of OLETs
requires substantially fewer components than a conventional organic EL display. The substrate, Bio
Nanofiber Composite, reinforces transparent polymer with microscopic nanofibers derived from
bacteria. It features a low thermal expansion to prevent circuit breakage or damage in the circuit
mounting process. These innovations not only hold great promise to make display devices more
light, flexible and durable; they also come at an opportune time for the next digital generation of
new mobile devices, e-books, e-newspapers, e-posters and other display products coming through the
commercial pipeline to gain traction in the global marketplace.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Trend information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following is a description of the most significant recent trends in each of our business
segments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Home Electronics</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Traditional audio/video products continue to be exposed to downward price pressure and slower
sales. This, in turn, has negatively impacted our production levels and our inventory. We have
responded and expect to continue to respond to such downward pressure in sales and production
through the introduction of new value-added products and models in Home Electronics, including home
theater systems, DVD-related products and plasma displays.
</DIV>

<P align="center" style="font-size: 10pt">46
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>DVD recorders. </I>Although the DVD recorder market is expanding and our sales in it are increasing,
we, exposed to falling prices, increasing competitors and evolving product functionality, have
found it difficult to maintain a competitive advantage in this business. In order to regain
competitiveness, we plan to shorten the development time by 30% by renovating IT infrastructure and
enhancing software development efficiency. We aim for twice-a-year launches of new models
simultaneously worldwide. We plan to cut manufacturing lead time and reduce inventory through a new
production system which integrates all stages of DVD product manufacturing, from laser pickups to
finished products, at our Dongguan facilities in China. We will thereby reduce costs and timely
release attractive products that meet customer demands.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Recordable DVD drives. </I>Our recordable DVD drives for PCs generate sales. However, competitors in
Taiwan and South Korea are dropping prices aggressively on increasingly competitive products, so we
cannot expect a return to earlier levels of high profitability. We plan to increase our share and
maintain profit margins for these products, as we will focus on slim drives for notebook computers
and sell more drives to both the OEM market and the consumer market worldwide. We will also take
advantage of the strong synergy between our recordable DVD drive business and our home-use DVD
recorder business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Plasma displays. </I>The large-screen display market for plasma displays has been expanding in recent
years, and there are several manufacturers in Japan and South Korea. As competition for market
shares is higher, the product prices continue to decrease rapidly. In the market for displays
under the 40-inch size, plasma displays are also subject to increasingly intense competition from
liquid crystal displays. Currently, demand for plasma displays consists of those for standard
models and high-definition models. We expect that shifting from analog TV broadcasting to digital
will increase demand for high-definition plasma displays. As a result of this trend, we plan to
focus on new products such as 40-inch and larger models, which have higher resolution.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Japan Electronics and Information Technology Industries Association (&#147;JEITA&#148;) forecasts an
approximately 28% increase in consumer DVD player and DVD recorder sales worldwide, from 85&nbsp;million
units in 2004 to 109&nbsp;million in 2009, and strong growth in recordable DVD drives from 54&nbsp;million
units in 2004 to 127&nbsp;million units in 2007 worldwide. It also forecasts that sales of plasma
displays worldwide will increase 5 times, from 2.3&nbsp;million units in 2004 to 11.6&nbsp;million in 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Car Electronics</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Severe competition in the car electronics business worldwide has led to strong downward pressure on
prices. However, the popularity of car navigation systems, which we believe is a major area of our
operations, continues to increase. In Japan, the increase in demand for car navigation systems has
been conspicuous and the markets in North America and Europe show signs of expansion. In both
markets we introduced in the spring of 2004 compact 1-DIN-sized units featuring all car navigation
system functions as well as those for CD/MP3/DVD-Video playback. We plan to integrate functions
for car navigation, audio/video control and information gathering inside and outside the vehicle,
creating systems that are compatible with both home and mobile environments. In the car audio
business, we will strengthen our activity in growing markets such as Brazil, Russia, India and
China.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">There is also a trend in the car electronics industry that OEM sales to car manufacturers are
increasing. We intend to increase our efforts to market ourselves towards such car manufacturers
and strengthen our foothold in OEM sales as well.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">JEITA forecasts that sales of car navigation systems worldwide will increase approximately 2 times,
from 6&nbsp;million units in 2004 to 11&nbsp;million in 2009.
</DIV>

<P align="center" style="font-size: 10pt">47
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Patent Licensing</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the current patent business environment, nearly every company follows a policy of actively
protecting their patent rights, and the number of patent lawsuits has increased considerably. The
value of patents is increasingly recognized, and companies are seeking to maximize the utility of
their patents through the transfer or licensing of patent rights. While poor economic conditions
favor purchasers of patent rights, purchase prices generally are increasing because of the growing
importance of such intellectual property.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our royalty revenue from the worldwide licensing of patents relating to laser optical disc
technologies has declined substantially from previous years, as a significant portion of our
patents in Japan and Europe has expired. See &#147;Item&nbsp;4.B. Business overview&#151;Nature of
operations&#151;<I>Patent licensing</I>&#148; for more information on our patent licensing business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Others</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>OLED displays</I>. With the entry of other companies, market competition in OLED displays is becoming
even more intense, while each company in this market is proceeding with the development of
full-color OLED displays.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>E. Off-balance sheet arrangements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We provide guarantees to third parties who provide loans to our affiliated companies. For each
guarantee, we would have to pay the guaranteed amount, if our affiliated companies were to default
on a payment within contract periods of one year to eight years. The maximum potential amount of
undiscounted future payments we could be required to make under the guarantee is &#165;25.4&nbsp;billion as
of March&nbsp;31, 2005. Out of this &#165;25.4&nbsp;billion, &#165;25.0&nbsp;billion is a guarantee for ELDis, Inc. which
manufactures and markets thin film transistor substrates for active-matrix OLED, which is one of
our new products. ELDis, Inc. is 47.5% owned by Tohoku Pioneer Corporation, a 67% owned subsidiary
and is accounted for by the equity method of accounting.
</DIV>

<P align="center" style="font-size: 10pt">48
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>F. Tabular disclosure of contractual obligation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following summarizes our contractual obligations at March&nbsp;31, 2005.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 1px solid #000000">Payment Due by Period</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Less than</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">More than</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">1 year</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">1-3 years</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">3-5 years</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">5 years</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18">(In billions of yen)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Contractual obligations:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">98.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Operating leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Purchase commitment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Interest payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Contribution to
defined benefit
plans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="19" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>




<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="92%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="top">Notes:</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Total long-term debt of &#165;98.7&nbsp;billion does not include &#165;1.8&nbsp;billion
unamortized issue premium on convertible bonds.</DIV></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Long-term debt includes capital lease obligations.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3.</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Contractual obligations do not include &#165;0.7&nbsp;billion deferred income which is presented as
other long-term liabilities on the consolidated balance sheet.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">The amount that the Company will contribute under its defined pension plans are based on a
number of factors, primarily rate of salary increase and the number of employees. As such,
the Company has estimated the amount of such contribution for the year ending March&nbsp;31, 2006
and not the contribution for the years thereafter.</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The &#165;4.0&nbsp;billion purchase commitment outstanding as of March&nbsp;31, 2005 was for property, plant and
equipment and advertising. This included a part of our &#165;47.0&nbsp;billion capital expenditure plan in
fiscal 2006. The planned decrease in capital expenditures from &#165;63.9&nbsp;billion in fiscal 2005 mainly
reflects decrease of investment in production facilities for plasma displays.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>New Accounting Standards</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Inventory Costs</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In November&nbsp;2004, the FASB issued SFAS No.&nbsp;151, &#147;Inventory Costs &#151; an amendment of ARB No.&nbsp;43,
Chapter&nbsp;4.&#148; SFAS No.&nbsp;151 clarifies the language used in Accounting Research Bulletin No.&nbsp;43 with
respect to accounting for abnormal amounts of idle facility expenses, freight, handling costs and
spoilage. SFAS No.&nbsp;151 is effective for fiscal years beginning after June&nbsp;15, 2005, and is required
to be adopted by the Company effective April&nbsp;1, 2006. The adoption of this standard is not expected
to have any material impact on the Company&#146;s consolidated statements of operations or financial
position.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Exchanges of Nonmonetary Assets</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In December&nbsp;2004, the FASB issued SFAS No.&nbsp;153, &#147;Exchanges of Nonmonetary Assets &#151; an amendment of
Accounting Principles Board (&#147;APB&#148;) Opinion No.&nbsp;29,&#148; which will become effective for nonmonetary asset exchanges occurring in
fiscal periods beginning after June&nbsp;15, 2005. APB Opinion No.&nbsp;29
generally requires that exchanges of nonmonetary assets be measured based on fair value of the
assets exchanged but provided an exception for nonmonetary exchanges of similar productive assets,
which did not result in a change in carrying value for the new asset acquired even if the cash
flows
</DIV>

<P align="center" style="font-size: 10pt">49
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">resulting from the exchange would change significantly. SFAS No.&nbsp;153 eliminates the exception for
nonmonetary exchanges of similar productive assets and replaces it with a general exception for
exchanges of nonmonetary assets that do not have commercial substance. Nonmonetary exchanges lack
commercial substance if the cash flows to the entity will not change significantly as a result of
the exchange. The adoption of this standard is not expected to have any material impact on the
Company&#146;s consolidated statements of operations or financial position.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Share-Based Payment</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In December&nbsp;2004, the FASB issued SFAS No.&nbsp;123 (revised 2004), &#147;Share-Based Payment.&#148; The revised
SFAS No.&nbsp;123 supersedes APB Opinion No.&nbsp;25, which requires recognition of an expense when goods or
services are provided, and eliminates the ability to account for these instruments under the
intrinsic value method prescribed by APB Opinion No.&nbsp;25, and allowed under the original provisions
of SFAS No.&nbsp;123. The adoption of this standard is not expected to have any material impact on the
Company&#146;s consolidated statements of operations or financial position because the Company accounts
for its stock-based compensation agreements using the fair value based method, not the intrinsic
value method prescribed by APB Opinion No.&nbsp;25.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In March&nbsp;2004, the EITF confirmed as a consensus EITF Issue No.&nbsp;03-1, &#147;The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments&#148; (&#147;EITF 03-1&#148;). The
objective of this issue is to provide guidance on determining when an investment is considered
impaired, whether that impairment is other-than-temporary, and the measurement of an impairment
loss. The guidance also includes accounting considerations subsequent to the recognition of an
other-than-temporary impairment and requires certain disclosures about unrealized losses that have
not been recognized as other-than-temporary impairments. In September&nbsp;2004, the FASB issued FASB
Staff Position EITF 03-1-1 that delays the effective date for the measurement and recognition
guidance included in EITF 03-1. The disclosures required by EITF 03-1 have not been deferred and
are effective for the annual periods ending after June&nbsp;15, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Accounting for Conditional Asset Retirement Obligations</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In March&nbsp;2005, the FASB issued FIN No.&nbsp;47, &#147;Accounting for Conditional Asset Retirement
Obligations&#151;an interpretation of FASB Statement No.&nbsp;143&#148; FIN No.47 clarifies that the term
&#147;conditional asset retirement obligation&#148; as used in SFAS No.&nbsp;143, &#147;Accounting for Asset Retirement
Obligations,&#148; refers to a legal obligation to perform an asset retirement activity in which the
timing and (or)&nbsp;method of settlement are conditional on a future event that may or may not be
within the control of the entity. The obligation to perform the asset retirement activity is
unconditional even though uncertainty exists about the timing and (or)&nbsp;method of settlement. SFAS
No.&nbsp;143 acknowledges that in some cases, sufficient information may not be available to reasonably
estimate the fair value of an asset retirement obligation. FIN No.&nbsp;47 also clarifies when an entity
would have sufficient information to reasonably estimate the fair value of an asset retirement
obligation. FIN No.&nbsp;47 is effective no later than the end of fiscal years ending after December&nbsp;15,
2005. The Company has not completed the study of what effect FIN No.&nbsp;47 will have on its financial
position and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Accounting Changes and Error Corrections</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In May&nbsp;2005, the FASB issued SFAS No.&nbsp;154, &#147;Accounting Changes and Error Corrections&#151;a replacement
of APB Opinion No.&nbsp;20 and FASB Statement No.&nbsp;3.&#148; SFAS No.&nbsp;154 replaces APB No.&nbsp;20, &#147;Accounting
Changes,&#148; and SFAS No.&nbsp;3, &#147;Reporting Accounting Changes in Interim Financial
</DIV>


<P align="center" style="font-size: 10pt">50
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Statements,&#148; and changes the requirements for the accounting for and reporting of a change in
accounting principle. SFAS No.&nbsp;154 applies to all voluntary changes in accounting principle. SFAS
No.&nbsp;154 also applies to changes required by an accounting pronouncement in the unusual instance
that the pronouncement does not include specific transition provisions. SFAS No.&nbsp;154 is effective
for accounting changes and corrections of errors made in fiscal years beginning after December&nbsp;15,
2005, with earlier adoption permitted. Accordingly, the Company can not reasonably estimate the
ultimate impact of SFAS No.&nbsp;154.
</DIV>
<DIV align="left">
<A name="109"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;6. Directors, Senior Management and Employees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>A. Directors and senior management</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pioneer&#146;s Directors, Executive Officers and Corporate Auditors as of September&nbsp;1, 2005, and their
pertinent information, such as position and business experience, are as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Directors</U>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="32%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Current Position</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">(Date of birth)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">(Month and year of expiration)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Prior Position</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kanya Matsumoto<BR>
(June&nbsp;12, 1930)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman and Representative Director<BR>
(June&nbsp;2006)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;1996:<BR><DIV style="margin-left:15px; text-indent: 0px">Vice Chairman and Representative
Director</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kaneo Ito<BR>
(Apr. 30, 1936)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President and Representative
Director;<BR>
Chief Executive Officer<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;1991:<BR><DIV style="margin-left:15px; text-indent: 0px">Senior Managing Director and
Representative Director; General
Manager of International Business
Group; and in charge of overseas
operations and Public Relations
Division</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tamihiko Sudo<BR>
(Apr. 28, 1947)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Vice President and
Representative Director;
Chief Financial Officer; and
in charge of Corporate
Strategy Planning Group, Corporate Management Group,
Export Management and Quality
Control in general<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2004:<BR><DIV style="margin-left:15px; text-indent: 0px">Senior Managing Director and
Representative Director; President
of Pioneer&#146;s Mobile Entertainment
Company</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Akira Niijima<BR>
(Mar. 9, 1944)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Managing Director and
Representative Director; in
charge of Japanese domestic
subsidiaries<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2004:<BR><DIV style="margin-left:15px; text-indent: 0px">Senior Managing Director and
Representative Director;
Chief Financial Officer; and
in charge of administration and
export management in general</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">51
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="32%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Current Position</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">(Date of birth)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">(Month and year of expiration)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Prior Position</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Hajime Ishizuka<BR>
(May&nbsp;3, 1947)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Managing Director and
Representative Director;
President of Pioneer&#146;s Home
Entertainment Business Company and AV Business
Company; and in charge of
Procurement Group<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2003:<BR><DIV style="margin-left:15px; text-indent: 0px">Director; President of Pioneer&#146;s
Components Business Company; and in
charge of International Business
Division</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Osamu Yamada<BR>
(Mar. 16, 1944)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Managing Director;
General Manager of Research &#038; Development Group and
Corporate Research &#038;
Development Laboratories<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2003:<BR><DIV style="margin-left:15px; text-indent: 0px">Managing Director; General Manager
of Research &#038; Development Group and
Corporate Research &#038; Development
Laboratories</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tadahiro Yamaguchi<BR>
(Mar. 24, 1946)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Managing Director; Executive Vice President of Pioneer&#146;s
Plasma Display Business
Company (in charge of
technologies and production);
and Plant Manager of Ohmori
Plant<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2002:<BR><DIV style="margin-left:15px; text-indent: 0px">Managing Director; Executive Vice
President of Pioneer&#146;s Home
Entertainment Company (in charge of
technologies, production and quality
control); in charge of Cable &#038;
Satellite Systems Division; and
Plant Manager of Tokorozawa Plant</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Satoshi Matsumoto<BR>
(Apr. 15, 1954)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Managing Director; General
Manager of Environmental
Preservation Group and Environmental Preservation
Division<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2002:<BR><DIV style="margin-left:15px; text-indent: 0px">Managing Director; General Manager
of Environmental Preservation
Division</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Koichi Shimizu<BR>
(Feb. 3, 1944)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Managing Director; Chairman
of Pioneer China Holding Co.,
Ltd.<BR>
(June&nbsp;2006)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2004:<BR><DIV style="margin-left:15px; text-indent: 0px">Managing Director; in charge of
technologies, production and quality
control in general; General Manager
of Procurement Center; and in charge
of Strategic IT Division</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Yoichi Sato<BR>
(Jan. 15, 1950)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Managing Director; Deputy
General Manager of Research &#038; Development Group and General
Manager of PDP Development
Center<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July&nbsp;2004:<BR><DIV style="margin-left:15px; text-indent: 0px">Executive Officer; Deputy General
Manager of Research &#038; Development
Group and General Manager of PDP
Development Center</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">52
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="33%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="33%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Current Position</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">(Date of birth)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">(Month and year of expiration)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Prior Position</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Akira Haeno<BR>
(Feb. 14, 1949)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Managing Director; President
of Pioneer&#146;s Mobile
Entertainment Company<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2004:<BR><DIV style="margin-left:15px; text-indent: 0px">Executive Officer; Plant Manager of
Kawagoe Plant; and General Manager
of Production Division of Kawagoe
Plant of Pioneer&#146;s Mobile
Entertainment Company</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tatsuhiro Ishikawa<BR>
(Apr. 4, 1939)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Dec. 2001 to present:<BR><DIV style="margin-left:15px; text-indent: 0px">Attorney-at-Law
</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Shunichi Sato<BR>
(Feb. 10, 1941)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Apr. 2000:<BR><DIV style="margin-left:15px; text-indent: 0px">Japanese Ambassador Extraordinary
and Plenipotentiary to Belgium</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Executive Officers</U>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="32%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Current Position</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">(Date of birth)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">(Month and year of expiration)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Prior Position</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Masaru Saotome<BR>
(Aug. 20, 1944)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Managing Executive
Officer; President of
Pioneer&#146;s Plasma Display
Business Company<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2003:<BR><DIV style="margin-left:15px; text-indent: 0px">Senior Managing
Executive Officer;
Executive Vice
President of
Pioneer&#146;s Home
Entertainment
Company (in charge
of sales and
marketing); and
General Manager of
Display Business
Division</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kazunori Yamamoto<BR>
(Oct. 21, 1942)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Managing Executive
Officer; General Manager of
International Business Group<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2001:<BR><DIV style="margin-left:15px; text-indent: 0px">Senior Executive
Officer; President
of Pioneer North
America, Inc.</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Seiichiro Kurihara<BR>
(Mar.&nbsp;15, 1943)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Executive Officer;
General Manager of Intellectual Property
Division of Research &#038;
Development Group<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2001:<BR><DIV style="margin-left:15px; text-indent: 0px">Executive Officer;
General Manager of
Intellectual
Property Division</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Masao Kawabata<BR>
(Aug. 10, 1948)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Executive Officer;
General Manager of Corporate
Branding and Communications
Division<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2001:<BR><DIV style="margin-left:15px; text-indent: 0px">Executive Officer;
General Manager of
Corporate
Communications
Division</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">53
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="32%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Current Position</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">(Date of birth)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">(Month and year of expiration)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Prior Position</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Yoshio Taniyama<BR>
(Nov. 9, 1948)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Executive Officer; General Manager of Corporate
Planning Division<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2001:<BR><DIV style="margin-left:15px; text-indent: 0px">Executive Officer;
General Manager of
Finance Division</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Hideki Okayasu<BR>
(May&nbsp;12, 1950)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Executive Officer; General Manager of Finance
and Accounting Division<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2001:<BR><DIV style="margin-left:15px; text-indent: 0px">Executive Officer;
General Manager of
Accounting Division</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Buntarou Nishikawa<BR>
(Mar. 24, 1946)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Officer; Executive
Vice President of Pioneer&#146;s
Mobile Entertainment Company;
and General Manager of OEM
Sales Division<BR>
(June&nbsp;2006)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2001:<BR><DIV style="margin-left:15px; text-indent: 0px">Executive Officer;
General Manager of
Domestic Sales
Division of
Pioneer&#146;s Mobile
Entertainment
Company</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Osamu Takada<BR>
(July&nbsp;27, 1948)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Officer; General Manager of Personnel Division<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;1998:<BR><DIV style="margin-left:15px; text-indent: 0px">General Manager of
Personnel Division</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Sumitaka Matsumura<BR>
(Oct. 10, 1948)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Officer; Deputy
General Manager of Research &#038;
Development Group; and in
charge of Optical Disc &#038;
Systems Development Center<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jan. 2001:<BR><DIV style="margin-left:15px; text-indent: 0px">Deputy General
Manager of Research
&#038; Development
Group; and General
Manager of AV &#038;
Network Development
Center</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Chojuro Yamamitsu<BR>
(Mar. 26, 1946)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Officer; Deputy
General Manager of
Environmental Preservation
Group (in charge of Eco
Products)<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sept. 2002:<BR><DIV style="margin-left:15px; text-indent: 0px">Executive Officer;
Deputy General
Manager of Research
&#038; Development
Group; General
Manager of
Engineering; and in
charge of
Information &#038;
Communication
Development Center
and PDP Development
Center</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kenji Sato<BR>
(Aug. 29, 1947)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Officer; General
Manager of General
Administration Division<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;1998:<BR><DIV style="margin-left:15px; text-indent: 0px">General Manager of
General
Administration
Division</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Susumu Kotani<BR>
(Apr. 12, 1950)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Officer; Chairman &#038; Managing Director of Pioneer
Europe NV<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sept. 2002:<BR><DIV style="margin-left:15px; text-indent: 0px">Managing Director
of Pioneer Europe
NV</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">54
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="32%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Current Position</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">(Date of birth)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">(Month and year of expiration)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Prior Position</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tsutomu Haga<BR>
(June&nbsp;2, 1948)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Officer; President
&#038; Chief Operating Officer of
Pioneer North America, Inc.<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July&nbsp;2003:<BR><DIV style="margin-left:15px; text-indent: 0px">President &#038; Chief
Operating Officer
of Pioneer
Electronics (USA)
Inc.</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kenji Tokuyama<BR>
(Dec. 16, 1945)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Officer; Executive
Vice President of Plasma
Display Business Company (in
charge of OEM); and President of Pioneer Plasma Display
Corporation<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jan. 2003:<BR><DIV style="margin-left:15px; text-indent: 0px">President of NEC
Plasma Display
Corporation</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kaoru Sato<BR>
(July&nbsp;27, 1948)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Officer; Vice President of Home
Entertainment Business
Company; and Plant Manager of
Tokorozawa Plant<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2004:<BR><DIV style="margin-left:15px; text-indent: 0px">President of
Components Business
Company of Home
Entertainment
Business Company</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Keiichi Yamauchi<BR>
(Apr. 12, 1952)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Officer; General
Manager of Mobile Systems
Development Center of
Research &#038; Development Group<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Nov. 2003:<BR><DIV style="margin-left:15px; text-indent: 0px">General Manager of
Mobile Systems
Development Center
of Research &#038;
Development Group</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kazumi Kuriyama<BR>
(Sept. 12, 1953)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Officer; Deputy
General Manager of Corporate
Research &#038; Development
Laboratories of Research &#038;
Development Group<BR>
(June&nbsp;2006)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sept. 2002:<BR><DIV style="margin-left:15px; text-indent: 0px">General Manager of
Nano Process
Technology
Department of
Corporate Research
&#038; Development
Laboratories of
Research &#038;
Development Group</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Corporate Auditors</U>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="32%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Current Position</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">(Date of birth)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">(Month and year of expiration)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Prior Position</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Makoto Koshiba<BR>
(Nov. 21, 1943)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Auditor (full time)<BR>
(June&nbsp;2007)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sept. 1999:<BR><DIV style="margin-left:15px; text-indent: 0px">Director; General Manager of
Accounting Division; in charge of
Finance Division</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Shinji Yasuda<BR>
(June&nbsp;10, 1945)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Auditor (full time)<BR>
(June&nbsp;2007)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July&nbsp;2001:<BR><DIV style="margin-left:15px; text-indent: 0px">Director; Managing Director of
Pioneer China Holding Co., Ltd.</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">55
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="32%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Current Position</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">(Date of birth)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">(Month and year of expiration)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Prior Position</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Terumichi Tsuchida<BR>
(Aug. 22, 1921)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Auditor<BR>
(June&nbsp;2008)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July&nbsp;1998 to present:<BR><DIV style="margin-left:15px; text-indent: 0px">Advisor of Meiji Yasuda Life
Insurance Company</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Isao Moriya<BR>
(Sept. 5, 1937)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Auditor<BR>
(June&nbsp;2007)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mar. 1968 to present:<BR><DIV style="margin-left:15px; text-indent: 0px">Certified Public Accountant</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Keiichi Nishikido<BR>
(May&nbsp;2, 1953)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Auditor<BR>
(June&nbsp;2007)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jan. 1994 to present:<BR><DIV style="margin-left:15px; text-indent: 0px">Attorney-at-Law;
Managing Partner of Kohwa Sohgoh
Law Offices, Japan</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">All of the above persons, with the exception of Messrs.&nbsp;Tatsuhiro Ishikawa, Shunichi Sato,
Terumichi Tsuchida, Isao Moriya and Keiichi Nishikido devote themselves full time to our business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">None of the persons listed above was selected as a director, corporate auditor or member of senior
management pursuant to an arrangement or understanding with our major shareholders, customers,
suppliers or others.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;Kaneo Ito is married to a first cousin of Mr.&nbsp;Kanya Matsumoto. Mr.&nbsp;Satoshi Matsumoto is a
nephew of Mr.&nbsp;Kanya Matsumoto. Mr.&nbsp;Yoshio Taniyama is a first cousin of Mr.&nbsp;Kanya Matsumoto and a
brother-in-law of Mr.&nbsp;Kaneo Ito.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Compensation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The aggregate amount of compensation (including bonuses and stock-based compensation) paid by
Pioneer to all Directors, Executive Officers and Corporate Auditors of Pioneer as a group for
fiscal 2005 totaled &#165;1,136&nbsp;million. Also, as part of Pioneer&#146;s incentive compensation, Pioneer has
issued share acquisition rights for its shares of common stock to Directors, Executive Officers,
and certain employees, and certain directors/officers of certain of its subsidiaries from fiscal
2003. See &#147;Item&nbsp;6.E. Share ownership&#148; for further information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The aggregate amount set aside as lump-sum severance indemnities by Pioneer during fiscal 2005 for
Directors, Executive Officers and Corporate Auditors of Pioneer totaled &#165;790&nbsp;million. The
aggregate amount is calculated by the formula as defined in the regulations of Pioneer concerning
the retirement allowance. Provision is made for lump-sum severance payments for Directors,
Executive Officers and Corporate Auditors of Pioneer on a basis considered adequate for such future
payments as may be approved by the shareholders. (See Note 10 in &#147;Notes to Consolidated Financial
Statements.&#148;)
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Board practices</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pioneer&#146;s Articles of Incorporation provide for a Board of Directors of three or more members and
for three or more Corporate Auditors. All Directors and Corporate Auditors are elected at general
meetings of shareholders. In general, under the Articles of Incorporation of Pioneer, the term of
office of Directors expires at the conclusion of the ordinary general meeting of shareholders held
with respect to the last closing of accounts within one year after their assumption of office and
in the case of Corporate Auditors, within four years after their assumption of office; however,
Directors and Corporate Auditors may serve any number of consecutive terms. For information
regarding the expiration of the term of office for each of the Directors and Corporate Auditors,
see &#147;Item&nbsp;6.A. Directors and senior management.&#148;
</DIV>

<P align="center" style="font-size: 10pt">56
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Directors constitute the Board of Directors, which has the ultimate responsibility for
administration of our affairs. The Board of Directors may elect from among its members a Chairman
and Director, a Vice Chairman and Director, a President and Director, one or more Executive Vice
Presidents and Directors, Senior Managing Directors and Managing Directors. From among the
Directors referred to above, the Board of Directors elects one or more Representative Directors.
Each of the Representative Directors has the authority to individually represent Pioneer in the
conduct of its affairs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pioneer introduced a Corporate Executive Officer (<I>shikko yakuin</I>) system in June&nbsp;1999 to improve
management efficiency and speed up decision-making. Executive Officers are basically elected at
the meeting of the Board of Directors held immediately after the ordinary general meeting of
shareholders. In general, the term of office of Executive Officers expires at the conclusion of
the ordinary general meeting of shareholders held with respect to the last closing of accounts
within one year after their assumption of office. For information regarding the expiration of the
term of office of each of the Executive Officers, see &#147;Item&nbsp;6.A. Directors and senior management.&#148;
The Board of Directors may elect from among Executive Officers one or more Senior Managing
Executive Officers and Senior Executive Officers. Each of the Executive Officers has the authority
to individually operate businesses of which he or she is in charge under the control of the Board
of Directors and Representative Directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Corporate Auditors of Pioneer are not required to be certified public accountants. However, at
least one of the Corporate Auditors is required to be a person who has not been a director,
executive officer, general manager or employee of Pioneer or any of its subsidiaries during the
five-year period prior to his or her election as a Corporate Auditor. After the conclusion of the
ordinary general meeting of shareholders to be held with respect to the first fiscal year ending on
and after May&nbsp;1, 2005, at least half of the Corporate Auditors will be required to be persons who
have not been a director, executive officer, general manager or employee of Pioneer or any of its
subsidiaries at any time prior to their election as Corporate Auditors. The Corporate Auditors may
not at the same time be directors, executive officers, general managers or employees of Pioneer or
any of its subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Each Corporate Auditor has the statutory duty to supervise the administration by the Directors of
Pioneer&#146;s affairs and also to examine financial statements and business report to be submitted by a
Representative Director at the general meeting of shareholders. They shall attend meetings of the
Board of Directors but are not entitled to vote. In addition to Corporate Auditors, independent
certified public accountants or an audit corporation must be appointed by general meetings of
shareholders. Such independent certified public accountants or audit corporation have, as their
primary statutory duties, the duties to examine the financial statements proposed to be submitted
by a Representative Director at general meetings of shareholders and to report their opinion
thereon to the Board of Corporate Auditors and the Representative Director.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Corporate Auditors constitute the Board of Corporate Auditors. The Board of Corporate Auditors
has a statutory duty to prepare and submit its audit report to a Representative Director each year.
A Corporate Auditor may note his or her opinion in the audit report if his or her opinion is
different from the opinion expressed in the audit report. The Board of Corporate Auditors is
empowered to establish audit principles, method of examination by Corporate Auditors of Pioneer&#146;s
affairs, and financial position and other matters concerning the performance of the Corporate
Auditors&#146; duties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">There are no contractual arrangements providing for benefits to Directors upon termination of
service. Also see &#147;Item&nbsp;10.B. Memorandum and articles of association&#151;Directors.&#148;
</DIV>

<P align="center" style="font-size: 10pt">57
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Significant Differences in Corporate Governance Practices Between Pioneer Corporation and U.S.
Companies Listed on the NYSE</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Companies listed on the NYSE must comply with certain listing
standards regarding corporate governance (&#147;NYSE Corporate Governance&#148;). Listed companies that are
foreign private issuers, such as Pioneer, however, are permitted to
follow home country practices in lieu of NYSE Corporate Governance.
Pioneer&#146;s corporate
governance practices which comply with Japanese laws, regulations and stock exchange rules, and
NYSE Corporate Governance followed by U.S. listed companies have the following significant
differences:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Directors</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pioneer currently has two (2)&nbsp;non-executive directors on its board of directors who satisfy the
requirements of &#147;outside directors&#148; under the Commercial Code of Japan. &#147;Outside director&#148; is
defined as a director who does not engage in the execution of business operations of a company and
who (i)&nbsp;has not been a director responsible for the execution of business operations, executive
officer, manager or employee of the company or any of its subsidiaries, and (ii)&nbsp;is not a director
responsible for the execution of business operations or executive officer of any subsidiary of the
company, and (iii)&nbsp;is not a manager or other employee of the company or any of its subsidiaries.
The Commercial Code of Japan and related legislation (including the Law concerning Exceptional
Measures to the Commercial Code with respect to Auditing, etc. of Joint Stock Corporations (the
&#147;Special Exception Law&#148;), and collectively, the &#147;Code&#148;) do not require Japanese companies with
boards of corporate auditors, such as Pioneer, to have any independent (in the meaning given by
the NYSE listing standards) or outside (in the meaning given by the Code) directors on their boards
of directors. Consistent with most Japanese companies, but unlike NYSE Corporate Governance, Pioneer&#146;s non-management directors do not hold regularly scheduled sessions without management.
Moreover, the Code does not require, and accordingly Pioneer does not have, an internal
corporate body or committee comprised of only independent or outside directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Committees</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the Code, Pioneer has elected to structure its corporate governance system as a company
with a board of corporate auditors, which has a statutory duty to monitor, review and report on the
administration of the affairs as well as accounts of Pioneer. Pioneer, consistent with
other Japanese companies with boards of corporate auditors, but unlike NYSE Corporate Governance,
does not have specified committees, including those that are responsible for director nomination,
corporate governance and executive compensation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pursuant to the Code, Pioneer&#146;s board of directors nominates and submits a proposal for
election of directors for shareholder approval. The shareholders elect directors by a simple
majority of votes at Pioneer&#146;s general meeting of shareholders. The Code requires that the
total amount of remuneration to be paid to all directors and the total amount of remuneration to be
paid to all corporate auditors must be determined by a resolution of the general meeting of
shareholders, unless their remuneration is provided for in the Articles of Incorporation. The
distribution of remuneration among directors is broadly delegated to the board of directors and the
distribution of remuneration among corporate auditors is determined by consultation among the
corporate auditors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Audit Committee</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pioneer avails itself of paragraph (c) (3)&nbsp;of Rule&nbsp;10A-3 of the U.S. Securities Exchange Act of
1934 as amended, which provides a general exemption from the audit committee requirements for
foreign
</DIV>

<P align="center" style="font-size: 10pt">58
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">private issuers with a board of corporate auditors, subject to certain requirements which continue
to be applicable under Rule&nbsp;10A-3.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Consistent
with the requirements of the Code, Pioneer elects its corporate auditors by a
resolution at a general meeting of shareholders. Pioneer currently has five (5)&nbsp;corporate
auditors, which exceeds a minimum of three (3)&nbsp;corporate auditors required by the Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Unlike NYSE Corporate Governance, the Code, among others, does not require corporate auditors to
have expertise in accounting or other special knowledge and experience. Under the Code, the board
of corporate auditors may determine the auditing policies, method of investigating the conditions
of the business and the assets of a company, and may resolve other matters concerning the execution
of the corporate auditor&#146;s duties, prepare corporate auditors&#146; reports and give consent to
proposals of the nomination of corporate auditors and accounting auditors. Corporate auditors may
not at the same time be directors, executive officers, managers or employees of Pioneer or any
of its subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Unlike NYSE Corporate Governance, the Special Exception Law currently requires at least one of the
corporate auditors of a company must be a person who has not been a director, executive officer,
manager or employee of the company or any of its subsidiaries during the five-year period prior to
such corporate auditor&#146;s election. However, after the conclusion of the ordinary general meeting of
shareholders to be held with respect to the first fiscal year ending on and after May&nbsp;1, 2005, at
least half of the corporate auditors must be persons who have not been directors, executive
officers, managers or employees of the company or any of its subsidiaries at any time prior to such
corporate auditors&#146; election. Pioneer already has, out of a total of five (5)&nbsp;corporate
auditors, three (3) &#147;outside auditors&#148; who satisfy such new requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Corporate Governance Guidelines</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Unlike NYSE Corporate Governance, under Japanese laws and regulations, including the Code and the
Securities and Exchange Law and stock exchange rules, Pioneer is not required to adopt or
disclose corporate governance guidelines. However, Pioneer is required to disclose policies and
the present status of its corporate governance in its annual securities report and certain other
disclosure documents in accordance with the Securities and Exchange Law of Japan and regulations
thereunder, and stock exchange rules in respect of timely disclosure.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Code of Business Conduct and Ethics</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Unlike NYSE Corporate Governance, under Japanese laws and regulations, including the Code and the
Securities and Exchange Law and stock exchange rules, Pioneer is not required to adopt or
disclose a code of business conduct and ethics for directors, officers and employees. However, Pioneer maintains a &#147;Pioneer Group Code of Conduct&#148; which Pioneer believes is consistent with
the code of ethics described under Section&nbsp;406 of the U.S. Sarbanes-Oxley Act of 2002. See &#147;Item
16B. Code of Ethics.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Shareholder Approval of Equity Compensation Plans</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Unlike NYSE Corporate Governance, in which material revisions to equity-compensation plans of the
listed companies are subject to shareholder approval, pursuant to the Code, if Pioneer desires
to adopt an equity-compensation plan in which stock acquisition rights are granted on specially
favorable terms to the plan&#146;s recipients, then Pioneer must obtain shareholder approval by a
&#147;special resolution&#148; of a general meeting of shareholders, where the quorum is one-third of the
total number of voting rights and the approval of at least two-thirds of the voting rights represented at the
meeting is required.
</DIV>

<P align="center" style="font-size: 10pt">59
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Employees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth the number of our employees at the end of the period indicated.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Year ended March 31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of employees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,656</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,360</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,362</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pioneer and nine of its subsidiaries in Japan have their respective labor unions for the employees
of each company. Each such labor union is affiliated with the Japanese Electrical Electronic &#038;
Information Union. All employees except management, supervisory and certain other employees must
become union members. We have not been materially affected by any work stoppages or difficulties
in connection with labor negotiations or disputes and consider our labor relations to be good.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>E. Share ownership</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The total number of shares of Pioneer&#146;s common stock owned by our Directors, Executive Officers and
Corporate Auditors as a group as of June&nbsp;30, 2005 is as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Title of class</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Identity of person or group</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Number of shares owned</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Percent of class</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Common Stock
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Directors, Executive
Officers and Corporate
Auditors as a group
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">3,448,892 shares*
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.91</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">*</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Except for Mr.&nbsp;Kanya Matsumoto, Chairman of Pioneer, who owns 2,935,359 shares of common
stock, which constitutes 1.63% of all outstanding shares as of June&nbsp;30, 2005, none of
Pioneer&#146;s Directors, Executive Officers and Corporate Auditors is the owner of more than one
percent of Pioneer&#146;s common stock.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pioneer has granted the following share subscription rights for its shares of common stock to
certain of its employees.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Total number of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">shares covered by</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Current exercise</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number of shares</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">option</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">price</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">exercised</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Fiscal year granted</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">(in thousands)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Exercise period</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">per share</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(in thousands)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:30px; text-indent:-15px">2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">191</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">From July 1, 2002 to<BR>June 30, 2005</TD>
    <TD>&nbsp;</TD>
    <TD valign="top" nowrap align="left">&#165;</TD>
    <TD valign="top" align="right">4,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top" nowrap align="left">&nbsp;</TD>
    <TD valign="top" align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:30px; text-indent:-15px">2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">191</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">From July 1, 2003 to<BR>June 30, 2006</TD>
    <TD>&nbsp;</TD>
    <TD valign="top" nowrap align="left">&#165;</TD>
    <TD valign="top" align="right">3,791</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">60
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pioneer has granted the following share acquisition rights for its shares of common stock to its
Directors, Executive Officers and certain employees, and certain directors/officers of certain of
its subsidiaries.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Total number of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">shares covered by</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Current exercise</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number of shares</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">option</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">price</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">exercised</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Fiscal year granted</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">(in thousands)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Exercise period</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">per share</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(in thousands)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="top" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">564</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">From July 1, 2004 to<BR>June 29, 2007</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">2,477</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="top">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">313</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">From July 1, 2005 to<BR>June 30, 2008</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">2,951</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="top" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">316</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">From July 3, 2006 to<BR>June 30, 2009</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">2,944</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="top">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">315</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">From July 2, 2007 to<BR>June 30, 2010</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">1,828</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of March&nbsp;31, 2005, Pioneer holds 5,635,190 shares as treasury stock with the purchase of
1,007,095 shares and disposal of 4,867 shares both in the market in fiscal 2005.
</DIV>
<DIV align="left">
<A name="110"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;7. Major Shareholders and Related Party Transactions</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>A. Major shareholders</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Major shareholders that owned 5% or more of Pioneer&#146;s voting securities as of March&nbsp;31, 2005 on the
register of shareholders were as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number of shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Percentage of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Title of class</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(in thousands)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">outstanding shares</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Master Trust Bank of Japan, Ltd.<BR> (Trust Account)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top" align="right">13,804</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD valign="top" align="right">7.66</TD>
    <TD valign="top" nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Japan Trustee Services Bank, Ltd.<BR>(Trust Account)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top" align="right">11,666</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD valign="top" align="right">6.47</TD>
    <TD valign="top" nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Societe Generale Paris<BR>SGOP/DAI Paris 6Z</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top" align="right">10,403</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD valign="top" align="right">5.77</TD>
    <TD valign="top" nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Master Trust Bank of Japan, Ltd. and Japan Trustee Services Bank, Ltd. are securities
processing services companies. Societe Generale Paris SGOP/DAI Paris 6Z is one of the trust
accounts of Societe Generale Paris. We understand that these shareholders are not the beneficial
owner of our voting securities, but we do not have available further information concerning such
beneficial ownership.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To our knowledge, there are no major shareholders that were beneficial owners of 5% or more of
Pioneer&#146;s voting securities during the past three years.
</DIV>

<P align="center" style="font-size: 10pt">61
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">All shareholders of Pioneer have the same voting rights, subject to the limitation on exercise as
set forth in &#147;Item&nbsp;10.B. Memorandum and articles of association&#151;Common stock&#151;<I>Voting rights</I>.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of March&nbsp;31, 2005, there were 174,428,646 shares of common stock outstanding, of which 2,218,904
shares (1.27%) were held in the form of American Depositary Receipts
(&#147;ADRs&#148;) and 10,571,645 shares
(6.06%) were held of record in the form of common stock by residents in the United States (based
solely on their addresses). The number of registered ADR holders of record (including DTC) was 92,
and the number of registered holders of record in the United States (based solely on their
addresses) of shares of common stock, including those who held shares through a Japanese securities
clearing system, was 68.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To our knowledge, Pioneer is not directly or indirectly owned or controlled by any other
corporation or by the Japanese or any foreign government.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To our knowledge, there is no arrangement, the operation of which may at a subsequent date result
in a change in control of Pioneer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Related party transactions</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Interests of experts and counsel</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>
<DIV align="left">
<A name="111"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;8. Financial Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>A. Consolidated statements and other financial information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Consolidated financial statements</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">See the Consolidated Financial Statements beginning on page F-1.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Legal proceedings</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In common with numerous other industrial companies conducting a global business, we are party to
various lawsuits and administrative proceedings in the ordinary course of our business. Based on
the advice of counsel in the respective matters, except as described below, we do not expect such
lawsuits or administrative proceedings, individually or in the aggregate, to have a material effect
on our financial condition and business results.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During the year ended March&nbsp;31, 2001, we received a notice of proposed assessment from the German
tax authorities for approximately EUR21&nbsp;million (&#165;2,916&nbsp;million translated at the current foreign
exchange rate at March&nbsp;31, 2005) relating to a tax position taken in prior years concerning
intercompany purchase prices. We officially challenged the proposed assessment by arbitration
procedures. There was no progress in this matter during the year ended March&nbsp;31, 2005. In the
opinion of management, it is not possible at this time to determine the ultimate resolution of this
matter.
</DIV>

<P align="center" style="font-size: 10pt">62
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On April&nbsp;15, 2005, Pioneer Speakers, Inc. (&#147;PSI&#148;), a wholly-owned U.S. subsidiary of Tohoku Pioneer
Corporation, a 67% owned subsidiary received notice from the United States Customs and Border
Protection (&#147;CBP&#148;) assessing additional customs duties and penalties of approximately $26&nbsp;million
(&#165;2,792&nbsp;million translated at the foreign exchange rate at March&nbsp;31, 2005) for alleged erroneous
claims for preferential treatment of duties on products imported by PSI for the period from June
23, 1997 through December&nbsp;31, 1999. In addition, on June&nbsp;21, 2005, PSI received CBP&#146;s notice that
it may assess further penalties of approximately $16&nbsp;million (&#165;1,718&nbsp;million translated at the
foreign exchange rate at March&nbsp;31, 2005) for alleged record-keeping violations for products
imported by PSI for the period from June&nbsp;12, 1998 through December&nbsp;23, 1999. PSI has requested CBP
on July&nbsp;19, 2005 to consider settling both of these assessments for $7.8&nbsp;million (&#165;837&nbsp;million
translated at the foreign exchange rate at March&nbsp;31, 2005). In the opinion of management, it is
not possible at this time to determine the ultimate outcome of this matter. No provision was made
for the year ended March&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Dividend policy</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pioneer normally pays cash dividends twice per year. Pioneer&#146;s Board of Directors recommends
year-end dividends to be paid following the end of each fiscal year. This recommended year-end
dividend must then be approved by shareholders at the ordinary general meeting of shareholders
usually held in June of each year. Immediately following approval of the dividend at the
shareholders&#146; meeting, Pioneer pays the dividend to shareholders and pledges of record at the
preceding March&nbsp;31. In addition to these year-end dividends, Pioneer may pay interim dividends in
the form of cash distributions from its retained earnings to its shareholders of record as of
September&nbsp;30 in each year by resolution of its Board of Directors and without shareholder approval.
Pioneer normally pays interim dividends in December. See &#147;Item&nbsp;10.B. Memorandum and articles of
association&#151;Common stock&#151;<I>Dividends.</I>&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth the dividends paid by Pioneer for each of the periods shown. The
U.S. dollar equivalents for the dividends shown are based on the noon buying rate for cable
transfers in New York City as certified for customs purposes by the Federal Reserve Bank of New
York for yen on the date of the dividend payment:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Dividend per share</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Record date</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Dollars</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;31, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.06</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">September&nbsp;30, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.06</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;31, 2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.06</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">September&nbsp;30, 2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.06</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;31, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.08</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">September&nbsp;30, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">September&nbsp;30, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.11</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pioneer&#146;s policy on dividends allows for continued and stable dividend payment. In addition,
Pioneer determines the appropriate dividend amount taking into consideration its financial
condition, consolidated business results and other factors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Significant changes</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">There were no significant changes nor have any relevant facts occurred after the date of the
financial statements included in this annual report other than disclosed therein.
</DIV>

<P align="center" style="font-size: 10pt">63
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="112"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;9. The Offer and Listing</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>A. Offer and listing details</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth for the period indicated the reported high and low sales prices per
share of Pioneer&#146;s Common Stock on the Tokyo Stock Exchange and per share of Pioneer&#146;s ADSs on the New York Stock Exchange. See &#147;Item&nbsp;9.C. Markets,&#148; regarding the
markets for Pioneer&#146;s shares.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">Tokyo Stock Exchange</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">New York Stock Exchange</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">Price per share of Common Stock</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">Price per share of ADS</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">(yen)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">(U.S. dollars)</TD>
    <TD>&nbsp;</TD>
</TR>


<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">High</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Low</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">High</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Low</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><U>Annual highs and lows</U></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Year ended March&nbsp;31,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">4,940</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">2,085</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">45.38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20.50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.75</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,860</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,805</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.83</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,370</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.90</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,390</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,820</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30.85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><U>Quarterly highs and lows</U></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fiscal 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">1st quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,840</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.90</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2nd quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,030</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.85</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3rd quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,995</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,505</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4th quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,370</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27.01</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fiscal 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">1st quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,390</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,635</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30.85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.75</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2nd quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,215</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3rd quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,430</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,820</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.05</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4th quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,055</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fiscal 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">1st quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,655</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><U>Monthly highs and lows</U></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">March</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,015</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.60</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">April</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,760</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.60</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">May</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,815</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,703</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">June</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,783</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,655</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">July</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,687</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.35</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">August</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,785</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,634</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.55</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Plan of distribution</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>

<P align="center" style="font-size: 10pt">64
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Markets</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The primary market for shares of Pioneer&#146;s common stock is the Tokyo Stock Exchange (&#147;TSE&#148;).
Pioneer&#146;s shares of common stock have been listed on the TSE since October&nbsp;1961 and on the Osaka
Securities Exchange since April&nbsp;1968.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Since December&nbsp;1976, Pioneer&#146;s ADSs have been listed and traded on the New York Stock Exchange
(&#147;NYSE&#148;), having been traded on the United States over-the-counter market since February&nbsp;1970.
Pioneer&#146;s ADSs, each representing one share of common stock, are evidenced by ADRs issued by
Citibank, N.A., New York, as Depositary.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In addition, Cura&#231;ao Depositary Shares of Pioneer, evidenced by Cura&#231;ao Depositary Receipts, have
been listed and traded on the Euronext Amsterdam since February&nbsp;1969.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Selling shareholders</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>E. Dilution</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>F. Expenses of the issue</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>

<DIV align="left">
<A name="113"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;10. Additional Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>A. Share capital</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Memorandum and articles of association</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Organization</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pioneer is a joint stock corporation <I>(kabushiki kaisha) </I>incorporated in Japan under the Commercial
Code <I>(shoho) </I>of Japan. It is registered in the Commercial Register <I>(shogyo tokibo) </I>maintained by
the Meguro Branch Office of the Tokyo Legal Affairs Bureau.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Objects and purposes</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Article&nbsp;2 of the Articles of Incorporation of Pioneer provides that its purpose is to engage in the
following lines of business:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>manufacture and sale of electronic and electrical machinery and appliances;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>manufacture and sale of optical instruments, medical instruments, and other machinery and appliances;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>planning, production, manufacture and sale of audio, video and computer software;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>manufacture and sale of woodwork;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>manufacture and sale of agricultural products and plants for their cultivation;</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">65
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>sale of food and beverages, including liquor, and operation of restaurants and amusement facilities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>sale and purchase, rental and lease, and management of real estate and real estate agency business;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>publishing and printing business, advertising agency business, construction business and non-life insurance agency
business;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>acquisition, management and transfer of industrial property rights, copyrights and other intellectual property rights;
and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>all business incidental and related to each and every one of the businesses in the preceding paragraphs.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Directors</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Each Director has executive powers and duties to manage the affairs of Pioneer and each
Representative Director, who is elected from among the Directors by the Board of Directors, has the
statutory authority to represent Pioneer in all respects. Under the Commercial Code, the Directors
must refrain from engaging in any business competing with Pioneer unless approved by the Board of
Directors and any Director who has a material interest in the subject matter of a resolution to be
taken by the Board of Directors cannot vote on such resolution. The total amount of remuneration
to Directors and that to Corporate Auditors are subject to the approval of the general meeting of
shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Except as stated below, neither the Commercial Code nor Pioneer&#146;s Articles of Incorporation make
special provisions as to the Directors&#146; or Corporate Auditors&#146; power to vote in connection with
their compensation; the borrowing power exercisable by a Representative Director (or a Director who
is given power by a Representative Director to exercise such power), the Directors&#146; or Corporate
Auditors&#146; retirement age or requirement to hold any shares of capital stock of Pioneer. The
Commercial Code specifically requires the resolution of the Board of Directors for a company to
acquire or dispose of material assets; to borrow a substantial amount of money; to employ or
discharge from employment important employees, such as general managers; and to establish, change
or abolish material corporate organization such as branch offices. The Regulations of the Board of
Directors of Pioneer require a resolution of the Board of Directors for Pioneer to borrow a
substantial amount of money or to give guarantees in a substantial amount. There is no written
rule as to what constitutes a &#147;substantial&#148; amount in these contexts. However, it has been the
general practice of Pioneer&#146;s Board of Directors to adopt a resolution for borrowing or
guaranteeing in an amount not less than &#165;100&nbsp;million or its equivalent.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Common stock</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>General</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Except as otherwise stated, set forth below is information relating to Pioneer&#146;s Common Stock,
including brief summaries of the relevant provisions of Pioneer&#146;s Articles of Incorporation and
Share Handling Regulations, as currently in effect, and of the Commercial Code of Japan and related
legislation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A bill to modernize and make overall amendments to the Commercial Code by replacing the current
provisions with regard to corporations with a new company law (the &#147;New Company Law&#148;) was
promulgated on July&nbsp;26, 2005. The New Company Law will come into effect within one year and half
after its promulgation, and currently, it is expected that it will take effect in May&nbsp;2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In order to assert shareholders&#146; rights against Pioneer, a shareholder must have its name and
address registered on Pioneer&#146;s register of shareholders, in accordance with Pioneer&#146;s Share
Handling Regulations. The registered holder of deposited shares underlying the ADSs is the
Depositary for the ADSs. Accordingly, holders of ADSs will not be able to directly assert
shareholders&#146; rights to Pioneer.
</DIV>

<P align="center" style="font-size: 10pt">66
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A holder of shares may choose, at its discretion, to participate in the central clearing system for
share certificates under the Law Concerning Central Clearing of Share Certificates and Other
Securities of Japan. Participating shareholders must deposit certificates representing all of the
shares to be included in this clearing system with the Japan Securities Depository Center, Inc.
(&#147;JASDEC&#148;). If a holder is not a participating institution in JASDEC, it must participate through
a participating institution, such as a securities company or a commercial bank having a clearing
account with JASDEC. All shares deposited with JASDEC will be registered in the name of JASDEC on
Pioneer&#146;s register of shareholders. Each participating shareholder will in turn be registered on
Pioneer&#146;s register of beneficial shareholders and be treated in the same way as shareholders
registered on Pioneer&#146;s register of shareholders. For the purpose of transferring deposited
shares, delivery of share certificates is not required. Entry of the share transfer in the book
maintained by JASDEC for participating institutions, or in the book maintained by a participating
institution for its customers, has the same effect as delivery of share certificates. The
registered beneficial shareholders may exercise the rights attached to the shares, such as voting
rights, and will receive dividends (if any) and notices to shareholders directly from Pioneer. The
shares held by a person as a registered shareholder and those held by the same person as a
registered beneficial shareholder are aggregated for these purposes. Beneficial shareholders may
at any time withdraw their shares from deposit and receive share certificates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A new law to establish a new central clearing system for shares of listed companies and to
eliminate the issuance and use of certificates for such shares was promulgated in June&nbsp;2004 and the
relevant part of the law will come into effect within five years of the date of the promulgation.
On the effective date, a new central clearing system will be established and the shares of all
Japanese companies listed on any Japanese stock exchange, including the shares of Common Stock of
Pioneer, will be subject to the new central clearing system. On the same day, all existing share
certificates will become null and void and the companies are not required to withdraw those share
certificates from shareholders. The transfer of such shares will be effected through entry in the
books maintained under the new central clearing system.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Authorized capital</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Article&nbsp;5 of the Articles of Incorporation of Pioneer provides that the total number of shares
authorized to be issued by Pioneer is four hundred million (400,000,000) shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of March&nbsp;31, 2005, 180,063,836 shares of common stock were issued (including 5,635,190 shares
held as treasury stock).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">All shares of common stock of Pioneer have no par value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Dividends</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Dividends &#151; General
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Articles of Incorporation of Pioneer provide that the accounts shall be closed on March&nbsp;31 of
each year. Year-end cash dividends, if any, shall be paid to shareholders, beneficial shareholders
and pledgees of record as of the end of such day. After the close of the fiscal period, the Board
of Directors prepares, among other things, a proposed allocation of profits for dividends and other
purposes; this proposal is submitted to the Board of Corporate Auditors of Pioneer and to
independent certified public accountants and then submitted for approval to the ordinary general
meeting of shareholders, which is held in June each year. In addition to provisions for dividends,
if any, and for the legal reserve and other reserves, the allocation of profits customarily
includes a bonus to Directors and Corporate Auditors.
</DIV>

<P align="center" style="font-size: 10pt">67
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the New Company Law, subject to certain limitations on the distributable surplus as described
below, dividends, if any, may be paid to shareholders, beneficial shareholders, and pledgees of
record as of a record date as set forth either by the Articles of Incorporation of Pioneer or as
determined by the Board of Directors from time to time. Dividends shall be paid by way of
distribution of surplus. Dividends may be distributed in cash or in kind. In distributing
dividends, Pioneer may determine the kind of assets to be distributed, the book value of such
assets, matters regarding allocation of such assets, and the effective date of such dividends, by a
resolution of a general meeting of shareholders. However, Pioneer may generally determine such
matters by a resolution of the Board of Directors if (a)&nbsp;the Articles of Incorporation of Pioneer
so provide, (b)&nbsp;the term of its Directors is set to be until the conclusion of the ordinary general
meeting of shareholders held with respect to the last closing of accounts within one year after
such Director&#146;s assumption of office, and (c)&nbsp;certain requirements regarding the financial
statements and certain documents of Pioneer as set forth in an ordinance of the Ministry of Justice
are met; provided, however, that when Pioneer is to make in-kind dividends without giving
shareholders the right to request payment of cash dividends in lieu of in-kind dividends, it shall
determine such matters by a special shareholders resolution (as defined in &#147;Voting Rights&#148;). When
Pioneer makes payment of dividends, it shall allocate such dividends in proportion to the number of
shares of any specific class held by each shareholder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Dividends &#151; Interim cash dividends
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In addition to year-end cash dividends, the Board of Directors may by its resolution declare a cash
distribution pursuant to Article&nbsp;293-5 of the Commercial Code (an &#147;interim dividend&#148;) to
shareholders, beneficial shareholders and pledgees of record as of the end of September&nbsp;30 of each
year, without shareholders&#146; approval, but subject to the limitations described below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the New Company Law, notwithstanding the necessity of obtaining approval of a general meeting
of shareholders in general under the New Company Law as described above, Pioneer is allowed to make
payment of interim dividends during a fiscal year by way of distribution of surplus by resolution
of the Board of Directors; provided, however, that such payment of interim dividends shall be
limited to cash dividends and also limited to once per fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Dividends &#151; Legal reserve
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Commercial Code provides that a company may not make any distribution of profit by way of
dividends or interim dividends for any fiscal period unless it has set aside in its legal reserve
an amount equal to at least one-tenth of the amount paid by way of appropriation of retained
earnings for such fiscal period or equal to one-tenth of the amount of such interim dividends,
until the aggregate amount of additional paid-in capital and legal reserve is at least one-quarter
of its stated capital on a non-consolidated basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The New Company Law provides that when a joint stock company such as Pioneer makes a distribution
of surplus, it shall set aside in its legal reserve an amount equal to 10% of the amount of the
surplus to be decreased as a result of such distribution of surplus in accordance with the
provisions set forth in an ordinance of the Ministry of Justice.
</DIV>

<P align="center" style="font-size: 10pt">68
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Dividends &#151; Distributable amount
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the Commercial Code, Pioneer is permitted to distribute profits by way of year-end or interim
dividends out of the excess of its net assets, on a non-consolidated basis, over the aggregate of:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>its stated capital;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>its additional paid-in capital;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>its accumulated legal reserve;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(iv)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the legal reserve to be set aside in respect of the fiscal period concerned; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(v)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>such other amounts as are set out in an ordinance of the Ministry of Justice.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the case of interim dividends, the net assets are calculated by reference to the
non-consolidated balance sheet as at the last date of the preceding fiscal year, but adjusted to
reflect; (a)&nbsp;the legal reserve to be set aside in respect of interim dividends; (b)&nbsp;any subsequent
payment by way of appropriation of retained earnings and transfer to legal reserve in respect
thereof; (c)&nbsp;any subsequent transfer of retained earnings to stated capital; (d)&nbsp;if Pioneer has
been authorized, pursuant to a resolution of an ordinary general meeting of shareholders, a
resolution of the Board of Directors or both, to purchase shares of its common stock (see
&#147;<I>Acquisition by Pioneer of its common stock</I>&#148; below), the total amount of the purchase price of such
shares so authorized by such resolution that may be paid by Pioneer; and (e)&nbsp;such other amounts as
are set out in an ordinance of the Ministry of Justice, provided that (x)&nbsp;if Pioneer reduces its
stated capital, additional paid-in capital or accumulated legal reserve after the end of the
preceding fiscal year, the amount so reduced, less the amount paid to shareholders upon such
reduction and certain other amounts, and (y)&nbsp;such other amounts as are set out in an ordinance of
the Ministry of Justice, shall be added to the amount distributable as interim dividends as
described above. Interim dividends may not be paid if it is anticipated that at the end of the
fiscal year net assets, on a non-consolidated basis, will be less than the aggregate of the amounts
referred to in (i)&nbsp;through (v)&nbsp;above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the New Company Law, Pioneer is permitted to make a distribution of surplus to the extent
that the aggregate book value of the assets to be distributed to shareholders does not exceed the
Distributable Amount (as defined below) as at the effective date of such distribution of surplus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The amount of surplus at any given time shall be the amount of Pioneer&#146;s assets and the book value
of Pioneer&#146;s treasury stock after subtracting the amounts of the following items (1)&nbsp;through (4)&nbsp;as
they appear on Pioneer&#146;s non-consolidated balance sheet as at the end of Pioneer&#146;s last fiscal
year, and after reflecting the changes in Pioneer&#146;s surplus after the end of Pioneer&#146;s last fiscal
year, by adding the amounts of the following items (5), (6)&nbsp;and (7)&nbsp;and/or subtracting the amounts
of the following items (8), (9)&nbsp;and (10):
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>its liabilities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>its stated capital;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>its additional paid-in capital and accumulated legal reserve;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>other amounts as provided for by an ordinance of the Ministry of Justice;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(5)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(if Pioneer transferred its treasury stock after the end of the last fiscal year) the
transfer price of its treasury stock after subtracting the book value thereof;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(6)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(if Pioneer decreased its stated capital after the end of the last fiscal year) the amount of
decrease in its stated capital (excluding the amount transferred to the additional paid-in
capital or legal reserve);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(7)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(if Pioneer decreased its additional paid-in capital or legal reserve after the end of the
last fiscal year) the amount of decrease in its additional paid-in capital or legal reserve
(excluding the amount transferred to the stated capital);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(8)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(if Pioneer cancelled its treasury stock after the end of the last fiscal year) the book
value of its treasury stock so cancelled;</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">69
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(9)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(if Pioneer distributed surplus to shareholders after the end of the last fiscal year) the
assets distributed to shareholders by way of such distribution of surplus; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(10)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>other amounts as provided for by an ordinance of the Ministry of Justice.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Distributable Amount of Pioneer at any given time shall be the aggregate amount of (a)&nbsp;the
surplus, (b)&nbsp;the amount of profit as recorded for the period after the end of Pioneer&#146;s last fiscal
year until the date of an extraordinary settlement of account (if any) as provided for in an
ordinance of the Ministry of Justice and (c)&nbsp;the transfer price of its treasury stock in the same
period, after subtracting the amounts of the following items:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the book value of its treasury stock;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(if Pioneer transferred its treasury stock after the end of the last fiscal year) the
transfer price of its treasury stock;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the losses as recorded for the period after the end of Pioneer&#146;s last fiscal year until the
date of an extraordinary settlement of account (if any) as provided for in an ordinance of the
Ministry of Justice; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>other amounts as provided for by an ordinance of the Ministry of Justice.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Dividends &#151; Prescription
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under its Articles of Incorporation, Pioneer is not obligated to pay any dividends which are left
unclaimed for a period of three years after the date on which they first became payable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Dividends &#151; Liabilities
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the Commercial Code, if Pioneer makes interim dividends and at the end of the fiscal year
there is no excess of net assets over the aggregate of the amounts referred to in (i)&nbsp;through (v)
in &#147;Dividends &#151; Distributable amount&#148; above, Directors who have made such interim dividends shall
be jointly and severally liable to Pioneer for the smaller of the amount of such deficit or such
dividends unless such Directors prove that they did not fail to exercise due care in determining
such interim dividends.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the New Company Law, in cases where the distribution of surplus was made, if the aggregate
amount of the following items (1), (2)&nbsp;and (3)&nbsp;as at the end of the relevant fiscal year exceeds
the amount of surplus, the Directors who have distributed such dividends, shall be liable to
Pioneer for the smaller of such amount in excess or the amount of money or book value of such
distributed surplus unless such Directors prove that they did not fail to exercise due care in
determining such distribution:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the book value of Pioneer&#146;s treasury stock;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(if Pioneer transferred its treasury stock after the end of the last fiscal year) the
transfer price of its treasury stock after the end of Pioneer&#146;s last fiscal year; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>other amounts as provided for by an ordinance of the Ministry of Justice.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">However, the Directors shall not be liable to Pioneer for the distributions of surplus made
pursuant to the resolution of the ordinary general meeting of shareholders.
</DIV>

<P align="center" style="font-size: 10pt">70
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Stock splits</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pioneer may at any time split shares in issue into a greater number of shares by resolution of the
Board of Directors, and may amend its Articles of Incorporation to increase the number of the
authorized shares to be issued to allow such stock split pursuant to a resolution of the Board of
Directors, rather than relying on a special resolution of a general meeting of shareholders, which
is otherwise required for amending the Articles of Incorporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the event of a stock split, generally, shareholders will not be required to exchange share
certificates for new share certificates, but certificates representing the additional shares
resulting from the stock split will be issued to shareholders. When a stock split is to be made,
Pioneer must give public notice of the stock split, specifying the record date therefor, at least
two weeks prior to such record date. In addition, promptly after the stock split takes effect,
Pioneer must give notice to each shareholder specifying the number of shares to which such
shareholder is entitled by virtue of the stock split. After the New Company Law becomes effective,
no such notice to each shareholder is required.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Consolidation of Shares</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pioneer may at any time consolidate shares in issue into a smaller number of shares by a special
shareholders resolution (as defined in &#147;Voting Rights&#148;). When a consolidation of shares is to be
made, Pioneer must give public notice and notice to each shareholder that, within a period of not
less than one month specified in the notice, share certificates must be submitted to Pioneer for
exchange. A representative director of Pioneer must disclose the reason for the consolidation of
shares at the general meeting of shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>General meeting of shareholders</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The ordinary general meeting of shareholders of Pioneer for each fiscal year is held in June in
each year in or near Meguro-ku or in Minato-ku, Tokyo, Japan. In addition, Pioneer may hold an
extraordinary general meeting of shareholders whenever necessary by giving notice of convocation
thereof at least two weeks prior to the date set for the meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Notice of convocation of a shareholders&#146; meeting, setting forth the place, time and purpose
thereof, must be mailed to each shareholder having voting rights (or, in the case of a non-resident
shareholder, to his or her standing proxy or mailing address in Japan) at least two weeks prior to
the date set for the meeting. Such notice may be given to shareholders by electronic means,
subject to the consent of the relevant shareholders. The record date for an ordinary general
meeting of shareholders is March&nbsp;31 of each year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Any shareholder or group of shareholders holding at least 3% (or, when the New Company Law becomes
effective and in the event that Pioneer&#146;s Articles of Incorporation provide for a percentage lower
than 3%, such lower percentage) of the total number of voting rights for a period of six months
(or, when the New Company Law becomes effective and in the event that Pioneer&#146;s Articles of
Incorporation provide for a period shorter than six months, such period) or more may require the
convocation of a general meeting of shareholders for a particular purpose. Unless such
shareholders&#146; meeting is convened promptly or a convocation notice of a meeting which is to be held
not later than eight weeks (or, when the New Company Law becomes effective and in the event that
Pioneer&#146;s Articles of Incorporation provide for a period shorter than eight weeks, such a period)
from the day of such demand is dispatched, the requiring shareholder may, upon obtaining a court
approval, convene such shareholders&#146; meeting.
</DIV>

<P align="center" style="font-size: 10pt">71
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Any shareholder or group of shareholders holding at least 300 (or, when the New Company Law becomes
effective and in the event that Pioneer&#146;s Articles of Incorporation provide for a number less than
300, such number) voting rights or 1% (or, when the New Company Law becomes effective and in the
event that Pioneer&#146;s Articles of Incorporation provide for a percentage lower than 1%, such lower
percentage) of the total number of voting rights for a period of six months (or, when the New
Company Law becomes effective and in the event that Pioneer&#146;s Articles of Incorporation provide
for a period shorter than six months, such shorter period) or more may propose a matter to be
considered at a general meeting of shareholders by submitting a written request to a Representative
Director at least eight weeks (or, when the New Company Law becomes effective and in the event that
Pioneer&#146;s Articles of Incorporation provide for a period shorter than eight weeks, such shorter
period) prior to the date set for such meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Voting rights</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">So long as Pioneer maintains the unit share system (see &#147;<I>&#145;Unit&#146; share system</I>&#148; below; currently 100
shares constitute one unit) a holder of shares constituting one or more full units is entitled to
one voting right per unit of shares subject to the limitations on voting rights set forth in the
following two sentences. A corporate shareholder more than one-quarter of whose total voting
rights are directly or indirectly owned by Pioneer (or, when the New Company Law becomes effective,
management of which is being controlled in substance by Pioneer as provided for by an ordinance of
the Ministry of Justice) may not exercise its voting rights with respect to shares of common stock
of Pioneer that it owns. In addition, Pioneer may not exercise its voting rights with respect to
its shares that it owns. If Pioneer eliminates from its Articles of Incorporation the provisions
relating to the unit of shares, holders of common stock will have one voting right for each share
they hold. Except as otherwise provided by law or by the Articles of Incorporation, a resolution
can be adopted at a general meeting of shareholders by a majority of the number of voting rights of
all the shareholders present at the meeting. The Commercial Code (or, when the New Company Law
becomes effective, the New Company Law) and Pioneer&#146;s Articles of Incorporation provide, however,
that the quorum for the election of Directors and Corporate Auditors shall not be less than
one-third of the total number of voting rights of all the shareholders. Pioneer&#146;s shareholders are
not entitled to cumulative voting in the election of Directors. Shareholders may exercise their
voting rights through proxies, provided that the proxies are also shareholders holding voting
rights. Pioneer&#146;s shareholders also may cast their votes in writing, or exercise their voting
rights by electronic means pursuant to the method thereof determined by the Board of Directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Commercial Code (or, when the New Company Law becomes effective, the New Company Law) and
Pioneer&#146;s Articles of Incorporation require a special shareholders resolution (as defined below) in
order to amend the Articles of Incorporation and in certain other instances. A special
shareholders resolution is a resolution for which the quorum shall be one-third of the total voting
rights of all the shareholders, and the approval by at least two-thirds (or, when the New Company
Law becomes effective and in the event that Pioneer&#146;s Articles of Incorporation provide for a
percentage greater than two-thirds, such greater percentage) of the voting rights of all the
shareholders represented at the meeting is required (in addition, when the New Company Law becomes
effective and in the event that Pioneer&#146;s Articles of Incorporation provide that the approval by
certain number of shareholders is required, such approval is also required). The instances
requiring a Special Shareholders Resolution include:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>acquisition of its own shares from a specific party;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>consolidation of shares;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any offering of new shares at a &#147;specially favorable&#148; price (or any offering of stock
acquisition rights to subscribe for or acquire shares of capital stock, or bonds with stock
acquisition rights at &#147;specially favorable&#148; conditions) to any persons other than
shareholders;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the removal of a Director or Corporate Auditor (when the New Company Law becomes effective,
the removal of a Director who is elected by cumulative voting);</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">72
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(5)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the exemption of liability of a Director or Corporate Auditor with certain exceptions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(6)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a reduction of stated capital (when the New Company Law becomes effective, with certain
exceptions in which a shareholders&#146; resolution is not required);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(7)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(when the New Company Law becomes effective ) a distribution of in-kind dividends which meets
certain requirements;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(8)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>dissolution, merger, or consolidation with certain exceptions in which a shareholders&#146;
resolution is not required;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(9)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the transfer of the whole or a material part of the business;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(10)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the taking over of the whole of the business of any other corporation with certain exceptions
in which a shareholders&#146; resolution is not required;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(11)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>share exchange or share transfer for the purpose of establishing 100&nbsp;percent
parent-subsidiary relationships with certain exceptions in which a shareholders&#146; resolution is
not required; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(12)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>separating of the corporation into two or more corporations with certain exceptions in which
a shareholders&#146; resolution is not required.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Issue of additional shares and pre-emptive rights</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Holders of Pioneer&#146;s shares of common stock have no pre-emptive rights under its Articles of
Incorporation. Authorized but unissued shares may be issued at such times and upon such terms as
the Board of Directors determines, subject to the limitations as to the issue of new shares at a
&#147;specially favorable&#148; price mentioned under &#147;<I>Voting rights</I>&#148; above. The Board of Directors may,
however, determine that shareholders shall be given subscription rights regarding a particular
issue of new shares, in which case such rights must be given on uniform terms to all shareholders
as at a record date of which not less than two weeks&#146; prior public notice must be given. Each of
the shareholders to whom such rights are given must also be given notice of the expiry thereof at
least two weeks prior to the date on which such rights expire.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Subject to certain conditions, Pioneer may issue share acquisition rights or bonds with share
acquisition rights by a resolution of the Board of Directors. Holders of share acquisition rights
or bonds with share acquisition rights may exercise their rights to acquire a certain number of
shares within the exercise period as prescribed in the terms of their share acquisition rights and
bonds with share acquisition rights. Upon exercise of share acquisition rights, Pioneer will be
obliged to issue the necessary number of new shares or alternatively to transfer the relevant
number of shares held by it as treasury stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In cases where a particular issue of new shares or stock acquisition rights (i)&nbsp;violates laws and
regulations or Pioneer&#146;s Articles of Incorporation, or (ii)&nbsp;will be performed in a manner
materially unfair, and shareholders may suffer disadvantages therefrom, such shareholder may file
an injunction to enjoin such issue with a court.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Liquidation rights</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the event of a liquidation of Pioneer, the assets remaining after payment of all debts,
liquidation expenses and taxes will be distributed among shareholders in proportion to the
respective numbers of shares of common stock held by them.
</DIV>


<P align="center" style="font-size: 10pt">73
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Record date</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">March&nbsp;31 is the record date for Pioneer&#146;s year-end dividends. So long as Pioneer maintains the
unit share system, the shareholders and beneficial shareholders who are registered as the holders
of one or more full units of shares in Pioneer&#146;s register of shareholders and/or that of beneficial
shareholders at the end of each March&nbsp;31 are entitled to exercise shareholders&#146; rights at the
ordinary general meeting of shareholders with respect to the fiscal year ending on such March&nbsp;31.
September&nbsp;30 is the record date for interim dividends. In addition, Pioneer may set a record date
for determining the shareholders and/or beneficial shareholders entitled to other rights pertaining
to the shares of Common Stock of Pioneer, and for other purposes, by a resolution of the Board of
Directors and giving at least two weeks&#146; prior public notice.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The price of shares generally goes ex-dividend or ex-rights on Japanese stock exchanges on the
third business day prior to a record date (or if the record date is not a business day, the fourth
business day prior thereto), for the purpose of dividends or rights offerings.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Acquisition by Pioneer of its common stock</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pioneer may acquire its own shares (a)&nbsp;through a stock exchange on which such shares are listed
(pursuant to an ordinary resolution of an ordinary general meeting of shareholders or a resolution
of the Board of Directors) or by way of tender offer (pursuant to an ordinary resolution of an
ordinary general meeting of shareholders or a resolution of the Board of Directors); (b)&nbsp;by
purchase from a specific party other than a subsidiary of Pioneer (pursuant to a special resolution
of an ordinary general meeting of shareholders); or (c)&nbsp;by purchase from a subsidiary of Pioneer
(pursuant to a resolution of the Board of Directors). Under the New Company Law, not only ordinary
general meetings of shareholders but also extraordinary general meetings of shareholders will be
able to approve the acquisition by Pioneer of its own shares in the cases of (a)&nbsp;and (b)&nbsp;above. If
shares are purchased by Pioneer pursuant to a resolution of the Board of Directors, then the reason
for the purchase, as well as the kind, number and aggregate purchase price of such shares must be
reported to the shareholders at the ordinary general meeting of shareholders to be held immediately
after such purchase of shares. When such acquisition is made by Pioneer from a specific party
other than a subsidiary of Pioneer, any other shareholder may make a request to a Representative
Director, more than five calendar days prior to the relevant shareholders&#146; meeting, to include him
or her as a seller in the proposed purchase. Under the New Company Law, however, the acquisition
of its own shares at a price not exceeding the then market price to be provided under an ordinance
of the Ministry of Justice will not trigger the right of any shareholder to include him or her as
the seller of his or her shares in such proposed purchase. Any such acquisition of shares must
satisfy the requirements under the Commercial Code. In cases other than the acquisition by Pioneer
of its own shares pursuant to a resolution of the Board of Directors, the total amount of the
purchase price may not exceed the amount of the retained earnings available for dividend payments
after taking into account any reduction, if any, of the stated capital, additional paid-in capital
or legal reserve (if such reduction of the stated capital, additional paid-in capital or legal
reserve has been authorized pursuant to a resolution of the relevant ordinary general meeting of
shareholders), minus the amount to be paid by way of appropriation of retained earnings for the
relevant fiscal year and the amount to be transferred from retained earnings to stated capital. If
Pioneer purchases shares pursuant to a resolution of the Board of Directors, the total amount of
the purchase price may not exceed the amount of the retained earnings available for an interim
dividend payment minus the amount of any interim dividend Pioneer actually paid. However, if it is
anticipated that the net assets on the non-consolidated balance sheet as at the end of the relevant
fiscal year will be less than the aggregate amount of the stated capital, additional paid-in
capital and other items as described in (i)&nbsp;through (v)&nbsp;in &#147;<I>Dividends  &#151; Distributable
amount</I>&#148; above, Pioneer may not acquire such shares. Under the New Company Law, the
restriction on the source of funds for
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the acquisition by Pioneer of its own shares will be integrated into those for the distribution of
surplus to the shareholders. See &#147;<I>Dividends</I>.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Shares acquired by Pioneer may be held by it for any period or may be cancelled by a resolution of
the Board of Directors. Pioneer may also transfer to any person the shares held by it, subject to
a resolution of the Board of Directors, and subject also to other requirements similar to those
applicable to the issuance of new shares, as described in &#147;<I>Issue of additional shares and
pre-emptive rights</I>&#148; above. Pioneer may also utilize its treasury stock for the purpose of transfer
to any person upon exercise of share acquisition rights or for the purpose of acquiring another
company by way of merger, share exchange or corporate split through exchange of treasury stock for
shares or assets of the acquired company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>&#147;Unit&#148; share system</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Articles of Incorporation of Pioneer provide that 100 shares constitute one unit of shares of
stock. Although the number of shares constituting one unit is included in the Articles of
Incorporation, any amendment to the Articles of Incorporation reducing (but not increasing) the
number of shares constituting one unit or eliminating the provisions for the unit of shares may be
made by the resolution of the Board of Directors rather than by the special shareholders
resolution, which is otherwise required for amending the Articles of Incorporation. The number of
shares constituting one new unit, however, cannot exceed 1,000 or one two-hundredth (1/200) of all
issued shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Shareholders shall have one voting right for each unit of shares that they hold. Any number of
shares less than a full unit will carry no voting rights.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Unless Pioneer&#146;s shareholders amend the Articles of Incorporation by a special shareholders
resolution to eliminate the provision not to issue share certificates for less than a unit of
shares, a share certificate for any number of shares less than one full unit will in general not be
issued. As the transfer of shares normally requires the delivery of the share certificates
therefor, any fraction of a unit for which no share certificates are issued is not transferable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A holder of shares constituting less than one unit may require Pioneer to purchase such shares at
their market value in accordance with the provisions of the Share Handling Regulations of Pioneer.
In addition, the Articles of Incorporation of Pioneer provide that a holder of shares constituting
less than one full unit may request Pioneer to sell to such holder such amount of shares which
will, when added together with the shares constituting less than one full unit held by such holder,
constitute one full unit of stock, in accordance with the provisions of the Share Handling
Regulations of Pioneer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A holder who owns ADRs evidencing less than 100 ADSs will indirectly own less than one full unit of
shares of common stock. Although, as discussed above, under the unit share system holders of less
than one full unit have the right to require Pioneer to purchase their shares or sell shares held
by Pioneer to such holders, holders of ADRs evidencing ADSs that represent other than integral
multiples of a unit are unable to withdraw the underlying shares of common stock representing less
than one full unit and, therefore, are unable, as a practical matter, to exercise the rights to
require Pioneer to purchase such underlying shares or sell shares held by Pioneer to such holders
unless Pioneer&#146;s Articles of Incorporation are amended to eliminate the provision not to issue
share certificates for the numbers of shares less than a unit. As a result, access to the Japanese
markets by holders of ADRs through the withdrawal mechanism will not be available for dispositions
of shares of common stock in lots less than one full unit. The unit share system does not affect
the transferability of ADSs, which may be transferred in lots of any size.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Sale by Pioneer of shares held by shareholders whose location is unknown</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pioneer is not required to send a notice to a shareholder if a notice to such shareholder fails to
arrive at the registered address of the shareholder in Pioneer&#146;s register of shareholders or at the
address otherwise notified to Pioneer continuously for five years or more.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In addition, Pioneer may sell or otherwise dispose of shares of common stock for which the location
of the shareholder is unknown. Generally, if (i)&nbsp;notices to a shareholder fail to arrive
continuously for five years or more at the shareholder&#146;s registered address in Pioneer&#146;s register
of shareholders or at the address otherwise notified to Pioneer, and (ii)&nbsp;the shareholder fails to
receive dividends on the shares continuously for five years or more at the address registered in
Pioneer&#146;s register of shareholders or at the address otherwise notified to Pioneer, Pioneer may
sell or otherwise dispose of the shareholder&#146;s shares at the then market price of the shares by a
resolution of the Board of Directors and after giving at least three months&#146; prior public and
individual notice, and may hold or deposit the proceeds of such sale or disposal of shares for such
shareholder.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Reporting of substantial shareholdings</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Securities and Exchange Law of Japan and regulations thereunder require any person, regardless
of residence, who has become, beneficially and solely or jointly, a holder(s) of more than 5% of
the total issued shares of capital stock of a company listed on any Japanese stock exchange or
whose shares are traded on the over-the-counter market in Japan to file with the Director&#151;General
of a competent Local Finance Bureau of the Ministry of Finance within five business days a report
concerning such shareholdings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A similar report must also be filed in respect of any subsequent change of 1% or more in any such
holding or any change in material matters set out in reports previously filed, with certain
exceptions. For this purpose, shares issuable to such person upon conversion of convertible
securities or exercise of share subscription warrants or share acquisition rights are taken into
account in determining both the number of shares held by such holder and the issuer&#146;s total issued
share capital. Copies of such report must also be furnished to the issuer of such shares and all
Japanese stock exchanges on which the shares are listed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Except for the general limitations under Japanese anti-trust and anti-monopoly regulations against
holding of shares of capital stock of a Japanese corporation which leads or may lead to a restraint
of trade or monopoly, and except for general limitations under the Commercial Code or Pioneer&#146;s
Articles of Incorporation on the rights of shareholders applicable regardless of residence or
nationality, there is no limitation under Japanese laws and regulations applicable to Pioneer or
under its Articles of Incorporation on the rights of non-resident or foreign shareholders to hold
the shares of common stock of Pioneer or exercise voting rights thereon.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">There is no provision in Pioneer&#146;s Articles of Incorporation that would have an effect of delaying,
deferring or preventing a change in control of Pioneer and that would operate only with respect to
merger, consolidation, acquisition or corporate restructuring involving Pioneer.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Material contracts</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Exchange controls</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Foreign Exchange and Foreign Trade Law of Japan and its related cabinet orders and ministerial
ordinances (the &#147;Foreign Exchange Regulations&#148;) govern the acquisition and holding of shares of
common stock of Pioneer by &#147;exchange non-residents&#148; and by &#147;foreign investors.&#148; The Foreign
Exchange Regulations currently in effect do not, however, affect transactions between exchange
non-residents to purchase or sell shares outside Japan using currencies other than Japanese yen.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Exchange non-residents are:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>individuals who are not resident in Japan; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>corporations whose principal offices are located outside Japan.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Generally, branches and other offices of non-resident corporations that are located within Japan
are regarded as exchange residents of Japan. Conversely, branches and other offices of Japanese
corporations located outside Japan are regarded as exchange non-residents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Foreign investors are:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>individuals who are exchange non-residents;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>corporations that are organized under the laws of foreign
countries or whose principal offices are located outside Japan;
and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>corporations (1)&nbsp;of which 50% or more of their shares are held by
individuals who are exchange non-residents and/or corporations (a)
that are organized under the laws of foreign countries or (b)
whose principal offices are located outside Japan or (2)&nbsp;a
majority of whose officers, or officers having the power of
representation, are individuals who are exchange non-residents.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In general, the acquisition of shares of a Japanese company (such as the shares of common stock of
Pioneer) by an exchange non-resident from an exchange resident of Japan is not subject to any prior
filing requirements. In certain limited circumstances, however, the Minister of Finance may
require prior approval of an acquisition of this type. While prior approval, as described above,
is not required, in the case where an exchange resident of Japan transfers shares of a Japanese
company (such as the shares of common stock of Pioneer) for consideration exceeding &#165;100&nbsp;million to
an exchange non-resident, the exchange resident of Japan who transfers the shares is required to
report the transfer to the Minister of Finance within 20&nbsp;days from the date of the transfer, unless
the transfer was made through a bank, securities company or financial futures trader licensed under
Japanese law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If a foreign investor acquires shares of a Japanese company that is listed on a Japanese stock
exchange (such as the shares of common stock of Pioneer) or that is traded on an over-the-counter
market in Japan and, as a result of the acquisition, the foreign investor, in combination with any
existing holdings, directly or indirectly holds 10% or more of the issued shares of the relevant
company, the foreign investor must file a report of the acquisition with the Minister of Finance
and any other competent Ministers having jurisdiction over that Japanese company within 15&nbsp;days
from and including the date of the acquisition, except where the offering of the company&#146;s shares
was made overseas. In limited circumstances, such as where the foreign investor is in a country
that is not listed on an exemption schedule in the Foreign Exchange Regulations, a prior
notification of the acquisition must be filed with the Minister of Finance and any other competent
Ministers, who may then modify or prohibit the proposed acquisition.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the Foreign Exchange Regulations, dividends paid on and the proceeds from sales in Japan of
shares of common stock of Pioneer held by exchange non-residents of Japan may generally be
converted into any foreign currency and repatriated abroad.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>E. Taxation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following discussion is a summary of the principal Japanese national and U.S. federal income
tax consequences of the acquisition, ownership and disposition of shares of common stock or ADSs.
This summary does not purport to address all material tax consequences that may be relevant to
holders of shares of common stock or ADSs, and does not take into account the specific
circumstances of any particular investors, some of which (such as tax-exempt entities, banks,
insurance companies, broker-dealers, traders in securities that elect to use a mark-to-market
method of accounting for their securities holdings, regulated investment companies, real estate
investment trusts, investors liable for alternative minimum tax, investors that own or are treated
as owning 10% or more of Pioneer&#146;s voting stock, investors that hold shares of common stock or ADSs
as part of a straddle, hedge, conversion or constructive sale transaction or other integrated
transaction, persons that hold shares of common stock or ADSs through a partnership or other
pass-through entity and U.S. Holders (as defined below) whose functional currency is not the U.S.
dollar) may be subject to special tax rules. This summary is based on the national or federal
income tax laws and regulations of Japan and of the United States, judicial decisions, published
rulings and administrative pronouncements as in effect at the date hereof, as well as on the
current income tax convention between the United States and Japan (the &#147;Treaty&#148;), all of which are
subject to change (possibly with retroactive effect) and/or to differing interpretations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This summary is based in part upon the representations of the depositary and the assumption that
each obligation in the deposit agreement for ADSs and in any related agreement will be performed in
accordance with its terms.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For purposes of this discussion, a &#147;U.S. Holder&#148; is any beneficial owner of shares of common stock
or ADSs that, for U.S. federal income tax purposes, is:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a citizen or individual resident of the United States,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a corporation or other entity taxable as a corporation for U.S. federal income tax purposes organized
in or under the laws of the United States, any State, or the District of Columbia,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an estate the income of which is subject to U.S. federal income tax without regard to its source, or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a trust that is (i)&nbsp;subject to the primary supervision of a U.S. court and the control of one or more
U.S. persons, or (ii)&nbsp;that has a valid election in effect under applicable Treasury regulations to be
treated as a U.S. person.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">An &#147;Eligible U.S. Holder&#148; is a U.S. Holder that:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>is a resident of the United States for purposes of the Treaty,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>does not maintain a permanent establishment in Japan (i)&nbsp;with which shares of common stock or ADSs are
effectively connected or (ii)&nbsp;of which shares of common stock or ADSs form part of the business
property, and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>is eligible for benefits under the Treaty with respect to income and gain derived in connection with
the shares of common stock or ADSs.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The U.S. federal income tax consequences of a partner in a partnership holding shares of common
stock or ADSs generally will depend on the status of the partner and the activities of the
partnership. Partners in a partnership holding shares of common stock or ADSs should consult their
own tax advisors. This
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">summary does not address any aspects of U.S. federal tax law other than income taxation, and does
not discuss any aspects of Japanese tax law other than national income taxation, inheritance and
gift taxation. This summary also does not cover any state or local, or non-U.S., non-Japanese tax
considerations. Investors are urged to consult their tax advisors regarding the U.S. federal,
state and local and Japanese and other tax consequences of acquiring, owning and disposing of
shares of common stock or ADSs. In particular, where relevant, investors are urged to confirm
their status as Eligible U.S. Holders with their tax advisors and to discuss with their tax
advisors any possible consequences of their failure to qualify as Eligible U.S. Holders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In general, taking into account the earlier assumption, for purposes of the Treaty and for U.S.
federal income and Japanese income tax purposes, beneficial owners of ADRs evidencing ADSs will be
treated as the owners of the shares of common stock represented by those ADSs, and exchanges of
shares of common stock for ADSs, and exchanges of ADSs for shares of common stock, will not be
subject to U.S. federal income tax or Japanese income tax.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B><I>The discussion below is intended for general information only and does not constitute a
complete analysis of all tax consequences relating to the acquisition, ownership and disposition of
shares of common stock or the ADSs. Investors in shares of common stock or the ADSs should consult
their own tax advisors concerning the tax consequences of their particular situations.</I></B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Japanese taxation</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following is a summary of the principal Japanese tax consequences (limited to national taxes)
to holders of shares of common stock of Pioneer or ADRs evidencing ADSs representing shares of
common stock of Pioneer who are either individuals who are not residents of Japan or non-Japanese
corporations, without a permanent establishment in Japan (&#147;non-resident Holders&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Generally, an individual who is a non-resident of Japan or a non-Japanese corporation is subject to
Japanese withholding tax on dividends paid by a Japanese corporation. Pioneer withholds taxes from
dividends it pays as required by Japanese law. Stock splits in themselves are not subject to
Japanese income tax.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the absence of an applicable tax treaty, convention or agreement reducing the maximum rate of
Japanese withholding tax or allowing exemption from Japanese withholding tax, the rate of Japanese
withholding tax applicable to dividends paid by Japanese corporations to individuals who are
non-residents of Japan or non-Japanese corporations is 20%. However, with respect to dividends
paid on listed shares issued by a Japanese corporation (such as the shares of common stock of
Pioneer) to any corporate or individual shareholders (including those shareholders who are
non-Japanese corporations or Japanese non-resident individuals, such as non-resident Holders),
except for any individual shareholder who holds 5% or more of the total issued shares of the
relevant Japanese corporation, the aforementioned 20% withholding tax rate is reduced to (i)&nbsp;7% for
dividends due and payable on or before March&nbsp;31, 2008, and (ii)&nbsp;15% for dividends due and payable
on or after April&nbsp;1, 2008. At the date of this annual report, Japan has income tax treaties,
conventions or agreements whereby the above-mentioned withholding tax rate is reduced, in most
cases to 15&nbsp;percent for portfolio investors with, among other countries, Australia, Belgium,
Canada, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, New
Zealand, Norway, Singapore, Spain, Sweden, Switzerland, and the U.K.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the Treaty, the maximum rate of Japanese withholding tax which may be imposed on dividends
paid by a Japanese corporation to Eligible U.S. Holders that are portfolio investors is generally
limited to 10% of the gross amount actually distributed, and dividends paid by a Japanese
corporation to Eligible U.S. Holders that are pension funds is exempt from Japanese taxation by way
of withholding or otherwise
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">unless such dividends are derived from the carrying on of a business, directly or indirectly, by
such pension funds.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If the maximum tax rate provided for in the income tax treaty applicable to dividends paid by
Pioneer to any particular non-resident Holder is lower than the withholding tax rate otherwise
applicable under Japanese tax law or any particular non-resident Holder is exempt from Japanese
income tax with respect to such dividends under the income tax treaty applicable to such particular
non-resident Holder, such non-resident Holder who is entitled to a reduced rate of or exemption
from Japanese withholding tax on payment of dividends on Pioneer&#146;s shares of common stock is
required to submit an Application Form for Income Tax Convention Regarding Relief from Japanese
Income Tax on Dividends in advance through Pioneer to the relevant tax authority before such
payment of dividends. A standing proxy for non-resident Holders of a Japanese corporation may
provide this application service. With respect to ADSs, this reduced rate or exemption is
applicable if the Depositary or its agent submits two Application Forms (one before payment of
dividends, the other within eight months after Pioneer&#146;s fiscal year-end or semi-fiscal year-end)
to the Japanese tax authorities. To claim this reduced rate or exemption, any relevant
non-resident Holder of ADSs will be required to file a proof of taxpayer status, residence and
beneficial ownership (as applicable) and to provide other information or documents as may be
required by the Depositary. A non-resident Holder who is entitled, under an applicable tax treaty,
to a reduced treaty rate lower than the withholding tax rate otherwise applicable under Japanese
tax law or an exemption from the withholding tax, but failed to submit the required application in
advance will be entitled to claim the refund of withholding taxes withheld in excess of the rate
under an applicable tax treaty (if such non-resident Holder is entitled to a reduced treaty rate
under the applicable income tax treaty) or the whole of the withholding tax withheld (if such
non-resident Holder is entitled to an exemption under the applicable income tax treaty) from the
relevant Japanese tax authority. Pioneer does not assume any responsibility to ensure withholding
at the reduced treaty rate or not withholding for shareholders who would be eligible under an
applicable tax treaty but do not follow the required procedures as stated above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Gains derived from the sale of shares of common stock or ADSs outside Japan by a non-resident
Holder holding such shares or ADSs as a portfolio investor are, in general, not subject to Japanese
income or corporation tax. Eligible U.S. Holders are not subject to Japanese income or corporation
tax with respect to such gains under the Treaty.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Japanese inheritance and gift taxes at progressive rates may be payable by an individual who has
acquired shares of common stock or ADSs as a legatee, heir or donee even though neither the
individual nor the deceased nor donor is a Japanese resident.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Holders of shares of common stock of Pioneer or ADSs should consult their tax advisors regarding
the effect of these taxes and, in the case of U.S. Holders, the possible application of the Estate
and Gift Tax Treaty between the U.S. and Japan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>U.S. federal income taxation</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>U.S. Holders</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following discussion is a summary of the principal U.S. federal income tax consequences to
holders of shares of common stock and ADSs that are U.S. Holders and that hold those shares of
common stock or ADSs as capital assets (generally, for investment purposes).
</DIV>


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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Taxation of Dividends</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Subject to the passive foreign investment company rules discussed below, the gross amount of any
distribution made by us in respect of shares of common stock or ADSs (without reduction for
Japanese withholding taxes) will constitute a taxable dividend to the extent paid out of current or
accumulated earnings and profits, as determined under U.S. federal income tax principles. The U.S.
dollar amount of such a dividend generally will be included in the gross income of a U.S. Holder,
as ordinary income, when the dividend is actually or constructively received by the U.S. Holder, in
the case of shares of common stock, or by the depositary, in the case of ADSs. Dividends paid by
us will not be eligible for the dividends received deduction generally allowed to U.S. corporations
in respect of dividends received from other U.S. corporations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Subject to certain exceptions for short-term and hedged positions, and provided that we are not a
passive foreign investment company (as discussed below), dividends received by certain U.S. Holders
(including individuals) prior to January&nbsp;1, 2009 with respect to the shares of common stock or ADSs
will be subject to U.S. federal income taxation at a maximum rate of 15%. Investors should be
aware that the U.S. Treasury Department has announced its intention to promulgate rules pursuant to
which shareholders (and intermediaries) will be permitted to rely on certifications from issuers to
establish that dividends qualify for the reduced rate of U.S. federal income taxation. Because
such procedures have not yet been issued, we are not certain that we will be able to comply with
them. U.S. Holders of ADSs or shares of common stock should consult their own tax advisors
regarding the availability of the reduced rate in the light of their own particular circumstances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The U.S. dollar amount of a dividend paid in Japanese yen will be determined based on the Japanese
yen/U.S. dollar exchange rate in effect on the date that dividend is included in the gross income
of the U.S. Holder, regardless of whether the payment is converted into dollars on such date.
Generally, any gain or loss resulting from currency exchange fluctuations during the period from
the date the dividend payment is included in the gross income of a U.S. Holder through the date
that payment is converted into U.S. dollars (or the U.S. Holder otherwise disposed the Japanese
yen) will be treated as U.S. source ordinary income or loss. U.S. Holders should consult their own
tax advisors regarding the calculation and U.S. federal income tax treatment of foreign currency
gain or loss.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To the extent, if any, that the amount of any distribution received by a U.S. Holder in respect of
shares of common stock or ADSs exceeds our current and accumulated earnings and profits as
determined under U.S. federal income tax principles, the distribution first will be treated as a
tax-free return of capital to the extent the U.S. Holder&#146;s adjusted tax basis in those shares or
ADSs, and thereafter as U.S. source capital gain.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Distributions of additional shares of common stock that are made to U.S. Holders with respect to
their shares of common stock or ADSs and that are part of a pro rata distribution to all of our
shareholders generally will not be subject to U.S. federal income tax.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For U.S. foreign tax credit purposes, dividends included in gross income by a U.S. Holder in
respect of shares of common stock or ADSs will constitute income from sources outside the United
States and will be subject to various classifications and other limitations. Subject to generally
applicable limitations under U.S. federal income tax law and the Treaty, any Japanese withholding
tax imposed in respect of a dividend paid by us in respect of shares of common stock or ADSs may be
claimed either as a credit against the U.S. federal income tax liability of a U.S. Holder or, if
the U.S. Holder does not elect to take a credit for any foreign taxes paid that year, as a
deduction from that U.S. Holder&#146;s taxable income. In general, special rules will apply to the
calculation of foreign tax credits in respect of dividend income that is subject to preferential
rates of U.S. federal income tax. Additionally, special rules apply to individuals
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">whose foreign source income during the taxable year consists entirely of &#147;qualified passive income&#148;
and whose creditable foreign taxes paid or accrued during the taxable year do not exceed $300 ($600
in the case of a joint return). Further, under some circumstances, a U.S. Holder that:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>has held shares of common stock or ADSs for less than a specified minimum period, or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>is obligated to make payments related to our dividends,</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">will not be allowed a foreign tax credit for foreign taxes imposed on our dividends. U.S. Holders
are urged to consult their tax advisors regarding the availability of the foreign tax credit under
their particular circumstances. The Internal Revenue Service (the &#147;IRS&#148;) has expressed concern
that parties to whom ADSs are released may be taking actions that are inconsistent with the
claiming of foreign tax credits by U.S. Holders of ADSs. Accordingly, investors should be aware
that the discussion above regarding the creditability of Japanese withholding tax on dividends
could be affected by future actions that may be taken by the IRS.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Taxation of Capital Gains</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In general upon a sale or other taxable disposition of shares of common stock or ADSs, a U.S.
Holder will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the
difference between the amount realized on the sale or other taxable disposition and the U.S.
Holder&#146;s adjusted tax basis in those shares of common stock or ADSs (which is generally the U.S.
dollar cost thereof). Subject to the passive foreign investment company rules discussed below,
such gain or loss recognized on the sale or other taxable disposition generally will be capital
gain or loss and, if the U.S. Holder&#146;s holding period for those shares or ADSs exceeds one year,
will be long-term capital gain or loss. Certain U.S. Holders, including individuals, are eligible
for preferential rates of U.S. federal income tax in respect of long-term capital gain. Under U.S.
federal tax law, the deduction of capital losses is subject to limitations. Any gain or loss
recognized by a U.S. Holder in respect of the sale or other taxable disposition of shares of common
stock or ADSs generally will be treated as derived from U.S. sources for U.S. foreign tax credit
purposes.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Passive Foreign Investment Companies</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Based on current estimates of our income and asset, we do not believe that we are a passive foreign
investment company (a &#147;PFIC&#148;) for U.S. federal income tax purposes, and we intend to continue our
operations in such a manner that it is highly unlikely that we would become a PFIC in the future
although no assurances can be made regarding determination of our PFIC status in the current or any
future taxable year. The PFIC determination is made annually and generally is based on either the
portion of our assets (including goodwill) or the portion of our income being characterized as
passive under the PFIC rules.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If we become a PFIC, unless a U.S. Holder elects to be taxed annually on a mark-to-market basis
with respect to its shares of common stock or ADSs, any gain realized on a sale or other taxable
disposition of shares of common stock or ADSs and certain &#147;excess distributions&#148; (generally
distributions in excess of 125% of the average distribution over a three-year period, or shorter
holding period for the shares of common stock or ADSs) would be treated as realized ratably over
the U.S. Holder&#146;s holding period for the shares of common stock or ADSs; amounts allocated to prior
years during which we were a PFIC would be taxed at the highest ordinary income tax rate in effect
for each such year, and an additional interest charge may apply to the portion of the U.S. federal
income tax liability on such gains or distributions treated under the PFIC rules as having been
deferred by the U.S. Holder. Moreover, dividends that a U.S. Holder receives from us will not be
eligible for the reduced U.S. federal income tax rates described above if we are a PFIC either in
the taxable year of the dividend or the preceding taxable year (and instead will be taxable at
rates applicable to ordinary income).
</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If a mark-to-market election were made, a U.S. Holder would take into account each year the
appreciation or depreciation in value of its shares of common stock or ADSs, which would be treated
as ordinary income or (subject to limitations) ordinary loss, as would gains or losses on actual
dispositions of shares of common stock or ADSs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Any U.S. Holder who owns shares of common stock or ADSs during any taxable year that we are a PFIC
would be required to file Internal Revenue Service Form&nbsp;8621. U.S. Holders are urged to consult
their tax advisors concerning the U.S. federal income tax consequences of holding our shares of
common stock or ADSs if we were considered a PFIC in any year.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Non-U.S. Holders</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following discussion is a summary of the principal U.S. federal income tax consequences to
beneficial holders of shares of common stock or ADSs that are neither U.S. Holders nor partnerships
for U.S. federal income tax purposes (&#147;Non-U.S. Holders&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Subject to the discussion below on &#147;Backup withholding and information reporting,&#148; distributions
received by a Non-U.S. Holder in respect of shares of common stock or ADSs generally will not be
subject to any U.S. federal income or withholding tax, unless the Non-U.S. Holder conducts trade or
business within the United States, and the distributions are effectively connected with that trade
or business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Subject to the discussion below on &#147;Backup withholding and information reporting,&#148; a Non-U.S.
Holder generally will not be subject to U.S. federal income tax in respect of gain recognized on a
sale or other disposition of shares of common stock or ADSs, unless the gain is effectively
connected with a trade or business conducted by the Non-U.S. Holder within the United States, or
the Non-U.S. Holder is an individual who was present in the United States for 183 or more days in
the taxable year of the disposition and other conditions are met.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If an income tax treaty applies to a Non-U.S. Holder, it may require, as a condition for the
Non-U.S. Holder to be subject to U.S. federal income taxation on dividends or capital gains that
are effectively connected with trade or business conducted by a Non-U.S. Holder in the United
States, that the dividends or capital gains be attributable to a permanent establishment or fixed
base that the Non-U.S. Holder maintains in the United States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Income that is effectively connected with a U.S. trade or business of a Non-U.S. Holder, and, if an
income tax treaty applies and so requires, is attributable to a U.S. permanent establishment or
fixed base of the Non-U.S. Holder, generally will be taxed in the same manner as the income of a
U.S. Holder. In addition, however, under certain circumstances, any such effectively connected
income that is realized by a corporate Non-U.S. Holder may be subject to an additional &#147;branch
profits tax&#148; at the rate of 30% or at a lower rate that may be prescribed by an applicable income
tax treaty.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Backup withholding and information reporting</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In general, except in the case of certain exempt recipients (such as corporations) information
reporting requirements will apply to dividends on shares of common stock or ADSs paid to U.S.
Holders in the United States or through certain U.S. related financial intermediaries and to the
proceeds received upon the sale, exchange or redemption of shares of common stock or ADSs by U.S.
Holders within the United States or through certain U.S. related financial intermediaries.
Furthermore, backup withholding currently at a rate of 28% may apply to those amounts if a U.S.
Holder fails to provide an accurate tax
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">identification number or to report interest and dividends required to be shown on its U.S. federal
income tax returns or makes other appropriate certifications in the required manner.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Dividends on shares of common stock or ADSs paid to Non-U.S. Holders and proceeds received upon the
sale, exchange or redemption of shares of common stock or ADSs by Non-U.S. Holders generally are
exempt from information reporting and backup withholding. However, a Non-U.S. Holder may be
required to provide certification of non-U.S. status in order to obtain that exemption.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Persons required to establish their exempt status generally must provide such certification, under
penalty of perjury, on IRS Form W-9, entitled Request for Taxpayer Identification Number and
Certification, in the case of U.S. persons, and on IRS Form W-8BEN, entitled Certificate of Foreign
Status (or other appropriate IRS Form W-8), in the case of non-U.S. persons. Backup withholding is
not an additional tax. The amount of backup withholding imposed on a payment generally may be
claimed as a credit against the holder&#146;s U.S. federal income tax liability provided that the
required information is properly furnished to the IRS.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">THE SUMMARY OF U.S. FEDERAL INCOME AND JAPANESE TAX CONSEQUENCES SET OUT ABOVE IS INTENDED FOR
GENERAL INFORMATION PURPOSES ONLY. INVESTORS IN THE COMMON STOCK OR ADSs ARE URGED TO CONSULT WITH
THEIR OWN TAX ADVISORS WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF OWNING OR
DISPOSING OF COMMON STOCK OR ADSs, BASED ON THEIR PARTICULAR CIRCUMSTANCES.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>F. Dividends and paying agents</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>G. Statement by experts</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>H. Documents on display</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">It is possible to read and copy documents referred to in this annual report on Form 20-F that have
been filed with the SEC at the SEC&#146;s public reference room located at 100 F Street, N.E.,
Washington, D.C. 20549. You can also access the documents at the SEC&#146;s website
(http://www.sec.gov/).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>I. Subsidiary information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>

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</DIV>

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<DIV align="left">
<A name="114"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;11. Quantitative and Qualitative Disclosures About Market Risk</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We operate internationally, giving rise to exposure to market risks from changes in foreign
exchange rates and interest rates. In an effort to manage potential adverse effects caused by
market fluctuations in foreign exchange rates and interest rates, we hedge these market risks by
selectively using derivative financial instruments. However, we do not hedge all of our exposure,
and the extent of hedge as well as type of hedging instruments to be used depends on factors
including, but not limited to, type of risks exposed, market conditions and hedging cost. We do
not hold or issue derivative financial instruments for trading purposes. To minimize credit risks
from derivative financial instruments, we limit counterparties to reputable international financial
institutions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Marketable securities held by us are exposed to risk from changes in equity prices and consist
entirely of available-for-sale securities. We do not take hedging measures against the market
exposures on those securities.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Foreign exchange risk </U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To hedge certain purchase and sale commitments and anticipated but not yet committed transactions
denominated in other than functional currencies, we enter into forward exchange contracts and
purchase- and write-currency options. In order to minimize the risk, written options are entered
into only with purchased options.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table provides information about our derivative financial instruments related to
foreign currency exchange transactions as of March&nbsp;31, 2005, which have been translated into yen at
the rate as of such date, together with the related weighted average contractual exchange rates at
March&nbsp;31, 2005. All of the contracts mature within one year. There are no option contracts
outstanding as of March&nbsp;31, 2005.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">March&nbsp;31, 2005
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 1pt">Forward exchange contract
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center">Functional</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">EUR</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">A$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">THB</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">THB</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">NT$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center">currency</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">US$/</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Yen/</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">EUR/</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">A$/</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">THB/</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">US$/</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">US$/</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center">Sell/Buy</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">US$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">US$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">US$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">THB</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">NT$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="31" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="30">(In millions of yen except average rates)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Contract amounts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">12,456</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">18,949</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">181</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,063</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">371</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">34,950</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">average contractual
exchange rates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">135.93</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7741</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39.1100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38.9461</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31.2325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fair value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(243</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(293</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(505</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="33" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">85
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To change the currency and interest rate features of intercompany finance transactions, we
have entered into currency swap contracts with banks. Currency swap contracts effectively changed,
in substance, U.S. dollars floating interest rate intercompany borrowings into yen fixed interest
rate borrowings and Euro floating interest rate borrowings. The foreign exchange risk inherent in
our currency swap as of March&nbsp;31, 2005 are summarized as follows:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Currency swap as of March&nbsp;31, 2005
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="37%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="13">Expected maturity date</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Contract amounts</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="13" style="border-bottom: 1px solid #000000">(year ending March 31)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Buy</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Sell</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Total</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Fair value</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="26">(In millions except average rates)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Functional currency: Yen</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">24,540</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">US$200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">18,665</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">5,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">24,540</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(3,009</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Average contractual exchange rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">124.43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Functional currency: Euro</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">EUR76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">US$100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">10,506</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">10,506</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">189</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Average contractual exchange rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.3218</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Functional currency: Euro</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">EUR3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">GBP2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">443</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">443</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Average contractual exchange rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6901</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">With respect to interest rate risk inherent in our currency swaps as of March&nbsp;31, 2005, see
&#147;<U>Interest rate risk</U>&#148; below.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Interest rate risk</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table provides information about interest rate risk inherent in the aforementioned
currency swaps as of March&nbsp;31, 2005. Variable interest rates are determined using formulas such as
LIBOR&#043;<FONT face="Symbol">&#097;</FONT>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Currency swap as of March&nbsp;31, 2005
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="37%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="13">Expected maturity date</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Contract amounts</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="13" style="border-bottom: 1px solid #000000">(year ending March 31)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Buy</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Sell</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Total</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Fair value</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="26">(In millions except average rates)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Functional currency: Yen</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Variable (US$) to Fixed (Yen)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">12,590</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">US$100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">12,590</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">12,590</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(1,761</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Average pay rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.41</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Average receive rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.17</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Fixed (US$) to Fixed (Yen)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">11,950</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">US$100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,075</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">5,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">11,950</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(1,248</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Average pay rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.65</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.35</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Average receive rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.88</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Functional currency: Euro</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Variable (US$) to Fixed (Euro)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">EUR76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">US$100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">10,506</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">10,506</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">189</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Average pay rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.22</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Average receive rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.96</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Functional currency: Euro</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Fixed (GBP)&nbsp;to Fixed (Euro)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">EUR3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">GBP2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">443</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">443</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Average pay rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.20</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Average receive rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4.61</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">86
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table provides information about principal cash flows by expected maturity dates,
weighted average interest rates, and fair value of our debt obligations as of March&nbsp;31, 2005. The
interest rate on the variable rate debt is determined based on prevailing market rates for
tax-exempt municipal bonds in the U.S.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Long-term debt (including due within one year) as of March&nbsp;31, 2005
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="19%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Functional</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="26" style="border-bottom: 1px solid #000000">Expected maturity date (year ending March 31)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Currency</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2009</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thereafter</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Total</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Fair value</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="37" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="34">(In millions of yen except average rates)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fixed rate (Yen)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Yen</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">15,294</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62,519</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">88,789</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">83,724</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Average interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.36</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.90</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.90</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.80</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.90</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.03</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.78</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Variable rate (US$)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">US$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">537</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Average interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1.70</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1.70</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest free loan
(EUR)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">EUR</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="37" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">15,835</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">251</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">251</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,266</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62,519</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">89,366</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">84,301</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="37" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Market price risks on available-for-sale securities</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We do not own any marketable securities for trading purposes. Our equity investment portfolio
consists almost entirely of securities issued by Japanese companies. The following table sets forth
maturity dates and cost and fair values of debt securities in our investment portfolio, and the
cost and fair values of equity securities therein, at March&nbsp;31, 2005.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">Cost</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">Fair value</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">(In millions of yen)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Debt securities (by contractual maturities)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Maturing over one year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">98</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">5,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">22,170</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left">
<A name="115"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;12. Description of Securities Other than Equity Securities</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>

<P align="center" style="font-size: 10pt">87
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="116"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART II</B>
</DIV>

<DIV align="left">
<A name="117"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;13. Defaults, Dividend Arrearages and Delinquencies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None
</DIV>
<DIV align="left">
<A name="118"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;14. Material Modifications to the Rights of Security Holders and Use of Proceeds</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>
<DIV align="left">
<A name="119"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;15. Controls and Procedures</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pioneer performed an evaluation of the effectiveness of the design and operation of its disclosure
controls and procedures as of the end of the fiscal 2005. Disclosure controls and procedures are
designed to ensure that the material financial and non-financial information required to be
disclosed in the reports that Pioneer files under the Exchange Act is accumulated and communicated
to its management including the chief executive officer and the principal accounting and financial
officer to allow timely decisions regarding required disclosure. The disclosure controls and
procedures also ensures that the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the Commission&#146;s
rules and forms. The evaluation was performed under the supervision of Kaneo Ito, Pioneer&#146;s Chief
Executive Officer and Tamihiko Sudo, Pioneer&#146;s Chief Financial Officer. Pioneer&#146;s disclosure and
controls and procedures are designed to provide reasonable assurance of achieving its objectives.
Managerial judgment was necessary to evaluate the cost-benefit relationship of possible controls
and procedures. Mr.&nbsp;Ito and Mr.&nbsp;Sudo have concluded that Pioneer&#146;s disclosure controls and
procedures are effective at the reasonable assurance level.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">There have been no changes in Pioneer internal control over financial reporting during fiscal
period ended March&nbsp;31, 2005 that have materially affected, or are reasonably likely to materially
affect, Pioneer&#146;s internal control over financial reporting.
</DIV>


<P align="center" style="font-size: 10pt">88
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="120"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;16. &#091;Reserved&#093;</B>
</DIV>

<DIV align="left">
<A name="121"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;16A. Audit Committee Financial Expert</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pioneer maintains a corporate auditor system, in accordance with the Japanese Commercial Code (the
&#147;Code&#148;) and the Law concerning Exceptional Measures to the Commercial Code with respect to
Auditing, etc. of Joint Stock Corporations (the &#147;Special Exception Law&#148;). Pioneer&#146;s Board of
Corporate Auditors is comprised of five Corporate Auditors, three of whom are outside Corporate
Auditors. Each Corporate Auditor has been appointed at its shareholders&#146; meetings and has certain
statutory powers under the Code and the Special Exception Law, including auditing the business
affairs and accounts of Pioneer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pioneer&#146;s Board of Corporate Auditors has determined that it does not have an audit committee
financial expert serving on the Board of Corporate Auditors. The qualifications for, and powers
of, the Corporate Auditor specified in the Code and the Special Exception Law are different from
those anticipated for audit committee financial expert. Corporate Auditors have the authority to
be given reports from a certified public accountant or an accounting firm concerning audits,
including technical accounting matters. At the same time, each Corporate Auditor has the authority
to consult internal and external experts on accounting matters. Pioneer&#146;s Board of Corporate
Auditors has confirmed that each Corporate Auditor should fulfill the requirements under Japanese
laws and regulations and otherwise follow Japanese corporate governance practices. In addition,
its Board of Corporate Auditors has a former General Manager of Accounting Division of Pioneer, Mr.
Makoto Koshiba, as a full time Corporate Auditor, and a certified public accountant of Japan, Mr.
Isao Moriya, as an outside Corporate Auditor. Accordingly, it is not necessarily fundamental for
Pioneer to nominate as Corporate Auditor a person who meets the definition of audit committee
financial experts. Although Pioneer does not have an audit committee financial expert on its Board
of Corporate Auditors, Pioneer believes that Pioneer&#146;s current corporate governance system, taken
as a whole, including the Corporate Auditors&#146; ability to consult internal and external experts, is
functionally equivalent to a system having an audit committee financial expert on its Board of
Corporate Auditors.
</DIV>

<DIV align="left">
<A name="122"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;16B. Code of Ethics</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have adopted the Pioneer Group Code of Conduct (the &#147;Code of Conduct&#148;) for all officers and
employees of the Pioneer Group. The Code of Conduct is publicly available on our website at
www.pioneer.co.jp. If we make any substantive amendments to the Code of Conduct or grant any
waivers, including any implicit waiver, from a provision of this code to our chief executive
officer, principal financial officer or corporate controller, we will disclose the nature of such
amendment or waiver on our website.
</DIV>


<P align="center" style="font-size: 10pt">89
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left">
<A name="123"></A>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;16C. Principal Accountant Fees and Services</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Aggregate fees billed to the Company for the fiscal years ended March&nbsp;31, 2004 and 2005 by our
principal accounting firm, Deloitte Touche Tohmatsu (a Japanese member firm of Deloitte Touche
Tohmatsu, Swiss Verein), the other member firms of Deloitte Touche Tohmatsu (Swiss Verein), and
their respective affiliates (collectively, &#147;Deloitte Touche Tohmatsu&#148;), were as follows.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Year ended March 31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">(In millions of yen)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Audit Fees (1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">339</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">343</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Audit-Related Fees (2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax Fees (3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All Other Fees (4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">431</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">491</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Includes fees for the audit of our annual financial statements included in our Form 20-F and
for services provided in connection with statutory and regulatory filings or engagements.
This also includes fees billed for issuance of comfort letters and consent letters.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Includes fees for assurance and related services that are performed by the independent
accountant which include employee benefit plan audits, accounting consultations and audits in
connection with internal control reviews, attest services that are not required by statute or
regulation and consultation concerning financial accounting and reporting standards.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Includes fees for services related to tax compliance, including the preparation of tax
returns and claims for refund, tax planning and tax advice.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Includes fees for other than the services reported in paragraphs (1)&nbsp;through (3). All other
fees for fiscal 2005 include consulting services relating to compliance control.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Policy and procedures of the Board of Corporate Auditors for pre-approval</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In accordance with the regulations of the SEC, the Board of Corporate Auditors has adopted the
policy and procedures for the pre-approval regarding the engagements of the independent audit firm
and its affiliates (the &#147;auditor&#148;). The following is a summary of the policy and procedures.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">All audit and permissible non-audit services provided by the auditor to Pioneer and its
consolidated subsidiaries must be pre-approved by the Board of Corporate Auditors, prior to the
engagement of the auditor. In the case that pre-approvals are requested, the description of the
services including types of the service, periods of the service, and estimated fees, must be
submitted to the Board of Corporate Auditors. Our pre-approval procedures have two different
forms, &#147;Comprehensive pre-approval&#148; and &#147;Individual pre-approval.&#148; Under the &#147;Comprehensive
pre-approval&#148; procedure, all audit and permissible non-audit services scheduled for the following
fiscal year are pre-approved by resolution of the Board of Corporate Auditors meeting. All audit
and permissible non-audit services regarding the specific projects which are not included in the
&#147;Comprehensive pre-approval&#148; must be subject to the &#147;Individual pre-approval.&#148; For the purpose of
providing such pre-approval in a timely manner, the Board of Corporate Auditors may delegate
&#147;Individual pre-approval&#148; authority to full time Corporate Auditors. Full-time Corporate Auditors
shall report any &#147;Individual pre-approval&#148; decisions to the Board of Corporate Auditors meeting to
be held immediately after such pre-approval.
</DIV>


<P align="center" style="font-size: 10pt">90
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">None of the services provided by the auditor in fiscal 2004 and 2005 were waived from the
pre-approval requirement pursuant to paragraph (c)(7)(i)(C) of Rule&nbsp;2-01 of Regulation&nbsp;S-X.
</DIV>

<DIV align="left">
<A name="124"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;16D. Exemptions from the Listing Standards for Audit Committees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>
</DIV>



<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="125"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth the information with respect to any purchase made by Pioneer of its
common stock during fiscal 2005 ended March&nbsp;31, 2005.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">(c) Total Number</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">(d) Maximum Number</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">of Shares Purchased</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">of Shares that</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">(a) Total</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">(b) Average</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">as Part of Publicly</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">May Yet Be</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Number of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Price Paid</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Announced</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Purchased Under the</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Period</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2" style="border-bottom: 1px solid #000000">Shares Purchased</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2" style="border-bottom: 1px solid #000000">per Share</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2" style="border-bottom: 1px solid #000000">Plans or Programs</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2" style="border-bottom: 1px solid #000000">Plans or Programs</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">April 1 to April&nbsp;30, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">649</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3,158.43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">May 1 to May&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">302</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,824.09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">June 1 to June&nbsp;30, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">162</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,761.36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">July 1 to July&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">598</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,660.23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">August 1 to August&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">315</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,369.78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">September 1 to September&nbsp;30, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">544</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,373.78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">October 1 to October&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">683</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,252.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">November 1 to November&nbsp;30, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">741</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,953.67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">December 1 to December&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,958.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January 1 to January&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">509</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,999.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">February 1 to February&nbsp;28, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">479</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,880.48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March 1 to March&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,000,580</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,963.14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD style="border-top: 1px solid #000000"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,007,095</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,965.22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">Notes:&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.&nbsp;</TD>
    <TD>A holder of shares constituting less than one unit may require Pioneer to purchase
such shares at their market value in accordance with the provision of the Share Handling
Regulations of Pioneer, under the Commercial Code of Japan. All shares other than purchases
publicly announced were made by such requests.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.</TD>
    <TD>On March&nbsp;11, 2005, share repurchase approved by the Board of Directors pursuant to the
Articles of Incorporation of Pioneer was announced publicly.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD>Total number of shares approved to be purchased was up to 1,000,000 shares of common
stock.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD>Period during which shares may be purchased was from March&nbsp;14, 2005 to May&nbsp;11, 2005.
Pioneer finished the purchase on March&nbsp;23, 2005 prior to expiration.</TD>
</TR>

</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">91
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="126"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART III</B>
</DIV>

<DIV align="left">
<A name="127"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;17. Financial Statements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See Consolidated Financial Statements. Reference is made to Item&nbsp;19 for a list of all
financial statements filed as part of this annual report.
</DIV>
<DIV align="left">
<A name="128"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;18. Financial Statements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have responded to Item&nbsp;17 in lieu of responding to this Item.
</DIV>
<DIV align="left">
<A name="129"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;19. Exhibits</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Page</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><U>Consolidated financial statements</U></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Index to Consolidated Financial Statements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Report of Independent Registered Public Accounting Firm</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consolidated Balance Sheets as of March&nbsp;31, 2004 and 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consolidated
Statements of Operations
for the years ended March&nbsp;31, 2003, 2004 and 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consolidated Statements of Shareholders&#146; Equity
for the years ended March&nbsp;31, 2003, 2004 and 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consolidated Statements of Cash Flows
for the years ended March&nbsp;31, 2003, 2004 and 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Notes to Consolidated Financial Statements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-8</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Exhibits</U>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.01</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Regulations of the Board of Directors, as amended and currently in effect (English
translation)</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.02</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Regulations of the Board of Corporate Auditors, as amended and currently in effect (English
translation)</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.01</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Share Handling Regulations, as amended and currently in effect (English translation)</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">12.01</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification of Chief Executive Officer pursuant to Section&nbsp;302 of the Sarbanes-Oxley Act
of 2002</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">12.02</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification of Chief Financial Officer pursuant to Section&nbsp;302 of the Sarbanes-Oxley Act
of 2002</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">13.01</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section&nbsp;906
of the Sarbanes-Oxley Act of 2002</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">92
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">SIGNATURES
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and
that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left" style="border-bottom: 1px solid #000000">PIONEER CORPORATION</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">(Registrant)<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD align="left">Date: September 8, 2005&nbsp;</TD>
    <TD valign="top">By&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Tamihiko Sudo
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Tamihiko Sudo&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<P align="center" style="font-size: 10pt">93
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Page</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><U>Consolidated financial statements</U></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Report of Independent Registered Public Accounting Firm</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consolidated Balance Sheets as of March&nbsp;31, 2004 and 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consolidated
Statements of Operations
for the years ended March&nbsp;31, 2003, 2004 and 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consolidated Statements of Shareholders&#146; Equity
for the years ended March&nbsp;31, 2003, 2004 and 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consolidated Statements of Cash Flows
for the years ended March&nbsp;31, 2003, 2004 and 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Notes to Consolidated Financial Statements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-8</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-1
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Report of Independent Registered Public Accounting Firm</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To the Board of Directors and Shareholders of Pioneer Corporation:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have audited the accompanying consolidated balance sheets of Pioneer Corporation and
subsidiaries as of March&nbsp;31, 2004 and 2005, and the related consolidated statements of operations,
shareholders&#146; equity, and cash flows for each of the three years in the period ended March&nbsp;31, 2005
(all expressed in Japanese yen). These financial statements are the responsibility of the Company&#146;s
management. Our responsibility is to express an opinion on these financial statements based on our
audits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Company&#146;s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying consolidated financial statements do not present segment information concerning
the Company&#146;s operations which, in our opinion, is required for a complete presentation of the
Company&#146;s consolidated financial statements in accordance with accounting principles generally
accepted in the United States of America.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In our opinion, except for the omission of segment information disclosures, such consolidated
financial statements present fairly, in all material respects, the financial position of Pioneer
Corporation and subsidiaries as of March&nbsp;31, 2004 and 2005, and the results of their operations and
their cash flows for each of the three years in the period ended March&nbsp;31, 2005, in conformity with
accounting principles generally accepted in the United States of America.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our audits also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and,
in our opinion, such translation has been made in conformity with the basis stated in Note 1. Such
U.S. dollar amounts are presented solely for the convenience of readers outside Japan.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt; margin-top: 6pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="41%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="53%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Deloitte Touche Tohmatsu
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px; border-top: 1px solid #000000">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Deloitte
Touche Tohmatsu<BR>Tokyo, Japan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">May&nbsp;6, 2005
</DIV>



<P align="center" style="font-size: 10pt">F-2
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="center" style="font-size: 12pt; margin-top: 18pt"><B>Consolidated Balance Sheets</B><BR>
</DIV>
<DIV align="center" style="font-size: 10pt;">Pioneer Corporation and Subsidiaries<BR>
March&nbsp;31
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">(Note 1)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Assets</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Current assets:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Cash and cash equivalents&#151;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Cash, including time deposits of &#165;52,275&nbsp;million&#151;$488,551 thousand (&#165;88,425&nbsp;million in 2004)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">192,419</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>116,681</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1,090,477</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Trade receivables&#151;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,988</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,516</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>23,514</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Accounts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112,411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>132,110</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,234,673</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Allowance for doubtful notes and accounts (Note 20)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,344</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,450</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(22,897</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Inventories (Note 6)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107,806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>109,015</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,018,831</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Deferred income taxes (Note 11)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,886</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>25,519</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>238,495</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Prepaid expenses and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,622</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>43,505</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>406,589</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">479,788</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>426,896</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,989,682</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Investments and long-term receivables:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Available-for-sale securities (Note 5)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,516</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>22,268</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>208,112</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Investments in and advances to affiliated companies (Note 7)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,573</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,987</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>27,916</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Sundry investments (Notes 5 and 18)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,383</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,388</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>31,664</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Long-term receivables, less allowance for doubtful accounts of
&#165;160&nbsp;million&#151;$1,495 thousand (&#165;190&nbsp;million in 2004) (Note 20)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>185</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,729</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total investments and long-term receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,725</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>28,828</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>269,421</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Property, plant and equipment </B>(Note 9)<B>:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Land</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,050</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>32,965</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>308,084</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Buildings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113,863</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>136,372</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,274,505</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Machinery and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">239,081</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>293,359</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,741,673</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Construction in progress</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,568</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,056</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>9,869</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">385,562</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>463,752</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,334,131</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accumulated depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(229,361</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(253,607</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,370,159</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Net property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">156,201</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>210,145</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,963,972</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Other assets:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Intangible assets (Note 8)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,966</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>24,052</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>224,785</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Deferred income taxes (Note 11)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,276</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>25,420</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>237,570</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,586</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>9,826</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>91,832</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,828</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>59,298</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>554,187</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">722,542</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>725,167</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>6,777,262</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">See notes to consolidated financial statements.
</DIV>



<P align="center" style="font-size: 10pt">F-3
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">(Note 1)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Liabilities and Shareholders&#146; Equity</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Current liabilities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Short-term borrowings (Note 9)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">23,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>33,152</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>309,832</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Current portion of long-term debt (Note 9)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,510</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>19,276</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>180,150</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Trade payables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79,439</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>96,335</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>900,327</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accrued liabilities&#151;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Taxes on income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,341</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,938</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>46,150</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Payroll</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>17,203</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>160,776</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Royalty</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,688</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>14,811</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>138,420</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,626</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>36,843</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>344,327</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Warranty reserve (Note 20)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,419</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,722</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>53,477</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Dividends payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,193</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,180</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>20,374</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,151</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>20,710</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>193,551</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">223,298</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>251,170</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,347,384</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Long-term liabilities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Long-term debt (Note 9)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89,691</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>81,219</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>759,056</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accrued pension and severance cost (Note 10)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,143</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>40,022</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>374,037</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Deferred income taxes (Note 11)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,630</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>15,234</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other long-term liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>719</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6,720</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total long-term liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">148,462</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>123,590</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,155,047</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Commitments and contingent liabilities </B>(Note 21)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Minority interests</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,844</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>18,168</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>169,794</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Shareholders&#146; equity </B>(Note 12)<B>:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Common stock, no par value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Authorized&#151; 400,000,000 shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Issued&#151;180,063,836 shares&#151;2004 and 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,049</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>49,049</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>458,402</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Capital surplus</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82,464</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>82,735</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>773,224</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Retained earnings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">273,718</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>260,556</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,435,103</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accumulated other comprehensive loss (Note 14)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(61,829</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(47,669</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(445,505</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Treasury stock, at cost 4,632,962 shares&#151;2004
and 5,635,190 shares&#151;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,464</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(12,432</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(116,187</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">332,938</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>332,239</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,105,037</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total liabilities and shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">722,542</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>725,167</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>6,777,262</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">See notes
to consolidated financial statements.</DIV>

<P align="center" style="font-size: 10pt">F-4
</DIV>


<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><FONT style="font-size:12pt"><B>Consolidated Statements of Operations</B></FONT><BR>
Pioneer Corporation and Subsidiaries<BR>
Year ended March&nbsp;31
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">(Note 1)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Revenues:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Operating revenue:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">664,675</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">689,064</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>723,411</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>6,760,850</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Royalty revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,584</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,821</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>10,237</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>95,673</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total operating revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">677,259</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">700,885</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>733,648</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6,856,523</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,420</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,930</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>18,037</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gain on sale of subsidiaries&#146; stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">768</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other income (Note 15)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">504</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,415</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>31,916</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">680,821</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">702,809</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>738,993</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6,906,476</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cost and expenses:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cost of sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">473,239</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">487,297</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>584,060</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,458,504</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Selling, general and administrative expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">168,736</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">166,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>195,693</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,828,906</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Subsidy from the government (Note 10)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(48,697</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(455,112</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,814</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,154</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,746</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>16,318</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss on sale and disposal of fixed assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,519</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,454</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>40</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>374</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other deductions (Note 15)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,434</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6,338</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>59,234</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total cost and expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">652,742</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">660,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>739,180</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6,908,224</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Income (loss)&nbsp;from continuing operations before
income taxes</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,079</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,848</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(187</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,748</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Income taxes </B>(Note 11)<B>:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,477</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,829</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7,688</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>71,850</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,445</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">758</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,846</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(26,598</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,032</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,587</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,842</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>45,252</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Income (loss)&nbsp;from continuing operations before
minority interest
and equity in losses</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,047</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,261</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(5,029</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(47,000</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Minority interest in losses (earnings)&nbsp;of
subsidiaries</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(654</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(692</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(6,467</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Equity in losses of affiliated companies </B>(Note 7)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,126</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,244</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(3,068</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(28,673</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;from continuing operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,942</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,363</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(8,789</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(82,140</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income from discontinued operations, net of tax
(Note 4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,475</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net income (loss)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">16,078</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">24,838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(8,789</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(82,140</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000">Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Per share of common stock and per American Depositary
Share </B>(Note&nbsp;19)<B>:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Continuing operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">89.48</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">116.07</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(50.11</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(0.47</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.76</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">25.51</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">90.24</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">141.58</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(50.11</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(0.47</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Continuing operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">89.48</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">115.18</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(50.11</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(0.47</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.76</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">25.34</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">90.24</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">140.52</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(50.11</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(0.47</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">See notes to consolidated financial statements.
</DIV>


<P align="center" style="font-size: 10pt">F-5
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><FONT style="font-size:12pt"><B>Consolidated Statements of Shareholders&#146; Equity</B></FONT><BR>
Pioneer Corporation and Subsidiaries<BR>
Year ended March&nbsp;31
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="22" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Number of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Accumulated</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Other</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Total</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Issued</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Common</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Capital</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Retained</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Comprehensive</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Treasury</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Shareholders&#146;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">(Thousands)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Stock</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Surplus</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Earnings</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Loss</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Stock</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Equity</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at March&nbsp;31, 2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">180,064</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">49,049</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">82,010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">240,692</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(24,736</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(12</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">347,003</TD>
    <TD nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Comprehensive income (loss):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,078</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,078</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other comprehensive loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30,893</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30,893</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Comprehensive loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14,815</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Value ascribed to stock
options (Note&nbsp;13)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">149</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">149</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchase of treasury stock (Note&nbsp;12)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,566</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,566</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sales of treasury stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(412</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,126</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">714</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash dividends (&#165;17.50 per share)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,092</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,092</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at March&nbsp;31, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">180,064</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,049</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82,159</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">253,266</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(55,629</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,452</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">318,393</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Comprehensive income (loss):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,838</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other comprehensive loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,200</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,200</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,638</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Value ascribed to stock
options (Note&nbsp;13)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">305</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">305</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchase of treasury stock (Note&nbsp;12)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sales of treasury stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash dividends (&#165;25.00 per share)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,386</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,386</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at March&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">180,064</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,049</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82,464</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">273,718</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(61,829</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,464</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">332,938</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Comprehensive income (loss):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(8,789</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(8,789</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>14,160</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>14,160</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,371</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Value ascribed to stock
options (Note&nbsp;13)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>270</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>270</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchase of treasury stock (Note&nbsp;12)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,979</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,979</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sales of treasury stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>11</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>12</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash dividends (&#165;25.00 per share)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(4,373</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(4,373</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at March&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>180,064</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>49,049</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>82,735</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>260,556</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(47,669</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(12,432</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>332,239</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="22" style="border-bottom: 1px solid #000000">Thousands of U.S. Dollars (Note&nbsp;1)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Accumulated</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Other</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Total</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Common</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Capital</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Retained</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Comprehensive</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Treasury</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Shareholders&#146;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Stock</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Surplus</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Earnings</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Loss</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Stock</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Equity</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at March&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">458,402</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">770,692</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,558,112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(577,841</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(97,795</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,111,570</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Comprehensive income (loss):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(82,140</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(82,140</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>132,336</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>132,336</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>50,196</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Value ascribed to stock
options (Note&nbsp;13)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,523</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,523</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchase of treasury stock (Note&nbsp;12)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(18,495</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(18,495</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sales of treasury stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>103</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>112</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash dividends ($0.23 per share)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(40,869</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(40,869</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at March&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>458,402</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>773,224</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>2,435,103</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(445,505</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(116,187</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>3,105,037</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">See notes to consolidated financial statements.
</DIV>



<P align="center" style="font-size: 10pt">F-6
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><FONT style="font-size:12pt"><B>Consolidated Statements of Cash Flows</B></FONT><BR>
Pioneer Corporation and Subsidiaries<BR>
Year ended March&nbsp;31
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">(Note 1)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Operating activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">16,078</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">24,838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(8,789</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(82,140</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Adjustments to reconcile net income (loss)&nbsp;to net cash
provided by operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Income from discontinued operations, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(136</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,475</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,238</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,911</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>46,990</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>439,159</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Minority interest in (losses)&nbsp;earnings of subsidiaries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(21</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">654</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>692</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6,467</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Equity in losses of affiliated companies, less dividends</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,184</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,248</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,072</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>28,710</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,445</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">758</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,846</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(26,598</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Provision for pension and severance cost, less payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,812</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,579</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,463</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>23,019</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss on sale and disposal of fixed assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,519</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,454</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>40</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>374</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Impairment of long-lived assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,460</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>41,682</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Write-down of available-for-sale securities and sundry
investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,369</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">245</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>51</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>477</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">(Gains) losses on sale of available-for-sale securities and
sundry investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(37</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,309</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(21,579</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Gain on sale of subsidiaries&#146; stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(768</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Stock-based compensation expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">149</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">305</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>270</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,523</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Decrease (increase)&nbsp;in trade notes and accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,481</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,186</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(12,322</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(115,159</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Decrease (increase)&nbsp;in inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(20,707</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6,317</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>59,037</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Increase in prepaid expenses and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,122</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12,413</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(5,051</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(47,206</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Increase in trade payables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,221</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,989</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,405</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>41,168</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Increase (decrease)&nbsp;in accrued taxes on income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,450</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,782</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(4,473</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(41,804</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Increase (decrease)&nbsp;in other accrued liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,172</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,654</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(5,898</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(55,121</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,530</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">779</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(7,126</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(66,598</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net cash provided by operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,509</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,378</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>19,946</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>186,411</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Investing activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payment for purchase of fixed assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(40,493</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(57,978</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(63,866</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(596,879</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payment for purchase of investment securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,543</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(595</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(510</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(4,766</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payment for purchase of available-for-sale securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(53</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payment for purchase of a subsidiary, net of cash acquired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(34,015</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(317,897</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payment for other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(568</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(953</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,252</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(11,701</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from sale of fixed assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,982</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,458</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,184</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>20,411</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from sale of discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,897</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from sale of investment securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>12</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>112</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from sale of available-for-sale securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,493</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">156</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,091</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>28,888</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">261</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>840</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7,851</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net cash used in investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(35,228</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(52,754</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(93,516</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(873,981</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Financing activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from issuance of convertible bonds
(net of issuance cost &#165;1,586&nbsp;million)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,514</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payment of long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,914</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(934</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(6,246</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(58,374</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Increase (decrease)&nbsp;in short-term borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16,214</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,509</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>9,025</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>84,346</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchase of treasury stock (Note 12)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,566</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,979</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(18,495</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from sale of treasury stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">714</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>12</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>112</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Dividends paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,688</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,947</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(4,386</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(40,991</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Dividends paid to minority interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(285</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(445</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(4,159</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net cash provided by (used in) financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(34,680</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51,827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(4,019</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(37,561</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of exchange rate changes on cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,234</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,512</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,851</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>17,299</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net increase (decrease)&nbsp;in cash and cash equivalents</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,367</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,939</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(75,738</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(707,832</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents, beginning of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">127,113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">142,480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>192,419</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,798,309</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash and cash equivalents, end of year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right">142,480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">192,419</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>116,681</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1,090,477</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">See notes to consolidated financial statements.
</DIV>


<P align="center" style="font-size: 10pt">F-7
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><FONT style="font-size:12pt"><B>Notes to Consolidated Financial Statements</B></FONT><BR>
Pioneer Corporation and Subsidiaries
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>1. Basis of presentation and significant accounting policies:</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>1) Basis of Presentation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Basis of Financial Statements&#151;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying consolidated financial statements are stated in
Japanese yen, the currency of the country in which Pioneer
Corporation (Pioneer Kabushiki Kaisha) (the &#147;parent company&#148;) is
incorporated. The translation of Japanese yen amounts into U.S.
dollar amounts for the year ended March&nbsp;31, 2005 is included
solely for the convenience of readers outside Japan and has been
made at the rate of &#165;107 to U.S.$1.00, the approximate rate of
exchange prevailing at the Tokyo Foreign Exchange Market at March
31, 2005. Such translation should not be construed as a
representation that Japanese yen amounts could be converted into
U.S. dollars at the above or any other rate.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accompanying consolidated financial statements have been
prepared on the basis of accounting principles generally accepted
in the United States of America (&#147;U.S. GAAP&#148;) except for the
omission of segment information concerning the operations of the
parent company and its majority-owned subsidiaries (together, the
&#147;Company&#148;), as required by Statement of Financial Accounting
Standards (&#147;SFAS&#148;) No.&nbsp;131.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accompanying consolidated financial statements reflect
the adjustments which management believes are necessary to
conform them with U.S. GAAP. Effect has been given in the
consolidated financial statements to adjustments which, because
of either customary accounting practices in Japan or income tax
law requirements, have not been entered in the Company&#146;s general
books of account.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Nature of Operations&#151;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company is engaged in the development, manufacture and sale
of electronics products. The Company is one of the leading
manufacturers of consumer- and commercial-use electronics such as
audio, video and car electronics on a global scale.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The principal production activities of the Company are
carried out in Asia including Japan. The Company&#146;s products are
generally sold under its own brand names, principally &#147;Pioneer.&#148;
The principal markets for the Company are Japan, the United
States of America, European countries and Asia. The Company sells
its products to customers in consumer and commercial markets
through its sales offices in Japan, and its sales subsidiaries
and independent distributors overseas. On an
original-equipment-manufacturer basis, the Company markets
certain products, such as car electronics products, to other
companies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Use of Estimates&#151;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The preparation of the consolidated financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the dates of these
statements and the reported amounts of revenues and expenses
during the reporting period.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due to the inherent uncertainty involved in making
estimates, actual results could differ from those estimates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2) Summary of Significant Accounting Policies</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Consolidation and Investments in Affiliated Companies&#151;The
consolidated financial statements include the accounts of the
parent company and its majority-owned subsidiaries. Investments
in 20% to 50% owned companies are accounted for by the equity
method of accounting. All significant intercompany transactions have been eliminated.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gains and losses resulting from the issuance of
subsidiaries&#146; stock are recognized in consolidated earnings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the year ended March&nbsp;31, 2005, the Company adopted the
Financial Accounting Standards Board (&#147;FASB&#148;) Interpretation No.
46 (revised December&nbsp;2003), &#147;Consolidation of Variable Interest
Entities&#148; (&#147;FIN46R&#148;) which requires certain variable interest
entities to be consolidated by the primary beneficiary of the
entity if the equity investors in the entity do not have the
characteristics of a controlling financial interest or do not
have sufficient equity at risk for the entity to finance its
activities without additional subordinated financial support from
other parties. The adoption of FIN46R had no impact on its
financial position and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Foreign Currency Translation&#151;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For all significant foreign operations, the functional currency
is the local currency. Generally, all asset and liability
accounts of foreign operations are translated into Japanese yen
at year-end rates and all revenue and expense accounts are
translated at rates prevailing at the time of the transactions.
The resulting translation adjustments are accumulated and
reported as a component of accumulated other comprehensive income
(loss).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign currency receivables and payables are translated at
year-end exchange rates and resulting exchange gains and losses
are recognized in earnings currently.
</DIV>

<P align="center" style="font-size: 10pt">F-8
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Revenue Recognition&#151;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Sales are generally recorded when merchandise is shipped or
delivered to customers. Recognition of sales occurs when the
title and risks and rewards of ownership are transferred to
customers based on sales contracts. In circumstances where sales
are recorded when merchandise is shipped to customers, the
shipment date is equivalent to the delivery date because of a
short delivery time. In certain cases, terms of the contract
require the product to pass customer inspection after delivery
and the Company records the sale upon satisfactory customer
acceptance. Royalty revenue, which is based on actual amounts
produced or sold by the licensee, is recognized when either a
royalty report or payment is received from the licensee,
whichever is earlier. Until such time, this revenue is not
considered to have met the recognition criterion of being fixed
or determinable, nor is collectibility reasonably assured. The
Company normally does not accept returns except for warranty
issues, non-compliance with purchase order specifications and
returns from end-users to certain dealers. The financial impact
of the future returns are estimated and reserved based on
historical experience.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Costs incurred by the Company in connection with sales
incentives related to the purchase or promotion of the Company&#146;s
products are classified as a reduction of revenues in accordance
with Emerging Issues Task Force (&#147;EITF&#148;) Issue No.&nbsp;01-9,
&#147;Accounting for Consideration Given by a Vendor to a Customer.&#148;
Such costs include the estimated cost of promotional discounts,
dealer price protection, dealer rebates, consumer rebates, cash
discounts, and support for dealers&#146; promotion of the Company&#146;s
products. Sales incentives that are dependent on future customer
performance are estimated and recorded at the later of when the
original sale is recorded and when the incentive is offered.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Cash and Cash Equivalents&#151;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Cash and cash equivalents include cash on hand and deposits in
bank including time deposits. The Company considers all time
deposits with an original maturity of one year or less to be cash
equivalents. Such time deposits can be withdrawn at any time
without diminution of the principal amount.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Available-for-Sale Securities&#151;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under SFAS No.&nbsp;115, &#147;Accounting for Certain Investments in Debt
and Equity Securities,&#148; all debt securities and marketable equity
securities held by the Company are classified as
available-for-sale securities, and are carried at their fair
values with unrealized gains and losses reported in other
comprehensive income (loss). The cost of securities is determined
using the average-cost method.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company reviews the fair value of its available-for-sale
securities on a regular basis to determine if the fair value of
any individual security has declined below its cost and if such
decline is other than temporary. If the decline in value is
judged to be other than temporary, the cost basis of the security
is written down to fair value and the resulting realized loss is
included in the consolidated statements of operations. For such
marketable debt and equity securities, we assume the decline is
other than temporary when market value is less than cost for a
period of six months, or sooner depending on severity of decline
or other factors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Sundry Investments&#151;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Sundry investments are stated at cost. The Company reviews the
investments for impairment when the events or changes in
circumstances that may have significant adverse effect on the
value of those investments are identified. The investments are
written down if the value of investments is estimated to have
declined and such decline is other than temporary.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Inventories&#151;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Inventories are valued at the lower of cost, which is determined
principally by the average-cost method, or market, which is net
realizable value. Cost of finished goods and work in process
inventories include the cost of materials, labor and applied
factory overhead. Applied factory overhead includes depreciation
on production related assets, utilities of the production area,
and production tools and equipment that are not capitalized.
Inventories are reviewed periodically and items considered to be
slow moving or obsolete are written down to market, net
realizable value.
</DIV>


<P align="center" style="font-size: 10pt">F-9
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Property, Plant and Equipment and Depreciation&#151;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Property, plant and equipment are stated at cost. Depreciation is
computed principally using the declining-balance method for
assets located in Japan and under the straight-line method for
assets located outside Japan, using rates based on the estimated
useful lives of the assets.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The principal ranges of estimated useful lives are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="80%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="25%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Buildings</DIV></TD>
    <TD align="right" valign="bottom">15-65&nbsp;years</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Machinery and equipment
</DIV></TD>
    <TD align="right" valign="bottom">2-10&nbsp;years</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Goodwill and Other Intangible Assets&#151;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under SFAS No.&nbsp;142, &#147;Goodwill and Other Intangible Assets,&#148;
acquired goodwill and other intangible assets that are determined
to have an indefinite life are no longer amortized. Instead, the
carrying value of these assets are reviewed for impairment at
least annually, or more frequently if events or changes in
circumstances indicate that the asset might be impaired.
Intangible assets that are determined to have a definite life are
amortized over their estimated useful lives. At March&nbsp;31, 2005,
the Company had no goodwill. Amortization of intangible assets
with definite lives is computed using the straight-line method
with no residual value. The cost of patents is amortized over
seven to nineteen years and software is amortized principally
over two to five years.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Long-Lived Assets&#151;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On April&nbsp;1, 2002, the Company adopted SFAS No.&nbsp;144, &#147;Accounting
for the Impairment or Disposal of Long-Lived Assets&#148; which
applied to all long-lived assets.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company reviews its long-lived assets and certain
identifiable intangibles for impairment whenever events or
changes in circumstances indicate that the carrying amount of an
asset group may not be recoverable. For the purpose of assessment
of an impairment loss, the Company groups long-lived assets with
other assets and liabilities at the lowest level for which
identifiable cash flows are largely independent of the cash flows
of other assets and liabilities. When the sum of expected future
cash flows is less than the carrying amount of the asset group,
an impairment loss is recognized. Such impairment loss is
measured as the amount by which the carrying amount of the asset
group exceeds the fair value of the asset group.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In fiscal 2003, the Company sold its subsidiaries&#146; stock and
recorded gains of &#165;768&nbsp;million. The subsidiaries&#146; main operation
was karaoke business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Warranty Reserve&#151;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company engages in extensive product quality programs and
processes including actively monitoring and evaluating the
quality of component suppliers. The Company&#146;s warranty obligation
is affected by product failure rates and service costs incurred
in correcting product failure. The Company provides for the
estimated cost of product warranties at the time revenue is
recognized. These estimates are established using historical
information.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Long-term Debt&#151;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Premiums and issuance costs of long-term debt are amortized over
the term of long-term debt using the interest method.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Income Taxes&#151;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Income taxes are provided based on the asset and liability method
of accounting. Deferred income taxes are recorded to reflect the
tax consequences in future years of differences between the tax
basis of assets and liabilities and their financial reporting
amounts at year-end. These deferred taxes are measured by
applying currently enacted tax laws. A valuation allowance is
established to reduce deferred tax assets if it is more likely
than not that all, or some portion, of such deferred tax assets
will not be realized.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Research and Development Costs and Advertising Cost&#151;
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Research and development costs and advertising cost are expensed as incurred.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Shipping and Handling Charges&#151;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Shipping and handling costs totaled &#165;10,373&nbsp;million, &#165;11,282
million and &#165;12,830&nbsp;million ($119,907 thousand) for the years
ended March&nbsp;31, 2003, 2004 and 2005, respectively, and are
included in selling, general and administrative expenses in the
consolidated statements of operations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Accounting for Stock-Based Compensation&#151;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company accounts for its stock-based compensation agreements
using the fair value based method in accordance with SFAS No.
123, &#147;Accounting for Stock-Based Compensation.&#148;
</DIV>


<P align="center" style="font-size: 10pt">F-10
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Earnings (loss)&nbsp;per Share&#151;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Basic net income (loss)&nbsp;per share has been computed by dividing
net income (loss)&nbsp;available to holders of common stock by the
weighted-average number of shares of common stock outstanding
during each year. Diluted net income per share reflects the
potential dilution and has been computed on the basis that all
dilutive potential common stocks were exercised.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Derivatives&#151;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Derivative financial instruments utilized by the Company are
comprised principally of forward exchange contracts and currency
swaps. Forward exchange contracts, the majority of which mature
within six months, and currency swaps, which mature from 2005 to
2006, are utilized to hedge exposures to foreign exchange risk
and interest risk. The Company does not hold or issue derivative
financial instruments for trading purposes.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company adopted SFAS No.&nbsp;133, &#147;Accounting for Derivative
Instruments and Hedging Activities,&#148; as amended by SFAS No.&nbsp;138,
&#147;Accounting for Certain Derivative Instruments and Certain
Hedging Activities&#151;an amendment of FASB Statement No.&nbsp;133,&#148; and
by SFAS No.&nbsp;149, &#147;Amendment of SFAS No.&nbsp;133 on Derivative
Instruments and Hedging Activities.&#148; Under SFAS No.&nbsp;133, all
derivative instruments are recognized in the balance sheet at
their fair values and changes in fair value are recognized
immediately in earnings, unless the derivatives qualify as hedges
of future cash flows. For derivatives qualifying as hedges of
future cash flows, the effective portion of changes in fair value
is recorded in other comprehensive income, then recognized in
earnings along with the related effects of the hedged items. Any
ineffective portion of hedges is reported in earnings as it
occurs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Forward exchange contracts and currency swaps are utilized
to hedge certain foreign currency and interest rate exposures.
However, none of these derivatives were designated as hedging
instruments under SFAS No.&nbsp;133 at March&nbsp;31, 2003, 2004 and 2005.
Unrealized gains and losses on such instruments are recognized
currently in earnings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Reclassifications&#151;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Certain reclassifications and format changes have been made to
prior year amounts to conform to the current year presentation.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">New Accounting Standards&#151;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In November&nbsp;2004, the FASB issued SFAS No.&nbsp;151, &#147;Inventory Costs
&#151; an amendment of ARB No.&nbsp;43, Chapter&nbsp;4.&#148; SFAS No.&nbsp;151 clarifies
the language used in Accounting Research Bulletin No.&nbsp;43 with
respect to accounting for abnormal amounts of idle facility
expenses, freight, handling costs and spoilage. SFAS No.&nbsp;151 is
effective for fiscal years beginning after June&nbsp;15, 2005, and is
required to be adopted by the Company effective April&nbsp;1, 2006.
The adoption of this standard is not expected to have any
material impact on the Company&#146;s consolidated statements of
operations or financial position.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2004, the FASB issued SFAS No.&nbsp;153, &#147;Exchanges
of Nonmonetary Assets &#151; an amendment of APB Opinion No.&nbsp;29,&#148;
which will become effective for nonmonetary asset exchanges
occurring in fiscal periods beginning after June&nbsp;15, 2005.
Accounting Principles Board (&#147;APB&#148;) Opinion No.&nbsp;29 generally
requires that exchanges of nonmonetary assets be measured based
on fair value of the assets exchanged but provided an exception
for nonmonetary exchanges of similar productive assets, which did
not result in a change in carrying value for the new asset
acquired even if the cash flows resulting from the exchange would
change significantly. SFAS No.&nbsp;153 eliminates the exception for
nonmonetary exchanges of similar productive assets and replaces
it with a general exception for exchanges of nonmonetary assets
that do not have commercial substance. Nonmonetary exchanges lack
commercial substance if the cash flows to the entity will not
change significantly as a result of the exchange. The adoption of
this standard is not expected to have any material impact on the
Company&#146;s consolidated statements of operations or financial
position.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2004, the FASB issued SFAS No.&nbsp;123 (revised
2004), &#147;Share-Based Payment.&#148; The revised SFAS No.&nbsp;123 supersedes
APB Opinion No.&nbsp;25, which requires recognition of an expense when goods or services are provided, and eliminates
the ability to account for these instruments under the intrinsic
value method prescribed by APB Opinion No.&nbsp;25, and allowed under
the original provisions of SFAS No.&nbsp;123. The adoption of this
standard is not expected to have any material impact on the
Company&#146;s consolidated statements of operations or financial
position because the Company accounts for its stock-based
compensation agreements using the fair value based method, not
the intrinsic value method prescribed by APB Opinion No.&nbsp;25.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March&nbsp;2004, the EITF confirmed as a consensus EITF Issue
No.&nbsp;03-1, &#147;The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments&#148;
</DIV>

<P align="center" style="font-size: 10pt">F-11
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(&#147;EITF 03-1&#148;). The objective of this issue is to provide guidance
on determining when an investment is considered impaired, whether
that impairment is other-than-temporary, and the measurement of
an impairment loss. The guidance also includes accounting
considerations subsequent to the recognition of an
other-than-temporary impairment and requires certain disclosures
about unrealized losses that have not been recognized as
other-than-temporary impairments. In September&nbsp;2004, the FASB
issued FASB Staff Position EITF 03-1-1 that delays the effective
date for the measurement and recognition guidance included in
EITF 03-1. The disclosures required by EITF 03-1 have not been
deferred and are effective for the annual periods ending after
June&nbsp;15, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March&nbsp;2005, the FASB issued FIN No.&nbsp;47, &#147;Accounting for
Conditional Asset Retirement Obligations&#151;an interpretation of
FASB Statement No.&nbsp;143&#148; FIN No.&nbsp;47 clarifies that the term
&#147;conditional asset retirement obligation&#148; as used in SFAS No.
143, &#147;Accounting for Asset Retirement Obligations,&#148; refers to a
legal obligation to perform an asset retirement activity in which
the timing and (or)&nbsp;method of settlement are conditional on a
future event that may or may not be within the control of the
entity. The obligation to perform the asset retirement activity
is unconditional even though uncertainty exists about the timing
and (or)&nbsp;method of settlement. SFAS No.&nbsp;143 acknowledges that in some cases, sufficient information may not
be available to reasonably estimate the fair value of an asset
retirement obligation. FIN No.&nbsp;47 also clarifies when an entity
would have sufficient information to reasonably estimate the fair
value of an asset retirement obligation. FIN No.&nbsp;47 is effective
no later than the end of fiscal years ending after December&nbsp;15,
2005. The Company has not completed the study of what effect FIN
No.&nbsp;47 will have on its financial position and results of
operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In May&nbsp;2005, the FASB issued SFAS No.&nbsp;154, &#147;Accounting
Changes and Error Corrections&#151;a replacement of APB Opinion No.&nbsp;20
and FASB Statement No.&nbsp;3.&#148; SFAS No.&nbsp;154 replaces APB No.&nbsp;20,
&#147;Accounting Changes,&#148; and SFAS No.&nbsp;3, &#147;Reporting Accounting
Changes in Interim Financial Statements,&#148; and changes the
requirements for the accounting for and reporting of a change in
accounting principle. SFAS No.&nbsp;154 applies to all voluntary
changes in accounting principle. SFAS No.&nbsp;154 also applies to
changes required by an accounting pronouncement in the unusual
instance that the pronouncement does not include specific
transition provisions. SFAS No.&nbsp;154 is effective for accounting
changes and corrections of errors made in fiscal years beginning
after December&nbsp;15, 2005, with earlier adoption permitted.
Accordingly, the Company can not reasonably estimate the ultimate
impact of SFAS No.&nbsp;154.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2. Supplemental cash flow information:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Selected cash payments and noncash activities for the years ended March&nbsp;31, 2003, 2004 and 2005 were as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash payment for interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,654</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,458</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>2,038</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>19,047</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash payment for income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,047</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>17,195</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>160,701</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Noncash investing activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Acquisition of a subsidiary:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Fair value of assets, net of cash acquired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>60,736</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>567,626</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Liability assumed including capital lease obligation of
&#165;12,882&nbsp;million ($120,393 thousand)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(26,721</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(249,729</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payment for acquisition of a subsidiary, net of cash acquired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>34,015</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>317,897</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sales of discontinued operations:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Transferred assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,932</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Transferred liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,823</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Foreign currency translation adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(37</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Gain on sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,825</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Cash received&#151;net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,897</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-12
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>3. Acquisition:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On September&nbsp;30, 2004, the Company acquired 100% of the
issued common stock of NEC Plasma Display Corporation (&#147;NPD&#148;), a
subsidiary of NEC Corporation, and the intellectual property
rights of NPD for cash in an aggregate amount of &#165;35,097&nbsp;million.
NPD changed its name to Pioneer Plasma Display Corporation
(&#147;PPD&#148;) on September&nbsp;30, 2004. This acquisition was to meet a
fast-growing global demand of plasma displays and to ensure its
leading role in this market.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consolidated financial statements for the year ended
March&nbsp;31, 2005 include the operating results of PPD from the date
of acquisition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with this acquisition, &#165;6,937&nbsp;million was
assigned to intangible asset of patents subject to amortization
with an amortization period of 7&nbsp;years which is based on legal
provisions that may limit the useful life.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table summarizes the estimated fair values of
the assets acquired and liabilities assumed at the date of
acquisition:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Millions of Yen</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="5" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">15,390</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,426</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Acquired intangible asset of patent</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,937</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,065</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17,420</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,301</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="5" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net assets acquired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">35,097</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="5" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following unaudited pro forma information shows the
results of the Company&#146;s consolidated operations for the years
ended March&nbsp;31, 2004 and 2005 as if the acquisition had been
completed at the beginning of each fiscal year presented.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">Unaudited</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">752,858</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>754,161</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,332</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(19,002</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">Yen</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)&nbsp;per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">98.80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(108.34</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">98.02</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(108.34</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-13
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>4. Discontinued operations:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For the year ended March&nbsp;31, 2004 in accordance
with SFAS No.&nbsp;144, the Company presented the results of
discontinued operations as a separate line item in the
consolidated statements of operations under &#147;Income
from discontinued operations, net of tax.&#148;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to improve management efficiency by concentrating
resources in strategic business, the Company reached
an agreement to sell 100% of its shares in two of its
wholly-owned subsidiaries, Pioneer LDC, Inc. and
Pioneer Entertainment (USA)&nbsp;Inc., to Dentsu Inc.,
Japan&#146;s largest comprehensive advertising agency.
These subsidiaries were engaged in the audio/video
software businesses in Tokyo, Japan and in California,
the United States of America, respectively. The
transfer of 100% of the shares of Pioneer LDC, Inc.
and 90% of the shares of Pioneer Entertainment (USA)
Inc. owned by the Company were each completed in the
year ended March&nbsp;31, 2004. The remaining shares of
Pioneer Entertainment (USA)&nbsp;Inc. are expected to be
transferred to Dentsu Inc. by September&nbsp;30, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March&nbsp;2004, Q-Tec, Inc., which had been a
99.26% owned subsidiary of the Company, became an
independent company through a management buyout after
acquiring all of the shares owned by the Company, with
a business alliance of Vision Capital Corporation and
Memory-Tech Corporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Summarized selected financial
information for the years ended March&nbsp;31, 2003 and
2004 for the discontinued operations reclassified
during the year ended March&nbsp;31, 2004 was as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">35,051</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">16,664</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost and expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">34,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">16,324</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">551</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">340</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gain on sales of discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,825</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income taxes (benefit)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,310</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income from discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">136</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">4,475</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">F-14
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>5.</B>&nbsp;&nbsp;&nbsp;<B>Available-for-sale securities and sundry investments:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Cost, gross unrealized holding gains, gross unrealized holding losses and the aggregate fair
value of available-for-sale securities at March&nbsp;31, 2004 and 2005 were as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="30" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="14" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="14" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Holding</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Holding</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Aggregate</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Holding</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Holding</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Aggregate</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Cost</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Gains</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Losses</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Fair Value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Cost</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Gains</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Losses</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Fair Value</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="33" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Marketable equity securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Non-current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,520</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">17,890</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">24,409</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>5,734</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>16,438</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>22,170</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Marketable debt securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Non-current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">106</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>94</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>98</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="33" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,626</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">17,891</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">24,516</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>5,828</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>16,442</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>22,268</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="33" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="14" style="border-bottom: 1px solid #000000">Thousands of U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="14" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Holding</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Holding</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Aggregate</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Cost</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Gains</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Losses</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Fair Value</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="33" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Marketable equity securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Non-current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>53,589</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>153,626</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>19</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>207,196</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Marketable debt securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Non-current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>878</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>38</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>916</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="33" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>54,467</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>153,664</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>19</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>208,112</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="33" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table presents fair value and unrealized losses of available-for-sale marketable
equity securities, aggregated by length of time that the individual securities have been in a
continuous unrealized loss position at March&nbsp;31, 2005.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">Thousands of U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">Less than 12 Months</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">Less than 12 Months</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Fair</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Fair</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Losses</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Losses</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Marketable equity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>16</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>150</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>19</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">&nbsp;
</DIV>

<P align="center" style="font-size: 10pt">F-15
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At March&nbsp;31, 2005, the fair values of marketable debt
securities by contractual maturities for securities classified as
available-for-sale due in one year through five years were &#165;98
million ($916 thousand).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross realized gain on available-for-sale securities for the
years ended March&nbsp;31, 2004 and 2005 were &#165;43&nbsp;million and &#165;2,300
million ($21,495 thousand), respectively. Gross realized losses
for the years ended March&nbsp;31, 2003, 2004 and 2005 were &#165;16
million, &#165;6&nbsp;million and &#165;1&nbsp;million ($9 thousand), respectively.
There was no gross realized gain on available-for-sale securities
recorded for the year ended March&nbsp;31, 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company holds marketable equity securities of customers
and financial institutions for the purpose of maintaining
long-term relationships, whose share prices are highly volatile.
The Company has one investment in Japan which was in an
unrealized loss position due to the share price&#146;s poor
performance at March&nbsp;31, 2005. The duration of the impairment was
less than six months. The Company evaluated the near-term
prospects of the issuer in relation to the severity and duration
of the impairment. Based on that evaluation and the Company&#146;s ability and intent to
hold this investment for a reasonable period of time sufficient
for a forecasted recovery of fair value, the Company does not
consider this investment to be other-than-temporarily impaired at
March&nbsp;31, 2005. For the years ended March&nbsp;31, 2003, 2004 and
2005, losses on other than temporary impairment of marketable
equity securities were &#165;1,346&nbsp;million, &#165;27&nbsp;million and &#165;3&nbsp;million
($28 thousand), respectively. For the year ended March&nbsp;31, 2005,
a loss on other-than-temporary impairment of marketable debt
securities was &#165;3&nbsp;million ($28&nbsp;thousand).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sundry investments consist of non-marketable equity
securities and memberships. The aggregate cost of the Company&#146;s
non-marketable equity securities totaled &#165;2,977&nbsp;million ($27,823
thousand) at March&nbsp;31, 2005. Investments with an aggregate cost
of &#165;2,970&nbsp;million ($27,757 thousand) were not evaluated for
impairment because (a)&nbsp;those investments were not practicable to
estimate the fair value and (b)&nbsp;the Company did not identify any
events or changes in circumstances that may have had significant
adverse effect on the fair value of those investments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>6.</B>&nbsp;&nbsp;&nbsp;<B>Inventories:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Inventories at March&nbsp;31, 2004 and 2005 comprise the following:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Finished products</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">51,360</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>52,807</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>493,523</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Work in process</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,956</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>26,330</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>246,075</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Materials and supplies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>29,878</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>279,233</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">107,806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>109,015</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1,018,831</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>7.</B>&nbsp;&nbsp;&nbsp;<B>Investments in and advances to affiliated companies:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Investments in and advances to affiliated companies
principally represent the Company&#146;s equity in the underlying
assets of 20% to 50% owned companies. Dividends received from
companies accounted for on an equity basis were &#165;58&nbsp;million, &#165;4
million and &#165;4&nbsp;million ($37 thousand), respectively, for the
years ended March&nbsp;31, 2003, 2004 and 2005.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Retained earnings include the parent company&#146;s and its
consolidated subsidiaries&#146; equity in undistributed earnings of
20% to 50% owned companies accounted for on an equity basis in
the amount of &#165;310&nbsp;million and &#165;329&nbsp;million ($3,075 thousand) at
March&nbsp;31, 2004 and 2005, respectively.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Summarized financial information of companies owned 20% to
50%, including ELDis, Inc., 47.5% owned by Tohoku Pioneer
Corporation, a 67% owned subsidiary, accounted for by the equity
method of accounting is as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;
</DIV>

<P align="center" style="font-size: 10pt">F-16
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">10,619</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>8,427</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>78,757</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,978</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>25,326</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>236,692</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">393</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>403</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,766</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">39,990</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>34,156</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>319,215</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,822</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>5,116</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>47,813</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>24,736</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>231,178</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,058</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,304</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>40,224</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total liabilities and shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">39,990</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>34,156</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>319,215</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Year ended March 31</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">7,845</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">8,408</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>9,229</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>86,252</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,932</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(18,056</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,802</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,023</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,801</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>54,215</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>8.</B>&nbsp;&nbsp;&nbsp;<B>Intangible assets:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Intangible assets subject to amortization acquired during the
year ended March&nbsp;31, 2005 totaled &#165;12,189&nbsp;million ($113,916
thousand) and primarily consist of software of &#165;4,853&nbsp;million
($45,355 thousand) and patents of &#165;6,937&nbsp;million ($64,832
thousand) (see Note 3). The weighted-average amortization
periods for software, patents and total acquired during the
year ended March&nbsp;31, 2005 are 3.5&nbsp;years, 7.0&nbsp;years and 5.9
years, respectively.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Intangible assets subject to amortization are comprised of the following:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="14" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Carrying</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Accumulated</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Carrying</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Accumulated</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Carrying</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Accumulated</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Amount</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Amortization</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Amount</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Amortization</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Amount</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Amortization</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Software</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">31,161</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(15,412</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>34,281</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(19,595</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>320,383</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(183,131</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Patents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,798</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(21,426</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>28,107</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(20,538</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>262,682</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(191,944</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,693</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(848</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,737</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(940</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>25,580</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(8,785</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">56,652</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(37,686</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>65,125</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(41,073</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>608,645</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(383,860</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate amortization expense for intangible
assets for the years ended March&nbsp;31, 2003, 2004 and 2005
was &#165;7,949&nbsp;million, &#165;6,109&nbsp;million and &#165;7,229&nbsp;million
($67,561 thousand), respectively. The estimated aggregate
amortization expense for intangible assets for the next five
years is as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Year ending March 31</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,811</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">63,654</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,929</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,411</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,192</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,178</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,059</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,589</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,346</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,925</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">&nbsp;
</DIV>

<P align="center" style="font-size: 10pt">F-17
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>9.</B>&nbsp;&nbsp;&nbsp;<B>Short-term borrowings and long-term debt:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Short-term borrowings at March&nbsp;31, 2004 and 2005 comprise the following:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Bank loans:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Weighted-average interest rate 1.74% at March&nbsp;31, 2004
and 1.25% at March&nbsp;31, 2005:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Uncollateralized</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">23,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>33,152</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>309,832</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>

<TR style="font-size: 6pt"><TD>&nbsp;</TD></TR>
<TR style="font-size: 10pt">
    <TD colspan="13" align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-term debt at March&nbsp;31, 2004 and 2005 comprises the following:</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>


<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loans, principally from banks, maturing serially through 2013
interest ranging from 3.06% to 3.90% at March&nbsp;31, 2004 and from 2.90%
to 3.06% at March&nbsp;31, 2005:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Collateralized</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,804</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>1,960</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>18,318</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Uncollateralized</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>50</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>467</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2.35% Uncollateralized bonds due 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>15,000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>140,187</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2.80% Uncollateralized bonds due 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>10,000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>93,458</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Zero coupon convertible bonds due 2011, including unamortized issue premium,
&#165;1,779&nbsp;million ($16,626 thousand) (effective annual rate 0.5%)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62,079</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>61,779</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>577,374</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term capital lease obligations, 1.25% to 3.26% at March&nbsp;31, 2005,
due principally to 2012</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>11,129</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>104,009</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Industrial development U.S. dollar revenue bonds due 2005 with fluctuating
interest rates (1.29% at March&nbsp;31, 2004 and 1.70% at March&nbsp;31, 2005),
subject to maximum rate of 15% in 2004 and 2005 and other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">638</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>577</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,393</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">94,201</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>100,495</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>939,206</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less&#151;Portion due within one year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,510</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>19,276</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>180,150</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">89,691</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>81,219</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>759,056</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">&nbsp;
</DIV>

<P align="center" style="font-size: 10pt">F-18
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The outstanding bond indentures generally require the parent
company to provide collateral for the outstanding bonds if the
parent company provides collateral to new bonds issued in Japan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;5, 2004, the parent company issued &#165;60,000&nbsp;million
zero coupon convertible bonds due 2011 (bonds with stock
acquisition rights) (&#147;Bonds&#148;) at 103.5% of their principal
amount. The Bonds do not bear interest. The stock acquisition
rights are not transferable separately from the Bonds. The Bonds
are traded on the London Stock Exchange&#146;s market for listed
securities. The Bonds were issued in the denomination of &#165;5
million each and each bondholder is entitled to exercise the
stock acquisition right from April&nbsp;1, 2006 until February&nbsp;18,
2011 (unless previously redeemed) into common shares at an
initial conversion price, subject to adjustment in certain
events, of &#165;4,022. Market price of common stock at the date of
issuance of the Bonds was &#165;3,220.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Parent company may redeem all, but not some of the Bonds,
with advance irrevocable notice to bondholders in each case (1)
if the closing price of common stock for each of the 30
consecutive trading days is at least 120% of the conversion price
on or after March&nbsp;4, 2007 and prior to maturity, or (2)&nbsp;if the
laws or regulations of Japan having power to tax is changed, or
(3)&nbsp;if a resolution is passed at the general meeting of
shareholders of the parent company to become a wholly-owned
subsidiary of another company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The stock acquisition right is also exercisable on or after
March&nbsp;19, 2004 if the parent company issues an irrevocable notice
to bondholders for (2)&nbsp;or (3)&nbsp;above, or if a resolution passes at
a general meeting of shareholders of parent company (a)&nbsp;for any
consolidation or amalgamation of parent company with any company,
or (b)&nbsp;for any split of parent company&#146;s business, or (c)&nbsp;for the
parent company to become a wholly-owned subsidiary of another
company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The parent company will redeem the outstanding Bonds at 100%
of their principal amount on March&nbsp;4, 2011.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unused lines of credit for short-term financing at March&nbsp;31,
2005 approximated &#165;230,109&nbsp;million ($2,150,551 thousand) of which
&#165;30,000&nbsp;million ($280,374 thousand) relates to commercial paper
programs. Unused commitments for long-term financing arrangements
at March&nbsp;31, 2005 amounted to &#165;5,000&nbsp;million ($46,729 thousand).
There were no commitment fees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Land and buildings with a book value of &#165;5,999&nbsp;million
($56,065 thousand) were pledged as collateral for certain
long-term loans of the Company at March&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate annual maturities of long-term debt during the
five years ending March&nbsp;31, 2010 and thereafter are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Year ending March 31</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">19,276</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">180,150</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,338</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,196</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,649</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,757</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,740</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,374</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">716</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,692</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2011 and thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,776</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">596,037</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">100,495</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">939,206</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Substantially all short-term and long-term loans from banks
are made under agreements which, as is customary in Japan,
provide that the bank may, under certain conditions, require the
borrower to provide collateral (or additional collateral) or
guarantors with respect to the loans, and that the bank may treat
any collateral, whether furnished as security for short-term or
long-term loans or otherwise, as collateral for all indebtedness
to such bank. The Company has no compensating balance
arrangements with any lending bank.
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">&nbsp;
</DIV>

<P align="center" style="font-size: 10pt">F-19
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>10.</B>&nbsp;&nbsp;&nbsp;<B>Pension plans and accrued severance cost:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The parent company and major domestic subsidiaries have
trusteed non-contributory defined benefit pension plans which
cover substantially all of their employees. The benefits are in
the form of annuity payments and/or lump-sum payments and are
based on points and length of service and conditions under which
termination occurs. The Company&#146;s policy is to fund amounts
required to maintain sufficient plan assets to provide for
accrued benefits, subject to the limitation on deductibility
imposed by the Japanese income tax laws.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company also sponsors a domestic contributory
defined-benefit welfare pension plan (the &#147;welfare pension plan&#148;)
covering substantially all of its Japanese employees. The
benefits of the welfare pension plan are primarily based on years
of service and on the average compensation during years of
service and subject to governmental regulations. The welfare
pension plan consists of a substitutional portion, which has been
specified by the Japanese government&#146;s welfare pension
regulations, and a corporate portion established by the Company.
Management considers that a portion of the welfare pension plan,
which is administered by a board of trustees composed of
management and labor representatives, represents a welfare
pension plan carried on behalf of the Japanese government.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company received approval from the government for an
exemption from the obligation to pay benefits for future employee
service related to the substitutional portion on October&nbsp;29, 2003
and an exemption from the obligation to pay benefits for past
employee service related to the substitutional portion on
November&nbsp;1, 2004. On March&nbsp;11, 2005, the benefit obligation of
the substitutional portion and the related government-specified
portion of plan assets of the welfare pension plan were
transferred to the government. In accordance with EITF Issue No.
03-2, &#147;Accounting for the
Transfer to the Japanese Government of the Substitutional Portion
of Employee Pension Fund Liabilities,&#148; the Company recorded the
transaction upon completion of transfer to the government of the
substitutional portion of the benefit obligation and related plan
assets. The transfer resulted in the Company recording a subsidy
from the government of &#165;48,697&nbsp;million ($455,112 thousand)
representing the difference between the accumulated benefit
obligation of the substitutional portion and the related plan
assets. Additionally, the Company recorded a reduction in net
periodic benefit cost related to the derecognition of previously
accrued salary progression of &#165;2,402&nbsp;million ($22,448 thousand)
and a settlement loss of &#165;51,893&nbsp;million ($484,981 thousand). The
total amount of derecognition of previously accrued salary
progression and settlement loss is allocated to cost of sales of
&#165;25,339&nbsp;million ($236,813 thousand) and selling, general and
administrative expenses of &#165;24,152&nbsp;million ($225,720 thousand).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the year ended March&nbsp;31, 2005, the Company amended the
corporate portion of the contributory plan. A major change was a
change in the benefits calculation factor and the period of
benefit payments. The amendment generated an unrecognized prior
service gain of &#165;9,602&nbsp;million ($89,738 thousand).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The plan assets and pension obligation for the
non-contributory plans and the contributory plan of the parent
company and certain subsidiaries are measured at March&nbsp;31 in each
fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net periodic benefit costs for the non-contributory plans
and the contributory plan of the parent company and certain
domestic subsidiaries for the years ended March&nbsp;31, 2003, 2004
and 2005 consisted of the following:
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">&nbsp;
</DIV>

<P align="center" style="font-size: 10pt">F-20
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
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    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="22" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Non-</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Non-</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Non-</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Non-</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">contributory</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Contributory</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">contributory</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Contributory</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">contributory</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Contributory</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">contributory</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Contributory</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Plans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Plan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Plans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Plan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Plans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Plan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Plans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Plan</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="33" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Service cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,884</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,892</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,860</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>2,795</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>1,745</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>26,121</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>16,308</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,695</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,518</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,712</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,512</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>16,000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>32,823</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected return on assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,606</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,941</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,386</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,741</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,692</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,037</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(15,813</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(19,037</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization of unrecognized
net actuarial loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,021</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,853</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,632</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,428</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,185</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,040</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>11,075</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>19,065</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization of unrecognized
net assets at date of application</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(163</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(344</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(160</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(344</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(160</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(344</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,495</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(3,215</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization of unrecognized
prior service gain</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(535</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(364</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(535</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(364</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(535</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(364</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(5,000</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(3,402</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Settlement loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>51,893</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>484,981</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Derecognition of previously
accrued salary progression</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,402</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(22,448</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="33" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net periodic benefit cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3,296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">4,799</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>3,305</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>54,043</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>30,888</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>505,075</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="33" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Actuarial assumptions used to
determine net periodic
pension cost:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Discount rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>2.5</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>4.1</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Rate of salary increase</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD nowrap><B>*</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>2.6</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Long-term rate of return on plan assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">3.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">3.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">3.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">3.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>3.9</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>3.9</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="33" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Non-contributory plans are not pay-related.</TD>
</TR>

</TABLE>



<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">&nbsp;
</DIV>

<P align="center" style="font-size: 10pt">F-21
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reconciliations of beginning and ending balances of benefit obligations and the fair value of the
plan assets are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="14" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Non-</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Non-</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Non-</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">contributory</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Contributory</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">contributory</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Contributory</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">contributory</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Contributory</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Plans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Plan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Plans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Plan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Plans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Plan</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Change in benefit obligation:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Benefit obligation at beginning of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">69,446</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">80,512</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>68,465</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>85,660</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>639,860</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>800,561</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Service cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,892</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,860</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,795</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,745</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>26,121</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>16,308</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Interest cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,518</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,712</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,512</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>16,000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>32,823</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Plan participants&#146; contribution</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">659</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>39</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>364</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Actuarial loss (gain)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,004</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(543</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(922</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>37,013</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(8,617</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>345,916</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Lump-sum cash payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,429</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,878</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(17,551</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Benefits paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(507</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,129</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(623</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,287</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(5,822</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(12,028</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Transfer of substitutional portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(92,219</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(861,860</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Plan amendment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(9,602</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(89,738</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Decrease due to sales of discontinued
operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(451</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Benefit obligation at end of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">68,465</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">85,660</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>69,549</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>24,861</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>649,991</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>232,346</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Change in plan assets:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Fair value of plan assets at beginning of
year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">35,923</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">44,639</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>43,375</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>52,220</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>405,374</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>488,037</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Actual return on plan assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,739</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,670</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,016</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>688</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>18,841</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6,430</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Employer contribution</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,381</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,074</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,821</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>38,074</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>17,019</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Plan participants&#146; contribution</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">659</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>39</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>364</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Lump-sum cash payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,429</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,878</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(17,551</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Benefits paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(507</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,129</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(623</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,287</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(5,822</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(12,028</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Transfer of substitutional portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(41,120</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(384,299</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Decrease due to sales of discontinued
operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(391</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Fair value of plan assets at end of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">43,375</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">52,220</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>46,964</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>12,361</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>438,916</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>115,523</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Funded status</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(25,090</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(33,440</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(22,585</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(12,500</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(211,075</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(116,823</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrecognized actuarial loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,476</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,483</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>25,045</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>19,912</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>234,066</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>186,094</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrecognized net assets at the date of
application</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(486</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(953</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(326</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(609</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(3,047</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(5,691</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrecognized prior service gain</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,700</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,209</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(7,165</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(13,447</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(66,963</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(125,673</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net amount recognized</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(5,800</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(3,119</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(5,031</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(6,644</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(47,019</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(62,093</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Amounts recognized in the statement of financial
position consist of:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accrued benefit liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(23,017</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(27,302</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(20,589</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(12,170</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(192,421</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(113,738</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accumulated other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,217</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,183</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>15,558</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,526</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>145,402</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>51,645</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net amount recognized</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(5,800</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(3,119</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(5,031</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(6,644</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(47,019</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(62,093</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated benefit obligation at end of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">66,392</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">79,522</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>67,543</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>24,531</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>631,243</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>229,261</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Actuarial assumptions used to determine benefit
obligations:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Discount rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>2.5</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>2.5</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Rate of salary increase</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD nowrap><B>*</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD nowrap><B>**</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Non-contributory plans are not pay-related.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">**</TD>
    <TD>&nbsp;</TD>
    <TD>Corporate portion of contributory plan are not pay-related.</TD>
</TR>

</TABLE>



<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">&nbsp;
</DIV>

<P align="center" style="font-size: 10pt">F-22
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Substantially all of the employees of U.S. and European
subsidiaries are covered by defined benefit pension plans.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The plan assets and pension obligations for the defined
benefit pension plans of U.S. and European subsidiaries are
measured at March&nbsp;31 in each fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net periodic benefit costs for the defined benefit pension
plans of U.S. and European subsidiaries for the years ended March
31, 2003, 2004 and 2005 consisted of the following:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Service cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">566</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">542</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>565</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>5,280</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">632</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">639</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>693</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6,477</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected return on assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(166</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(442</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(580</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(5,420</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization of unrecognized net actuarial
loss (gain)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>52</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>486</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization of unrecognized prior service cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>37</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Curtailment/settlement loss (gain)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(168</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>26</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>243</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net periodic benefit cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">872</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">748</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>760</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>7,103</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Actuarial assumptions used to determine net
periodic pension cost:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Discount rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>5.6</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Rate of salary increase</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">3.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>4.0</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Long-term rate of return on plan assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">7.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">7.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>7.0</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">&nbsp;
</DIV>

<P align="center" style="font-size: 10pt">F-23
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reconciliations of beginning and ending balances of benefit obligations and the fair value of the
plan assets are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Change in benefit obligation:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Benefit obligation at beginning of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">10,732</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>12,574</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>117,514</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Service cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">542</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>565</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,280</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Interest cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">639</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>693</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6,477</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Plan participants&#146; contribution</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>110</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,028</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Actuarial loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,496</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>781</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7,299</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Benefits paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(235</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(228</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,131</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Curtailment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(80</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,412</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(13,196</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Translation adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(623</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>512</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,785</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Benefit obligation at end of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">12,574</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>13,595</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>127,056</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Change in plan assets:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Fair value of plan assets at beginning of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,248</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>7,656</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>71,551</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Actual return on plan assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,249</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>499</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,664</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Employer contribution</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">703</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>990</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>9,252</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Plan participants&#146; contribution</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>110</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,028</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Benefits paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(232</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(228</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,131</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Translation adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(415</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>303</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,832</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Fair value of plan assets at end of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">7,656</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>9,330</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>87,196</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Funded status</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(4,918</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(4,265</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(39,860</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrecognized actuarial loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,814</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>16,954</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrecognized prior service cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>58</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>542</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net amount recognized</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(2,539</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(2,393</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(22,364</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Amounts recognized in the statement of financial position
consists of:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accrued benefit liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(3,096</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(3,263</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(30,495</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accumulated other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">557</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>870</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8,131</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net amount recognized</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(2,539</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(2,393</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(22,364</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated benefit obligation at end of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">10,556</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>12,344</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>115,364</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Actuarial assumptions used to determine benefit obligations:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Discount rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.6%</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>5.4%</B></TD>
    <TD nowrap><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Rate of salary increase</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4.0%</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>4.0%</B></TD>
    <TD nowrap><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accumulated benefit obligations and the fair value of plan assets for the pension plans
with accumulated benefit obligations in excess of plan assets are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated benefit obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">10,430</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>11,474</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>107,234</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fair value of plan assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,483</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8,369</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>78,215</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">&nbsp;
</DIV>


<P align="center" style="font-size: 10pt">F-24
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The unrecognized prior service gain/cost, the unrecognized
actuarial loss and the unrecognized net assets at the date of
initial application are being amortized over the average
remaining service period of employees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company determines the expected long-term rate of return
on pension plan assets based on weighted average of expected
long-term returns on various categories of plan assets,
reflecting the current and target allocations of pension plan
asset. Expected long-term return by asset category is derived
from historical studies by investment advisors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The pension plan weighted-average asset allocations at March
31, 2004 and 2005, by asset category are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Asset Category</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">46</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>53</B></TD>
    <TD nowrap><B>%</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Debt securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>34</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Real estate and other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>13</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>100</B></TD>
    <TD nowrap><B>%</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s investment policy is to maintain a diversified
portfolio of asset classes with the primary goal of producing an
adequate return that, when combined with the Company&#146;s
contribution, will maintain the fund&#146;s ability to meet future
cash requirements for pension benefit payments. For primary
domestic pension plans, the target asset allocation is
established based on long-term pension plan asset/liability
studies, and the current weighted-average
target asset allocation for these plans is; equity securities
56%, debt securities 41%, other 3%. All the assets are externally
managed and investment managers have discretion to carry out
investment operations within their respective mandates specified
by the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With respect to directors, provision is made for lump-sum
severance indemnities on a basis considered adequate for such
future payments as may be approved by the shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June&nbsp;2002, Tohoku Pioneer Corporation, a 67% owned
subsidiary, implemented a voluntary early retirement plan. In
relation to this plan, the Company recorded special termination
benefits of &#165;1,424&nbsp;million. These special termination benefits
were included in the selling, general and administrative
expenses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company expects to contribute &#165;6,522&nbsp;million ($60,953
thousand) to its defined benefit plans in the year ending March
31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following benefit payments, which reflect expected
future service, as appropriate, are expected to be paid:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Year ending March 31</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,314</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">21,626</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,905</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,150</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,567</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,336</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,028</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,645</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,499</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,047</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Years 2011&#150;2015</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,888</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">251,290</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>11.</B>&nbsp;&nbsp;&nbsp;<B>Income taxes:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company is subject to a number of different income taxes
which, in the aggregate, indicate a normal statutory tax rate of
approximately 42% for the years ended March&nbsp;31, 2003 and 2004 and
41% for the year ended March&nbsp;31, 2005 in Japan. A change in the
tax rate was enacted in Japan in March&nbsp;2003 and the normal
effective statutory tax rate effective for the year beginning
April&nbsp;1, 2004 was changed from 42% to 41%.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax expense for the year ended March&nbsp;31, 2004
included &#165;682&nbsp;million charges resulting from the settlement of a
proposed assessment from the U.S. Internal Revenue Service
relating to an adjustment to transfer prices between affiliated
companies for the years ended March&nbsp;31, 1997 through 1999.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s provision for income taxes differed from the
provision for income taxes at the normal statutory tax rates in
Japan as follows:
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">&nbsp;
</DIV>

<P align="center" style="font-size: 10pt">F-25
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Computed tax expense at normal statutory tax rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">11,793</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">17,576</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD nowrap align="right"><B>(77</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(720</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Increase (decrease)&nbsp;resulting from:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">992</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,294</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6,137</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>57,355</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Realization of tax benefit of operating loss carryforwards</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,056</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(395</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(671</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(6,271</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Expenses not deductible for tax purpose:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Domestic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">269</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">280</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>251</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,346</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Foreign</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">439</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">149</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>325</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,037</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Difference in foreign and Japanese tax rates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,595</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,608</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,848</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(17,271</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Effect of tax rate change on deferred taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">835</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">447</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Tax benefit for discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,025</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Tax credit for research and development expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(530</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(898</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(232</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,168</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,115</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,283</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>957</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8,944</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">9,032</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">18,587</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>4,842</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>45,252</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>

<TR style="font-size: 6pt"><TD>&nbsp;</TD></TR>

<TR style="font-size: 10pt">
    <TD colspan="17" align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total income taxes provided for the years ended March&nbsp;31, 2003, 2004 and 2005 are as follows:</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for income taxes on income from continuing operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">9,032</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">18,587</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>4,842</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>45,252</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for income taxes (benefit)&nbsp;on income from discontinued
operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,310</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shareholders&#146; equity&#151;directly charged (credited):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Minimum pension liability adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,927</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,953</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8,225</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>76,869</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net unrealized gains on securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(899</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,009</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(593</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(5,542</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(379</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">27,239</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>12,474</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>116,579</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>

<TR style="font-size: 6pt"><TD>&nbsp;</TD></TR>

<TR style="font-size: 10pt">
    <TD colspan="17" align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income from continuing operations before income taxes and income tax expense comprised the following components:</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)
from continuing
operations before
income taxes:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Domestic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">10,137</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">18,481</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(8,656</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(80,897</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Foreign</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,942</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,367</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8,469</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>79,149</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">28,079</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">41,848</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD nowrap align="right"><B>(187</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(1,748</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income taxes&#151;Current:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Domestic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,643</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">10,799</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>4,091</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>38,233</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Foreign</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,834</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,030</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,597</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>33,617</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">14,477</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">17,829</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>7,688</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>71,850</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income taxes&#151;Deferred:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Domestic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(3,296</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(385</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(1,576</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(14,729</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Foreign</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,149</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,143</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,270</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(11,869</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(5,445</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">758</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(2,846</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(26,598</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">&nbsp;
</DIV>

<P align="center" style="font-size: 10pt">F-26
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The significant components of the deferred tax assets and liabilities at March&nbsp;31, 2004 and 2005
are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="14" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Deferred</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Deferred</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Deferred</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Deferred</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Deferred</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Deferred</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Tax</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Tax</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Tax</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Tax</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Tax</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Tax</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Assets</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Liabilities</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Assets</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Liabilities</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Assets</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Liabilities</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,911</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>5,590</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>52,243</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Marketable equity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,971</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">5,017</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,040</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>4,445</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>19,066</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>41,542</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Allowance for notes and accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>824</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7,701</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,893</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>16,316</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>152,486</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Warranty reserve</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,784</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,863</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>17,411</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax loss carryforwards</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,297</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>21,232</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>198,430</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pension and severance cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,268</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>15,116</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>141,271</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,840</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,230</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>39,533</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,907</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">302</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,029</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>490</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>28,308</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,580</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Royalty receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">974</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>539</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,037</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,268</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,408</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6,539</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,469</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>61,112</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>23,075</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72,153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,727</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>77,318</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7,404</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>722,598</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>69,197</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Valuation allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,591</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(20,605</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(192,570</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">60,562</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">8,727</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>56,713</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>7,404</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>530,028</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>69,197</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The changes in the valuation allowance for the years ended March&nbsp;31, 2003, 2004 and 2005 are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="18" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Balance at</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Balance at</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Beginning</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Translation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">End</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Valuation Allowance</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">of Period</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Addition*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Deduction</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Adjustments</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">of Period</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">18,299</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">5,741</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(8,912</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">164</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">15,292</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,292</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,956</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,469</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(188</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,591</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>11,591</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>12,851</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(3,963</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>126</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>20,605</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="18" style="border-bottom: 1px solid #000000">Thousands of U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Balance at</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Balance at</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Beginning</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Translation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">End</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Valuation Allowance</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">of Period</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Addition*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Deduction</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Adjustments</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">of Period</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>108,327</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>120,103</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(37,037</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1,177</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>192,570</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>&#147;Addition&#148; includes valuation allowance of &#165;7,953&nbsp;million ($74,327 thousand) recognized by PPD at the time of acquisition at September&nbsp;30, 2004.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 16pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The valuation allowance principally relates to deferred
tax assets for loss carryforwards of subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Decrease in valuation allowance for the year ended March&nbsp;31,
2003 was mainly due to the reversal of valuation allowance which
had been provided for a tax benefit, the realization of which had
been determined to be not more likely than not, as profitability
of subsidiaries improved. Decrease in valuation allowance for the year ended March&nbsp;31, 2004
was mainly due to the reversal of valuation allowance for
discontinued operations. Increase in valuation allowance for the
year ended March&nbsp;31, 2005 was mainly due to losses incurred for
which the realization of the related deferred tax assets was
determined to be not more likely than not.
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">&nbsp;
</DIV>

<P align="center" style="font-size: 10pt">F-27
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At March&nbsp;31, 2005, the Company has tax loss carry-forwards
which are available to reduce taxable income in subsequent
periods. If not utilized, such loss carryforwards expire as
follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Year ending March 31</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">203</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,897</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">536</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,009</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">593</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,542</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,449</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,630</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,963</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,973</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">448,346</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">56,090</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">524,206</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No provision for income taxes is recognized on undistributed
earnings of foreign subsidiaries that are not expected to be
remitted in the foreseeable future. Undistributed earnings of
foreign subsidiaries (including related foreign currency
translation adjustments) at March&nbsp;31, 2004 and 2005 amounted to
approximately &#165;116,689&nbsp;million and &#165;115,606&nbsp;million ($1,080,430
thousand), respectively. It is not practical to estimate the
amount of taxes that might be payable on the eventual remittance
of such earnings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The domestic undistributed earnings would not, under the
present Japanese tax laws, be subject to additional taxation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>12.</B>&nbsp;&nbsp;&nbsp;<B>Shareholders&#146; equity:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Common Stock and Capital Surplus&#151;<BR>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As permitted by the Commercial Code of Japan (the &#147;Code&#148;) prior
to April&nbsp;1, 1991, the parent company had made free share
distributions which were accounted for by a transfer from capital
surplus to common stock or without any transfers in the capital
accounts.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Companies in the United States issuing shares in similar
transactions would be required to account for them as stock
dividends. Had the distributions been accounted for in the manner
adopted by the United States companies, &#165;179,076&nbsp;million
($1,673,607 thousand) would have been transferred from retained
earnings to appropriate capital accounts as of March&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Code requires that all shares of common stock are
recorded with no par value and at least 50% of the issue price of
new shares is required to be recorded as common stock and the
remaining net proceeds as capital surplus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Retained Earnings&#151;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Retained earnings consist of legal reserve and unappropriated
retained earnings.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Code also provides that an amount at least equal to 10%
of the aggregate amount of cash dividends and certain other cash
payments which are made as an appropriation of retained earnings
applicable to each fiscal period shall be appropriated and set
aside as a legal reserve until such reserve and capital surplus
equals 25% of common stock. The amount of total capital surplus
and legal reserve which exceeds 25% of the common stock is
available for appropriations by resolution of the shareholders.
In addition, the Code permits the transfer of a portion of
capital surplus and legal reserve to the common stock by
resolution of the Board of Directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Code allows companies to repurchase treasury stock and
dispose of such treasury stock by resolution of the Board of
Directors. The repurchased amount of treasury stock cannot exceed
the amount available for future dividend plus amount of common
stock, capital surplus or legal reserve to be reduced in the case
where such reduction was resolved at the general shareholders
meeting.
</DIV>


<P align="center" style="font-size: 10pt">F-28
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amount available for dividends under the Code was
&#165;128,882&nbsp;million ($1,204,505 thousand) as of March&nbsp;31, 2005, that
is based on the amount recorded in the parent company&#146;s general
books and records maintained in accordance with accepted Japanese
accounting practices. The adjustments are included in the
accompanying consolidated financial statements to conform with
U.S. GAAP, but are not recorded in the books, and have no effect
on the determination of retained earnings available for dividends
under the Code. In addition to the provision that requires an
appropriation for a legal reserve in connection with the cash
payment as described above, the Code imposes certain limitations
on the amount of retained earnings available for dividends.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At the general shareholders meeting held on June&nbsp;27, 2002,
the shareholders of the parent company authorized the purchase of
up to 10,000,000 shares of the parent company&#146;s common stock. In August&nbsp;2002, November&nbsp;2002 and
February&nbsp;2003, the parent company purchased 1,610,000 shares,
2,000,000 shares and 1,500,000 shares of their common stock,
respectively, in the market for the aggregate cost of &#165;11,492
million as a publicly announced plan to improve capital
efficiency pursuant to a revision in the Code. In March&nbsp;2005, the
parent company purchased 1,000,000 shares of its common stock in
the market for the cost of &#165;1,963&nbsp;million as a publicly announced
plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The appropriations of retained earnings for the year ended
March&nbsp;31, 2005, which have been incorporated in the accompanying
consolidated financial statements, will be proposed for approval
at the general shareholders&#146; meeting to be held on June&nbsp;29, 2005,
and will be recorded in the parent company&#146;s general books of
account after shareholders&#146; approval.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>13. Stock-based compensation plans:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company has a stock option plan as an incentive plan for
directors and selected employees.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with approval at shareholders&#146; meetings on
June&nbsp;29, 2000 and June&nbsp;28, 2001, the Company granted share
subscription rights to employees. Also, in accordance with
approval at shareholders&#146; meetings on June&nbsp;27, 2002, June&nbsp;27,
2003 and June&nbsp;29, 2004, the Company granted share acquisition
rights to directors and certain employees of the Company. These
options vest over two years and expire in five years from the
date of grant. The Company recorded the fair value of the stock
option as a part of their remuneration.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A summary of information for the Company&#146;s stock option
plans is as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Weighted-Average</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Number of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Weighted-Average</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Grant Date</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Shares</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Year</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Plan</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Exercisable Period</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Exercise Price</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Share Price</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">(Thousands)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Stock option</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">From July 1, 2002 to June 30, 2005</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">4,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">4,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">191</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Stock option</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">From July 1, 2003 to June 30, 2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,791</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">191</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Stock option</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">From July 1, 2004 to June 29, 2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,477</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,170</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">564</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Stock option</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">From July 1, 2005 to June 30, 2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,951</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,845</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">313</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Stock option</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">From July 3, 2006 to June 30, 2009</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,944</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,660</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>316</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Weighted-Average</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Weighted-Average</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Grant Date</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Year</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Plan</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Exercisable Period</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Exercise Price</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Share Price</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Stock option</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">From July 3, 2006 to June 30, 2009</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>27.51</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>24.86</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">F-29
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Remuneration cost recognized for stock-based compensation
plans for the years ended March&nbsp;31, 2003, 2004 and 2005 were &#165;149
million, &#165;305&nbsp;million and &#165;270&nbsp;million ($2,523 thousand),
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The weighted-average fair value per share at the date of
grant for the stock options granted during the years ended March
31, 2003, 2004 and 2005 were &#165;704, &#165;907 and &#165;654 ($6.11),
respectively. The fair value of the stock options granted on the
date of grant, which is amortized to expense over the vesting period, is estimated using the
Black-Scholes option-valuation model with the following
weighted-average assumptions:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="right" colspan="5" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>

</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Risk-free interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.24</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.34</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>0.50</B></TD>
    <TD nowrap><B>%</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected lives</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" nowrap align="right">3.48 years</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" nowrap align="right">3.48 years</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" nowrap align="right"><B>3.48 years</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected volatility</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">52.81</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">48.13</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>40.02</B></TD>
    <TD nowrap><B>%</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected dividends</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.69</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.88</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>0.93</B></TD>
    <TD nowrap><B>%</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A summary of the status of the Company&#146;s warrants, which expired up until August&nbsp;26, 2004, and
options as of March&nbsp;31, 2003, 2004 and 2005, and changes during the years is as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Weighted-Average</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6">Weighted-Average Exercise</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Number of Shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Remaining Life</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">Price per Share</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">(Thousands)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">(Years)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at March&nbsp;31, 2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,177</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3,798</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">564</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,477</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Expired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(98</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,188</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at March&nbsp;31, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,643</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3,441</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">313</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,951</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Expired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(284</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,728</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at March&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,672</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3,131</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>316</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,944</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>27.51</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(4</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,477</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>23.15</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Expired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(413</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,266</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>30.52</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at March&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,571</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>3,059</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>28.59</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercisable at March&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">795</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3,664</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercisable at March&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>942</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>3,133</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>29.28</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-30
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>14. Other comprehensive income:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Change in accumulated other comprehensive income (loss)&nbsp;is as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="14" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Foreign Currency</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Total Accumulated</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Minimum Pension</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Net Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Translation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Other Comprehensive</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Liability Adjustments</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Gains on Securities</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Adjustments</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Income (Loss)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at March&nbsp;31, 2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(20,487</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">4,583</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(8,832</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(24,736</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustments for the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12,188</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,235</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17,470</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30,893</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at March&nbsp;31, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(32,675</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,348</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26,302</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(55,629</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustments for the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,745</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,755</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(21,700</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,200</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at March&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(22,930</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(48,002</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(61,829</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustments for the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>11,744</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(853</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,269</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>14,160</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at March&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(11,186</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>8,250</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(44,733</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(47,669</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="14" style="border-bottom: 1px solid #000000">Thousands of U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Foreign Currency</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Total Accumulated</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Minimum Pension</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Net Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Translation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Other Comprehensive</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Liability Adjustments</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Gains on Securities</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Adjustments</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Income (Loss)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at March&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(214,299</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">85,075</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(448,617</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(577,841</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustments for the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>109,757</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(7,972</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>30,551</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>132,336</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at March&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(104,542</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>77,103</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(418,066</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(445,505</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-31
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>


<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tax effects allocated to each component of other comprehensive income (loss)&nbsp;and reclassification
adjustments are as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="14" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Before-Tax</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Tax (Expense)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Minority</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Net-of-Tax</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Amount</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">or Benefit</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Interest</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Amount</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2003:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minimum pension liability adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(21,255</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">8,927</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(12,188</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net unrealized gains on securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unrealized holding losses arising during year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,502</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,472</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,023</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Less&#151;Reclassification adjustment for losses realized in net
income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,366</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(573</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">788</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net unrealized losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,136</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">899</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,235</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign currency translation adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18,178</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">708</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17,470</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(41,569</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">9,826</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(30,893</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2004:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minimum pension liability adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">16,803</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(6,953</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(105</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">9,745</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net unrealized gains on securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unrealized holding gains arising during year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,013</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,761</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Less&#151;Reclassification adjustment for gains realized in net
income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net unrealized gains</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,780</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,009</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,755</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign currency translation adjustments:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Foreign currency translation adjustments arising during year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23,010</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">912</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(22,098</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Less&#151;Reclassification adjustment for losses realized in net
income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">398</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net foreign currency translation adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(22,612</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">912</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(21,700</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3,971</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(10,962</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">791</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(6,200</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minimum pension liability adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>20,003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(8,225</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(34</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>11,744</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net unrealized gains on securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unrealized holding gains arising during year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>843</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(347</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>500</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Less&#151;Reclassification adjustment for gains realized in net
income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,293</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>940</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,353</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net unrealized losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,450</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>593</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(853</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign currency translation adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,292</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(23</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,269</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>21,845</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(7,632</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(53</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>14,160</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="14" style="border-bottom: 1px solid #000000">Thousands of U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Before-Tax</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Tax (Expense)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Minority</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Net-of-Tax</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Amount</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">or Benefit</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Interest</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Amount</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minimum pension liability adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>186,944</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(76,869</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(318</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>109,757</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net unrealized gains on securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unrealized holding gains arising during year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7,879</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(3,243</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>37</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,673</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Less&#151;Reclassification adjustment for gains realized in net
income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(21,430</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8,785</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(12,645</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net unrealized losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(13,551</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,542</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>37</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(7,972</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign currency translation adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>30,766</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(215</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>30,551</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>204,159</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(71,327</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(496</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>132,336</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-32
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>15. Supplemental information:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Supplemental information for the years ended March&nbsp;31, 2003, 2004 and 2005 is as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Research and development expenses charged
to cost and expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">45,388</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">51,483</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>55,897</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>522,402</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Advertising costs charged to expense as incurred</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,089</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>11,599</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>108,402</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income of revenues for the years ended March&nbsp;31, 2003, 2004 and 2005 consisted of the following:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gain on sale of available-for-sale
securities and sundry investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>2,309</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>21,579</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign exchange gain, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>462</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,318</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dividend income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">326</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>385</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,598</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">358</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">141</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>259</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,421</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total other income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">504</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>3,415</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>31,916</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other deductions of cost and expenses for the years ended March&nbsp;31, 2003, 2004 and 2005 consisted
of the following:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Impairment losses of long-lived assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>4,460</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>41,682</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Write-down of available-for-sale
securities and sundry investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,369</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">245</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>51</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>477</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign exchange loss, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,045</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">152</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,827</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>17,075</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total other deductions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3,434</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>6,338</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>59,234</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company recognized impairment losses of long-lived
assets of &#165;4,460&nbsp;million ($41,682 thousand) for the year ended
March&nbsp;31, 2005 in accordance with the provisions of SFAS No.&nbsp;144.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company reviewed PPD&#146;s production facilities for
impairment because of the unfavorable post-acquisition changes in
market conditions for plasma displays. For the impairment review
purpose, PPD&#146;s production facilities were grouped with other
assets and liabilities at the lowest level for which identifiable
cash flows are largely independent of the cash flows of other
assets and liabilities, and as a result, an impairment loss of
&#165;3,396&nbsp;million ($31,738 thousand) was recognized as the excess of
the carrying value of the asset group over the estimated fair
value of the asset group. Fair value was determined using an
expected present value technique.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, a foreign subsidiary recognized an impairment
loss of &#165;477&nbsp;million ($4,458 thousand) for the year ended March&nbsp;31, 2005 related to the property and equipment of the
plant to be closed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the year ended March&nbsp;31, 2005, the Company decided to
no longer sell set-top boxes for cable TV providers in the United
States in order to shift its research and development resources
toward products for the open cable market. The Company continues
to manufacture and sell cable TV set-top boxes in Japan and there was no
separate financial reporting for the distribution of the cable TV
set-top boxes to the U.S. market. As a result of this decision,
the Company recognized an impairment loss of &#165;587&nbsp;million ($5,486
thousand) related to intangible assets of software in Japan for
the manufacture of cable TV set-top boxes to the U.S. market and,
in addition to the impairment loss, charged &#165;1,783&nbsp;million
($16,664 thousand) in &#147;Other&#148; of other deductions of cost and
expenses for asset disposal cost, employee termination benefits
and contract termination costs for the year ended March&nbsp;31, 2005.
</DIV>

<P align="center" style="font-size: 10pt">F-33
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>16. Leased assets:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company leases certain land, machinery and equipment,
office space, warehouses, computer equipment and employees&#146;
residential facilities.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An analysis of assets under capital leases was as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Machinery and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>12,625</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>117,991</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,794</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(16,767</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>10,831</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>101,224</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a schedule by year of the future minimum
lease payments under capital leases together with the present
value of the net minimum lease payments as of March&nbsp;31, 2005:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Year ending March 31</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3,710</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">34,673</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,261</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,476</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,478</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,159</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">509</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,757</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">499</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,663</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2011 and thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,289</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,047</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total minimum lease payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">109,775</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less&#151;Amount representing interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">617</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,766</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Present value of net minimum
lease payment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104,009</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less&#151;Current obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,441</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,159</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term capital lease obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">7,688</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">71,850</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rental expenses under operating leases for the years ended
March&nbsp;31, 2003, 2004 and 2005 aggregated &#165;6,068&nbsp;million, &#165;6,268
million and &#165;8,376&nbsp;million ($78,280 thousand), respectively. Such
rentals relate principally to cancelable leases which are
renewable upon expiration.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The net minimum rental payments under operating leases that
have initial or remaining noncancelable lease terms in excess of
one year at March&nbsp;31, 2005 are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Year ending March 31</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,335</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">59,206</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,925</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,028</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,585</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,505</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,249</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,673</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,051</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,822</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,850</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total minimum future rentals</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">19,697</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">184,084</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-34
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>17. Financial instruments:</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Derivatives&#151;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company operates internationally, giving rise to exposure to
market risks from changes in foreign exchange rates and interest
rates. Derivative financial instruments are utilized by the
Company to reduce those risks but are not held or issued for
trading purposes.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To hedge certain purchase and sale commitments and
anticipated but not yet committed transactions denominated in
other than functional currencies, the Company enters into forward
exchange contracts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The notional amounts of forward exchange contracts as of
March&nbsp;31, 2004 and 2005 were &#165;20,505&nbsp;million and &#165;34,950&nbsp;million
($326,636 thousand), respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To change currency and interest rate features of
intercompany finance transactions, the Company entered into
currency swap contracts with banks. Currency swap contracts
effectively changed, in substance, the U.S. dollars floating
interest rate intercompany borrowings into Japanese yen fixed and
floating interest rate borrowings and euro fixed interest rate
borrowings. The notional amounts of currency swap contracts as of
March&nbsp;31, 2004 and 2005 were &#165;35,106&nbsp;million and &#165;35,489&nbsp;million
($331,673 thousand), respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Concentration of Credit Risk&#151;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company distributes its products to a diverse group of
domestic and foreign customers. Trade receivables arising from
these sales represent credit risk to the Company. However, due to
the large number and diversity of the Company&#146;s customer base,
concentration of credit risk with respect to trade receivables is
limited. The Company performs ongoing credit evaluation of its
customers&#146; financial condition and, generally, requires no
collateral from its customers.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Derivative financial instruments that the Company holds or
issues may expose the Company to credit risks if the
counterparties are unable to meet the terms of such contracts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company minimizes credit risk exposure of these
derivatives by limiting the counterparties to major international
banks and financial institutions as well as avoiding
concentration with certain counterparties, and also by making
frequent credit reviews of these counterparties. Management does
not expect to incur any significant losses as the result of
counterparty default.
</DIV>

<P align="center" style="font-size: 10pt">F-35
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>18. Fair value of financial instruments:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table presents the carrying amounts and fair values of the Company&#146;s financial
instruments at March&nbsp;31, 2004 and 2005:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6"></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="14" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">Thousands of U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Carrying</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Fair</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Carrying</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Fair</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Carrying</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Fair</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Amounts</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Amounts</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Amounts</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Value</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Available-for-sale securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">24,516</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">24,516</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>22,268</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>22,268</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>208,112</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>208,112</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Sundry investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">528</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">541</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>411</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>452</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,841</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,224</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Long-term receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>185</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>179</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,729</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,673</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other financial instruments:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Forward exchange contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>50</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>50</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>467</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>467</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Currency swap</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>190</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>190</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,776</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,776</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Long-term debt, including
current maturity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(94,201</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(100,495</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(939,206</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Less&#151;Capital lease obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>11,129</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>104,009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Long-term debt&#151;net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(94,201</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(89,507</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(89,366</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(84,301</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(835,197</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(787,860</B></TD>
    <TD align="left" nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other financial instruments:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Forward exchange contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(95</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(95</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(555</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(555</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(5,187</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(5,187</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Currency swap</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,179</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,179</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(3,009</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(3,009</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(28,121</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(28,121</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Estimation of Fair Values&#151;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following notes summarize the major methods and assumptions
used in estimating the fair values of financial instruments.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Short-term financial instruments are valued at their
carrying amounts included in the consolidated balance sheets,
which are reasonable estimates of fair value due to the
relatively short period to maturity of the instruments. This
approach is applied to cash and cash equivalents, trade
receivables, short-term borrowings and trade payables.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The carrying amounts and the fair values of
available-for-sale securities are disclosed in Note 5.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sundry investments included non-marketable equity
securities, amounting to &#165;2,855&nbsp;million and &#165;2,977&nbsp;million
($27,823 thousand) at March&nbsp;31, 2004 and 2005, respectively, and
memberships amounting to &#165;528&nbsp;million and &#165;411&nbsp;million ($3,841
thousand) at March&nbsp;31, 2004 and 2005, respectively. The
corresponding fair values of non-marketable equity securities at those dates were not computed
as such estimation is not practicable. The fair values of
memberships were estimated based on the market price.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The fair values of long-term receivables were estimated by
discounting estimated future cash flows using current interest
rates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The fair values of the Company&#146;s long-term debt were
estimated using a discounted cash flow analysis based on
incremental borrowing rates for similar types of borrowing
arrangements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The fair values of forward exchange contracts were estimated
based on the quoted market rates of similar contracts. The
currency swap and the interest rate swap were valued at
replacement cost.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The fair values of the Company&#146;s contingent liabilities for
guarantees of loans are not significant.
</DIV>

<P align="center" style="font-size: 10pt">F-36
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>19. Basic and diluted earnings (loss)&nbsp;per share:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A reconciliation of the numerators and denominators of basic and diluted net income (loss)&nbsp;per
share computation for the years ended March&nbsp;31, 2003, 2004 and 2005 is as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;from continuing operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">15,942</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">20,363</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(8,789</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(82,140</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of dilution&#151;Zero coupon convertible
bonds</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(21</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;from continuing
operations&#151;diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">15,942</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">20,342</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(8,789</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(82,140</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income from discontinued operations, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">136</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">4,475</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">16,078</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">24,838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(8,789</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(82,140</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of dilution&#151;Zero coupon convertible
bonds</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(21</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)&#151;diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">16,078</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">24,817</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(8,789</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(82,140</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="57%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="right" colspan="10">Number of Shares (Thousands)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="10" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD colspan="1"><DIV style="margin-left:15px; text-indent:-15px">Weighted-average common shares outstanding</DIV></TD>
    <TD align="right">178,168</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">175,433</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>175,389</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of dilutive convertible bonds</DIV></TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,115</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of dilutive warrants</DIV></TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of stock options</DIV></TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted common shares outstanding</DIV></TD>
    <TD align="right">178,171</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">176,609</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>175,389</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="11" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10">Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic net income per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Income (loss)&nbsp;from continuing operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">89.48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">116.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(50.11</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(0.47</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Income from discontinued operations, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">90.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">141.58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(50.11</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(0.47</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted net income per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Income (loss)&nbsp;from continuing operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">89.48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">115.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(50.11</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(0.47</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Income from discontinued operations, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">90.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">140.52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>&#165;</B></TD>
    <TD align="right"><B>(50.11</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(0.47</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-37
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>20. Supplemental schedule:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The changes in the allowance for doubtful receivables for the years ended March&nbsp;31, 2003, 2004
and 2005 are as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="18" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Balance at</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Charged (Credited)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Deductions for</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Beginning</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">to Costs and</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Accounts</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Translation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Balance at End</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Allowance for Doubtful Receivables</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">of Period</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Expenses</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Written Off</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Adjustments</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">of Period</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">5,319</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(765</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(334</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">4,631</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,631</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(667</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(417</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,534</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,534</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(515</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(497</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>88</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,610</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="18" style="border-bottom: 1px solid #000000">Thousands of U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Balance at</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Charged (Credited)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Deductions for</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Beginning</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">to Costs and</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Accounts</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Translation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Balance at End</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Allowance for Doubtful Receivables</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">of Period</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Expenses</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Written Off</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Adjustments</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">of Period</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>33,028</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(4,813</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(4,645</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>822</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>24,392</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The changes in the warranty reserve for the years ended March&nbsp;31, 2003, 2004 and 2005 are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="18" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Balance at</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Beginning</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Translation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Balance at End</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Warranty Reserve</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">of Period</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Provision</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Payments</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Adjustments</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">of Period</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,481</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">7,642</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(7,374</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(256</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,493</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,493</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,050</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,669</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(455</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,419</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,419</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8,030</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(7,844</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>117</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,722</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="18" style="border-bottom: 1px solid #000000">Thousands of U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Balance at</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Beginning</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Translation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Balance at End</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Warranty Reserve</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">of Period</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Provision</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Payments</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Adjustments</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">of Period</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>50,645</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>75,047</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(73,308</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1,093</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>53,477</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-38
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>21. Commitments and contingent liabilities:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Commitments outstanding at March&nbsp;31, 2005 for the purchase
of property, plant and equipment and advertisement payments
approximated &#165;3,967&nbsp;million ($37,075 thousand).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contingent liabilities at March&nbsp;31, 2005 principally for
loans guaranteed in the ordinary course of business amounted to
&#165;25,403&nbsp;million ($237,411 thousand).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loans guaranteed at March&nbsp;31, 2005 are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">Guaranteed Amount</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Guarantee for</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Guaranteed until</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Affiliated company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May 31, 2012&#150;October 22, 2012</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</b></TD>
    <TD align="right"><B>25,000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>233,645</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Affiliated company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April 1, 2005&#150;March 31, 2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>403</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,766</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>25,403</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>237,411</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="11" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company entered into these guarantee agreements to sustain the business relationships.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company will be required to pay the guaranteed amounts if the affiliated companies are unable to repay.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the year ended March&nbsp;31, 2001, the Company received a notice of proposed assessment from the
German tax authorities for approximately EUR 21&nbsp;million (&#165;2,916&nbsp;million translated at the foreign exchange rate
at March&nbsp;31, 2005) relating to a tax position taken in prior years concerning intercompany purchase prices. The Company
officially challenged the proposed assessment by arbitration procedures. There was no progress during the year ended March
31, 2005. In the opinion of management, it is not possible at this time to determine the ultimate resolution of this matter.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>22. Remuneration of directors, executive officers and corporate auditors:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The aggregate remuneration (including bonuses and
stock-based compensation &#091;see Note 13&#093;) charged to income by the
parent company for directors, executive officers and corporate
auditors for the years ended March&nbsp;31, 2003, 2004 and 2005
totaled &#165;965&nbsp;million, &#165;1,238&nbsp;million and &#165;1,136&nbsp;million ($10,617
thousand), respectively.
</DIV>




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>23. Subsequent event:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On April&nbsp;15, 2005, Pioneer Speakers, Inc. (&#147;PSI&#148;), a wholly-owned U.S.
subsidiary of Tohoku Pioneer Corporation received a notice from the United States
Customs and Border Protection proposing additional custom duty and penalty of
approximately $26&nbsp;million (&#165;2,792&nbsp;million translated at the foreign exchange rate at
March&nbsp;31, 2005) for alleged erroneous claims for preferential treatment of duties on
products imported by PSI for the period of June&nbsp;23, 1997 through
December&nbsp;31, 1999. PSI
intends to file a petition for relief from this penalty action. In the opinion of
management, it is not possible at this time to determine the ultimate outcome of this
matter.</DIV>



<P align="center" style="font-size: 10pt">F-39
</DIV>

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PIONEER CORPORATION
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
o
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
þ
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2005
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
o
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report ________________________
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
o
No
þ
Commission file number 1-7616
PIONEER KABUSHIKI KAISHA
(Exact name of Registrant as specified in its charter)
PIONEER CORPORATION
(Translation of Registrant's name into English)
JAPAN
(Jurisdiction of incorporation or organization)
4-1, MEGURO 1-CHOME, MEGURO-KU, TOKYO 153-8654, JAPAN
(Address of principal executive offices)
Securities registered pursuant to Section 12(b) of the Act.
Title of each class
Name of each exchange on which registered
Common Stock, each represented by
one American Depositary Share
New York Stock Exchange
Securities 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 of each of the issuer's classes of capital or common
stock as of the close of the period covered by the annual report.
Title of class
Outstanding as of
March 31, 2005
(Japan time)
Common Stock
174,428,646
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes
þ
No
o
Indicate by check mark which financial statement item the registrant has elected to follow.
Item 17
þ
Item 18
o
Table of Contents
TABLE OF CONTENTS
Page
Certain Defined Terms
4
Cautionary Statement with Respect to Forward-Looking Statements
4
PART I
Item 1. Identity of Directors, Senior Management and Advisers
4
Item 2. Offer Statistics and Expected Timetable
4
Item 3. Key Information
5
Item 4. Information on the Company
13
Item 5. Operating and Financial Review and Prospects
28
Item 6. Directors, Senior Management and Employees
51
Item 7. Major Shareholders and Related Party Transactions
61
Item 8. Financial Information
62
Item 9. The Offer and Listing
64
Item 10. Additional Information
65
Item 11. Quantitative and Qualitative Disclosures About Market Risk
85
Item 12. Description of Securities Other than Equity Securities
87
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
88
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
88
Item 15. Controls and Procedures
88
Item 16. [Reserved]
89
Item 16A. Audit Committee Financial Expert
89
Item 16B. Code of Ethics
89
Item 16C. Principal Accountant Fees and Services
90
Item 16D. Exemptions from the Listing Standards for Audit Committees
91
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
91
PART III
Item 17. Financial Statements
92
Item 18. Financial Statements
92
Item 19. Exhibits
92
EX-1.01 REGULATIONS OF THE BOARD OF DIRECTORS, AS AMENDED AND CURRENTLY IN EFFECT
EX-1.02 REGULATIONS OF THE BOARD OF CORPORATE AUDITORS, AS AMENDED AND CURRENTLY IN EFFECT
EX-2.01 SHARE HANDLING REGULATIONS, AS AMENDED AND CURRENTLY IN EFFECT
EX-12.01 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
EX-12.02 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
EX-13.01 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
3
Table of Contents
Certain Defined Terms
As used herein, the term "Pioneer" refers to Pioneer Corporation, the registrant, and "we"
and "our" refer to Pioneer and its consolidated subsidiaries as a group, unless the context
otherwise indicates.
References in this annual report to fiscal years refer to the 12-month periods ended March 31
of each calendar year.
Billion is used in the American sense of one thousand million.
Cautionary Statement with Respect to Forward-Looking Statements
Statements made in this annual report with respect to our current plans, estimates, strategies and
beliefs, and other statements that are not historical facts are forward-looking statements about
our future performance. Forward-looking statements include but are not limited to those statements
using words such as "believe," "expect," "intend," "plan," "aim," "forecast," "estimate,"
"project," "anticipate," "strategy," "prospects," "may," "might" or "will" and words of similar
meaning in connection with a discussion of future operations, financial performance, events or
conditions. From time to time, oral or written forward-looking statements may also be included in
other materials released to the public. These statements are based on our management's assumptions
and beliefs in light of the information currently available to it. We caution that a number of
important risks and uncertainties could cause actual results to differ materially from those in the
forward-looking statements, and therefore you should not place undue reliance on them. You also
should not believe that it is our obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise. We disclaim any such
obligation. Risks and uncertainties that might affect us include, but are not limited to, (i)
general economic conditions in the markets in which we sell our products, particularly levels of
consumer spending; (ii) exchange rates, particularly between the yen and the U.S. dollar, euro, and
other currencies in which we make significant sales or in which our assets and liabilities are
denominated; (iii) our ability to continue to design and develop and win acceptance of our products
and services, which are offered in highly competitive markets characterized by continual new
product introductions, rapid developments in technology, severe price competition and subjective
and changing consumer preferences; (iv) our ability to implement successfully our business
strategies; (v) our ability to compete and develop and implement successful sales and distribution
strategies in light of technological developments in and affecting our businesses; (vi) our
continued ability to devote sufficient resources to research and development, and capital
expenditure; (vii) our ability to continuously enhance our brand image; (viii) the success of our
joint ventures and alliances; and (ix) the outcome of contingencies.
PART I
Item 1. Identity of Directors, Senior Management and Advisers
Not applicable
Item 2. Offer Statistics and Expected Timetable
Not applicable
4
Table of Contents
Item 3. Key Information
A. Selected financial data
The following table presents selected consolidated financial data as of the dates and for the
periods indicated. We derived the consolidated statements of operations data for each of the three
years in the period ended March 31, 2005 and the consolidated balance sheet data as of March 31,
2004 and 2005 from our audited consolidated financial statements included elsewhere herein. We
derived the consolidated statement of operations data for each of the two years in the period ended
March 31, 2002 and the consolidated balance sheets data as of March 31, 2001, 2002 and 2003 from
our audited consolidated financial statements which are not included herein. Our audited
consolidated financial statements are prepared in accordance with accounting principles generally
accepted in the United States of America ("U.S. GAAP"), except for segment data which is prepared
in accordance with the regulations under the Securities and Exchange Law of Japan.
Year ended March 31
2001
2002
2003
2004
2005
(In millions of yen, except per share data)
Consolidated Statements of Operations Data:
Operating revenue (Note 4) (Note 5)
¥
610,171
¥
629,777
¥
677,259
¥
700,885
¥
733,648
Income (loss) from continuing operations
before income taxes (Note 5)
34,216
14,472
28,079
41,848
(187
)
Income (loss) from discontinued operations,
net of tax (Note 5)
(53
)
565
136
4,475
—
Net income (loss)
18,298
8,047
16,078
24,838
(8,789
)
Per share of common stock and
per American Depositary Share (ADS):
Income (loss) from continuing operations:
Basic
102.06
41.56
89.48
116.07
(50.11
)
Diluted
102.00
41.55
89.48
115.18
(50.11
)
Net income (loss):
Basic
101.76
44.70
90.24
141.58
(50.11
)
Diluted
101.70
44.69
90.24
140.52
(50.11
)
Consolidated Balance Sheets Data:
Total assets
¥
605,156
¥
645,129
¥
647,029
¥
722,542
¥
725,167
Short-term borrowings
37,571
45,867
29,893
23,327
33,152
Current portion of long-term debt
7,996
2,551
974
4,510
19,276
Long-term debt, less current portion
38,304
35,677
32,196
89,691
81,219
Shareholders' equity
336,995
347,003
318,393
332,938
332,239
Common stock
48,843
49,049
49,049
49,049
49,049
Number of shares issued (in thousands)
179,894
180,064
180,064
180,064
180,064
5
Table of Contents
Year ended March 31
2001
2002
2003
2004
2005
(In millions of yen,
except per share data and percentage amounts)
Other Data:
Capital expenditures (Note 5)
¥
41,944
¥
46,909
¥
40,493
¥
57,978
¥
63,866
Research and development (R&D) expenses
37,105
39,050
45,388
51,483
55,897
Cash flows from operating activities (Note 5)
51,141
57,358
91,509
60,378
19,946
Cash flows from investing activities (Note 5)
(41,481
)
(51,396
)
(35,228
)
(52,754
)
(93,516
)
Cash flows from financing activities (Note 5)
(46,567
)
(4,207
)
(34,680
)
51,827
(4,019
)
Return on equity (Note 1)
5.6
%
2.4
%
4.8
%
7.6
%
(2.6
%)
Return on assets (Note 2)
3.0
%
1.3
%
2.5
%
3.6
%
(1.2
%)
Cash dividends declared per share of common
stock and per ADS (Note 3):
Interim    (in yen)
7.50
7.50
7.50
12.50
12.50
(in U.S. dollars)
0.07
0.06
0.06
0.12
0.12
Year-end (in yen)
7.50
7.50
10.00
12.50
12.50
(in U.S. dollars)
0.06
0.06
0.08
0.11
0.11
Notes:
1.
Net income (loss) as a percentage of average shareholders' equity.
2.
Net income (loss) as a percentage of average total assets.
3.
Cash dividends in U.S. dollars are based on the noon buying rate in yen for cable transfers
in New York City as certified for customs purposes by the Federal Reserve Bank of New York on
the date of the dividend payment.
4.
In fiscal 2003, we adopted EITF (Emerging Issues Task Force) 01-9 "Accounting for
Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor's
Products)." The adoption resulted in a reduction in net sales and a corresponding decrease in
selling, general and administrative expenses. Previously reported amounts have been
reclassified accordingly.
5.
As a result of the sale of subsidiaries in the audio/video software business in fiscal 2004,
the gain on such sale, as well as the operating results of the discontinued operations, are
presented as a separate line item in the consolidated statements of operations in accordance
with Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." Previously reported amounts have been reclassified
accordingly.
6
Table of Contents
Exchange rates (yen per U.S. dollar)
The exchange rate between the yen and the U.S. dollar, based upon the noon buying rate in yen for
cable transfers in New York City as certified for customs purposes by the Federal Reserve Bank of
New York, was ¥xxx.xx = US$1.00 on September XX, 2005.
Year ended March 31
Average
High
Low
Period-end
2001
¥
111.65
¥
104.19
¥
125.54
¥
125.54
2002
125.64
115.89
134.77
132.70
2003
121.10
115.71
133.40
118.07
2004
112.75
104.18
120.55
104.18
2005
107.28
102.26
114.30
107.22
2005
March
103.87
107.49
April
104.64
108.67
May
104.41
108.17
June
106.64
110.91
July
110.47
113.42
August
109.37
112.12
For purposes of preparing our financial statements, we use rates obtained from the Tokyo foreign
exchange market, which differ from the rates listed above.
B. Capitalization and indebtedness
Not applicable
C. Reasons for the offer and use of proceeds
Not applicable
D. Risk factors
This section describes some of the risks that could affect our business. The factors listed below
should be considered in connection with any forward-looking statements given in this annual report
and should be read in conjunction with "Item 5. Operating and Financial Review and Prospects."
They are subject to the "
Cautionary Statement with Respect to Forward-Looking Statements
"
appearing elsewhere in this annual report. This list is necessarily incomplete, as some risks may
be as yet unknown to us. Any risk factor has the potential to adversely affect our business
results, share price and financial condition.
Economic conditions may adversely affect our sales and profitability
Demand for consumer electronics products, which account for a significant proportion of our
worldwide operating revenue, may be affected by general economic trends in the countries or regions
in which our products are sold. Purchases of our products are, to a significant extent,
discretionary. Similarly, demand for our business use products and for components we manufacture
that go into products of third parties is affected by general economic trends in the various
markets in which we sell our products. Economic downturns and resulting declines of demand in our
major markets, including Japan, North America, Europe and Asia, may thus adversely affect our sales
and profitability.
7
Table of Contents
Additionally, our operations may be indirectly affected by the economic conditions of regions where
our competitors manufacture their products. For example, if a competitor enjoys lower local labor
costs, it may be able to offer similar products at a lower price. As a result, our sales may be
adversely affected. Also, a decrease in the value of the local currency in a region that produces
parts and raw materials may lead to a decrease in production costs (on a yen or a U.S. dollar
basis) not only to us but to other manufacturers as well. Such a trend may in turn bring about
vigorous export competition and price-cutting, both of which could adversely affect our sales and
profitability.
Fluctuations in foreign currency exchange rates may adversely affect our business results and
financial condition
Our operations involve the global production and distribution of products. Revenue and expense
items that are denominated in local currency, such as sales, expenses and assets in each region,
are translated into yen in preparing our consolidated financial statements. Depending on the rate
of exchange at the time of currency translation, the values of such items in yen may be affected,
even if their value has not changed in their original currency. Also, fluctuations in exchange
rates may affect the local prices of our products and negatively impact their competitiveness in
local markets. Generally, an appreciation of the yen against other currencies, particularly the
yen against the U.S. dollar and the euro, in which we make significant sales, may adversely affect
our business results and financial condition.
An increase in the value of currencies in regions where we operate and produce may lead to an
increase in the costs of manufacturing and procurement in those regions. Such an increase could
accordingly adversely affect our profit margins and reduce our price competitiveness, thereby
adversely affecting our business results. We engage in currency hedging transactions to attempt to
minimize the negative effects of short-term fluctuations of foreign exchange rates among major
currencies such as the U.S. dollar, euro and yen. However, as a result of mid-to-long-term
exchange rate volatility, we cannot execute planned procurement, production, logistics, and sales
activities with any certainty and, consequently, fluctuations in exchange rates may adversely
affect our business results and financial condition.
If we are unable to innovate and to develop attractive new products, our future growth and
profitability may be adversely affected
We derive a substantial portion of our revenues from sales of innovative new products. We expect
that sales of our new products — currently including DVD-related products, plasma and organic
light-emitting diode ("OLED") displays and car navigation systems — will continue to account for a
substantial portion of our revenues, and we expect our future growth and profitability to rely
primarily on the continued development and sale of innovative new products.
While we believe that we are capable of continuing to develop innovative and attractive new
products, the industry in which we operate is characterized by rapid changes, including
technological changes. The process of developing and marketing new products is inherently complex
and uncertain, and there are a number of risks, including the following:
•
We may be unable to obtain adequate funding and resources
necessary for investments in new products and technologies.
•
Our long-term investments and commitment of significant resources
may not result in successful new products or technologies. For
example, we have invested substantial resources in the expansion
of our production capacity for plasma display panels ("PDPs") to
meet anticipated demand, but such demand may not materialize.
8
Table of Contents
•
We may not be able to anticipate successfully the new products and
technologies which will gain market acceptance and that such
products can be successfully marketed.
•
Our newly developed products or technologies may not be
successfully protected as proprietary intellectual property
rights.
•
Our products may become obsolete earlier than expected due to
rapid advancements in technology and changes in consumer
preferences.
•
A delay in commercializing new technologies now under development
may prevent us from keeping up with market demand. For
example, if we lag behind our competitors in the commercialization
of active-matrix full-color OLED displays, which are now under
development in our affiliated company, ELDis, Inc., we may not
secure a significant share of this market.
Our failure to anticipate adequately changes in the industry and the market, and to develop
attractive new products, including any of the risks described above, may reduce our future growth
and profitability.
Our exposure to the plasma display market has increased significantly as a result of our recent
substantial investments in the plasma display business
We are focusing on the plasma display business to establish it as the core of our business. In
order to achieve this goal, we have recently built a new production line for plasma display panels
and acquired a plasma display manufacturing company, which has significantly increased our plasma
display production capacity. If the plasma display market does not grow as we expect, or our
products do not acquire market acceptance, we may not be able to utilize this increased production
capacity efficiently and our sales and profitability could be adversely affected.
Competition generally, and especially on the basis of price and standardization of products,
may adversely affect our results of operations
The electronics industry, including the audio, video and car electronics industry, is intensely
competitive. We expect to face increased competition in the various product and geographic markets
in which we operate. Our competitors include manufacturers and distributors, some of which have
greater capital resources available for research, development, production and marketing. In
addition, as new technology develops and as new electronics products gain increased market
acceptance, it is possible that new competitors or alliances among existing competitors may emerge
and rapidly acquire significant market share. While we believe we are one of the leading
innovators of advanced, high-quality and value-added electronics products, we may not be able to
compete effectively in the future. Pricing pressures or loss of potential customers resulting from
our failure to compete effectively may adversely affect our results of operations.
For example, competitors in the plasma display market may substantially increase their production
capabilities or introduce alternative products at a lower price and cause market competition to
intensify further. Moreover, due to standardization and the relative ease of imitation of products
such as DVD players, competition from manufacturers in emerging markets may also continue to
intensify. Our research into the development of new products generally requires large costs that
competitive imitators may not need to incur. In an aggressive price-cutting environment we may
find it difficult to maintain or increase our market share or remain profitable against low-cost
and low-budget competitors.
9
Table of Contents
Failure of our next generation optical disc format to gain broad market acceptance may
adversely affect our business and results of operations
Currently, there are two generally recognized competing formats for the next generation optical
discs, Blu-ray Disc and HD DVD. Each of the recording disc formats makes use of its own distinct
technology and is incompatible with other format.
We are focusing on the Blu-ray Disc format as the next generation optical discs and are developing
products that are compatible with such format.
The question of which format will prevail as the industry standard is not yet settled. Should our
adopted format fail to be accepted as the
de facto
industry standard, or otherwise fail to gain
wide acceptance, our business strategy and results of operations may be adversely affected.
A substantial decline in our royalty revenue as a result of the expiration of many of our
existing patents relating to laser optical disc technologies may adversely affect our
profitability
The licensing of our patent and other intellectual property rights makes a significant contribution
to our net income since costs related to patent licensing are limited principally to amortization
of patent rights and expenses for licensing activities. The legal protections afforded to these
rights have a limited duration under applicable laws, and the length of protection varies from
country to country or region. A significant portion of our patent rights have expired in Europe
and Japan. As a result, our royalty revenue will continue to decline in the future. This decline
in royalty revenue may in turn have an adverse impact on our profitability. Royalty revenue from
patent licensing also depends to a material degree on the sales of patented products by our
licensees, making it hard for us to predict actual royalty revenue amounts. For a discussion of
our patent licensing business, see "Item 4.B. Business overview—Nature of operations."
If we are unable to successfully manage the risks inherent in our international activities and
our overseas expansion, our results of operations and production capacity could be adversely
affected
A substantial portion of our manufacturing and marketing activity is conducted outside Japan,
including in the United States, Europe, and in developing and emerging markets in Asia. There are
a number of risks inherent in doing business in such overseas markets, including the following:
•
Unexpected legal or regulatory changes;
•
Unfavorable political or economic factors;
•
Difficulties in recruiting and retaining personnel;
•
Labor disputes including strikes;
•
Less developed technological infrastructure, which can affect our production or other activities or result in lower
customer acceptance of our products and services;
•
Potentially adverse tax consequences; and
•
Social, political or economic turmoil due to terrorism, war, or other factors.
In order to produce our products competitively and to reduce costs, we aim to continue expanding
our production and parts procurement in the Shanghai and Guang Dong areas of the People's Republic
of China ("China"). Nevertheless, we may experience difficulties in managing a production facility
and entering into business arrangements in China in light of unexpected events, including political
or legal changes, labor shortages or strikes or changes in economic conditions in China.
Furthermore, the outbreaks of epidemics may, depending on how they develop, adversely impact our
operations in China,
10
Table of Contents
including delays in production due to travel restrictions on employees, as well as disruptions in
parts procurement and factory operations. Accordingly, such incidents could have an adverse impact
on our results of operations.
Our dependence on certain third-party manufacturers and suppliers for parts and components
could adversely affect our production capacity and results of operations
While we strive to produce key components and parts such as laser pickups internally, we are
dependent on a number of outside manufacturers and suppliers. Third parties manufacture some of
our most important components and parts, including semiconductors. Our arrangements with
third-party manufacturers and suppliers are generally on a renewable short-term basis. While we
have sought to secure supply where necessary through strategic alliances and other measures, we may
face shortages of key components, reflecting changes in the market trend. We may also experience
shortages or other material disruptions in our supply of components and parts due to natural
disasters or other events beyond our control. Shortages of key components may prevent us from
producing enough products on a timely basis, which would cause us to lose sales opportunities or
lead to strained relationships with our original equipment manufacturing ("OEM") customers. Such
condition may adversely affect our sales and profitability. See "Item 4.B. Business overview—Raw
materials and sources of supply" for a discussion of our outside manufacturers and suppliers.
Our performance in the OEM business is substantially dependent on the performance of our
customers' businesses
We provide our OEM business to automobile manufacturers, electronics manufacturers, personal
computer ("PC") makers and other large-scale businesses worldwide. The products we supply include
car stereo products, car navigation systems, recordable DVD drives, DVD-ROM drives, plasma displays
and OLED displays. Sales to business customers in these areas are significantly affected by the
respective customers' business results and by factors that are beyond our control. Further,
price-cutting to meet customer demands may cause a reduction in our profit margin. The
under-performance of a customers' business, the unexpected termination of contracts, changes in the
purchasing practices of our OEM customers or aggressive price-cutting to satisfy a large business
customer's demands may adversely affect our results of operations.
Because our products and technologies are dependent on the service of capable engineers and
other key personnel, difficulty in recruiting and developing key personnel could have an adverse
impact on our future growth
Our products and technologies are complex, and our future growth and success depend to a
significant extent on the service of capable engineers and other key personnel, and hiring and
training additional highly-skilled engineers and other competent personnel are important for our
success.
Failure to recruit and develop key personnel may adversely affect our future growth. On the other
hand, aggressive hiring of, among others, capable engineers who are experienced with the latest
technology, may increase, sometimes substantially, both recruiting and actual labor costs. In
addition, continued re-training of currently employed personnel, which may introduce higher costs,
might also be necessary to maintain a superior level of innovation and technological advance. Such
increased costs could have an adverse impact on our profitability.
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Limits on intellectual property protection may make us vulnerable to competition from third
parties that use our technology and expertise
While we have developed technology and expertise which differentiate our products from those of our
competitors, some of our unique technology and expertise is either not fully capable of being
protected by intellectual property rights or protected only to a limited extent pursuant to legal
limitations in certain jurisdictions. Although we have the ability to diminish illegal imports of
such products into certain jurisdictions through exercise of our legal rights, we may be unable to
effectively prevent third parties from using our intellectual property rights to produce products
similar to ours. In addition, we may be unable to prevent third parties from developing
technologies that are similar or superior to our technology, or from designing around or reverse
engineering our patents and trade secrets. Moreover, our future products and technology might
later be found to infringe upon a third party's intellectual property rights.
Product defects resulting in a large-scale product recall or successful products liability
claims against us could result in a significant cost or a negative impact on our reputation and
adversely affect our business results and financial condition
We manufacture various products at our plants worldwide in accordance with internationally accepted
quality-control standards. We cannot be certain, however, that all of our products are defect-free
and may not be recalled at some later date. Furthermore, although we maintain insurance against
product liability claims, we cannot be certain that such insurance can adequately satisfy the
liabilities ultimately incurred. In addition, insurance may not continue to be available on terms
acceptable to us. A large-scale product recall or a successful products liability claim against us
could result in significant costs or have a negative impact on our reputation, which may in turn
lead to a decrease in sales, adversely affecting our results of operations.
Failure to achieve the goals of collaborations, tie-ups, and joint ventures with third parties
may adversely affect our results of operations and future growth
As part of our technological development process, we conduct many joint activities with other
companies in the form of collaborations, technological tie-ups, or joint ventures intended to
optimize management resources and utilize the synergy of combined technologies. We expect to
continue to adopt an active approach to exploiting these opportunities. If differences arise among
the participants of these joint activities due to managerial, financial or other reasons, we may
not achieve the goals of these development projects, which may in turn adversely affect our results
of operations and future growth.
Governmental regulation may limit our activities or increase our costs of operations
Our business and operations are subject to various forms of government regulation in countries in
which we do business, including required business/investment approvals, as well as export
regulations based on national security or other reasons and other export/import regulations such as
tariffs. In addition, commercial, antitrust, patent, consumer, taxation, exchange control and
environment/recycling laws and regulations also apply. If we are unable to comply with these
regulations, they can serve to limit our activities. In addition, compliance with these
regulations could result in increased costs. Accordingly, these regulations could adversely affect
our results of operations. See "Item 4.B. Business overview—Governmental regulation" for a
discussion of certain government regulations applicable to us.
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Damage to our production facilities as a result of disasters, power outages or similar events
may significantly reduce our production capacity
We periodically carry out disaster prevention checks and facility maintenance at all of our
facilities to minimize potential negative impact caused by disruptions on our manufacturing lines.
However, we may not completely prevent or mitigate the effect of a disaster, outage or other
disruption at our production facilities. For example, our plasma display products are currently
manufactured at our Shizuoka and Yamanashi plants, and we are in the process of expanding our
manufacturing lines there. Accordingly, our plasma display panel production capacity could be
significantly reduced in the event of a major earthquake or other disruption of operations at the
Shizuoka and Yamanashi plants.
Employee retirement benefit costs and obligations may adversely affect our results of
operations
Pioneer is obligated to pay certain employee retirement benefit costs and obligations to qualified
employees upon their retirement. The amount of such employee retirement benefit costs and
obligations are dependent on assumptions used in the relevant actuarial calculations. These
assumptions include discount rates, future compensation levels, return on assets, retirement rates
and mortality rates, which are based upon current statistical data, as well as long-term returns on
pension plan assets and other factors. If actual results differ from the assumptions or
assumptions are changed, the resulting effects are accumulated and systematically recognized over
future periods and, therefore, generally affect recognized expense and recorded obligations in
future periods. Our pension benefit costs have been increasing in recent fiscal years due to
declining discount rates and negative returns on pension plan assets, and further declines of
discount rates and lower returns on pension plan assets may adversely affect our results of
operations.
Item 4. Information on the Company
A. History and development of the Company
History
Pioneer was incorporated under the Commercial Code of Japan (the "Commercial Code") as a joint
stock company (Kabushiki Kaisha) in May 1947, with the name Fukuin Denki Kabushiki Kaisha,
succeeding to the business founded in January 1938 by the late Mr. Nozomu Matsumoto. The present
name, Pioneer Kabushiki Kaisha, was adopted in June 1961. Its English name was changed from
"Pioneer Electronic Corporation" to "Pioneer Corporation" in June 1999.
Our business dates from January 1938 when we began the manufacture of audio speakers. In June 1955
we commenced the manufacture of audio amplifiers. During the 1960s, we expanded our line of
products to include hi-fi stereo sets and components, hi-fi car stereos, as well as
telephone-related equipment. Since the early 1960s we have established business offices and
subsidiaries in and outside Japan to support our expanding manufacturing and sales activities.
During the 1970s we expanded our business to include equipment related to cable TV systems.
Pioneer's shares of common stock were listed on the Tokyo Stock Exchange and Osaka Securities
Exchange in October 1961 and April 1968, respectively. In addition, Pioneer's American Depositary
Shares ("ADSs") were listed on the New York Stock Exchange ("NYSE") in December 1976.
In the 1980s, we began to expand our business base to include audio/video ("AV") equipment. We
started marketing laser disc ("LD") players and LDs, and commenced our own music and video software
business in Japan. Also, we introduced the world's first car compact disc ("CD") players. We also
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broadened our business base in commercial and industrial markets with such products as optical
memory disc drives for use in computers, laser karaoke (sing-along) systems and multiscreen video
systems.
In the 1990s, we released to the Japanese consumer market the world's first car navigation system
incorporating the Global Positioning System ("GPS"). In addition, we introduced DVD players and
thin-profile color plasma displays and began supplying digital direct-broadcast satellite ("DBS")
decoders to a European pay-TV company. Our other recent industry firsts include four-color OLED
displays and DVD recorders.
In fiscal 2001, we started supplying to PC makers recordable DVD drives that can record up to seven
times as much data as conventional CD-R/RW drives. In fiscal 2002, we introduced to the Japanese
consumer market hard disk drive ("HDD") car navigation systems with faster search and display of
routes to designated destinations. In fiscal 2003, we launched in Japan DVD recorders equipped
with large-capacity HDDs, as well as car navigation systems incorporating a data communication
module for access to the latest map data. Also, in June 2003, we began introducing recordable DVD
drives for PC use, which are compatible with DVD-R, -RW, +R and +RW discs, to worldwide markets.
In fiscal 2004, we started supplying passive-matrix full-color OLED display panels in cellular
phones. In fiscal 2005, we introduced recordable DVD drives for PC use, which are compatible with
dual layer DVD-R discs and DVD+R double layer discs.
Registered office
Pioneer's registered office is located at 4-1, Meguro 1-chome, Meguro-ku, Tokyo 153-8654, Japan.
Pioneer's telephone number is 81-3-3494-1111.
Principal capital expenditures, investments and divestitures
In fiscal 2003, 2004 and 2005, our capital expenditures consisted principally of facilities and
molds for production and totaled ¥40,493 million, ¥57,978 million and ¥63,866 million,
respectively. They were paid principally out of our internally generated working capital. The
facilities for production comprised those for OLED displays and DVD pickups, and plants and
machinery for plasma displays. See the table in "Item 4.D. Property, plants and equipment," for a
list of our principal plants.
In fiscal 2005, we invested ¥27 billion in building a new manufacturing line for plasma displays at
the Yamanashi Plant, which started its operation in September 2004. On September 30, 2004, we
acquired 100% of the issued common stock of NEC Plasma Display Corporation ("NPD"), a plasma
display manufacturing subsidiary of NEC Corporation, and the intellectual property rights of NPD
for cash in an aggregate amount of ¥35 billion. NPD changed its name to Pioneer Plasma Display
Corporation on September 30, 2004. These investments resulted in increasing our plasma display
production capacity to about 1.1 million units a year.
B. Business overview
Strategy
We aim to be a leading provider of advanced, high-quality, value-added electronics products
worldwide for consumer and business use. Our corporate philosophy is to "Move the Heart and Touch
the Soul," with products that are designed to increase satisfaction, comfort and convenience in
everyday life.
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To achieve our goals, we are pursuing the following strategies:
•
develop innovative, technologically-advanced products that meet and stimulate market
demand;
•
enhance our brand recognition and promote customer satisfaction;
•
leverage our leadership position in the car electronics business;
•
focus on our strategic products targeting global markets; and
•
adopt optimal production methods to maximize profitability.
Develop innovative, technologically-advanced products that meet and stimulate market demand
We believe our core strength is our ability to innovate. Throughout our history, we have focused
on the development of unique products, and have attempted to be the front-runner and market leader
in our product areas. Such areas have included dynamic speakers, car audio, LD and car navigation
systems. Consistent with our strategy, we have introduced into the market several cutting-edge
products, such as plasma displays and DVD products. In the DVD market, we were the first to
commercialize a DVD recorder. We were also the first to introduce a four-color OLED display to the
market. We intend to continue to take advantage of this strategy and attract customers by
introducing differentiated products into the market ahead of our competitors.
Enhance our brand recognition and promote customer satisfaction
The cornerstone of our business foundation lies in the quality of our products and their ability to
inspire consumer confidence. Accordingly, we focus on the enhancement of our brand image and
customer satisfaction. In addition to the extensive quality control and assurance measures on the
production side, we invest in various marketing campaigns to maintain and enhance the value of our
brand. Combined with our worldwide brand slogan of "
sound. vision. soul
," we aim to establish
Pioneer as a brand driven by innovation and clearly differentiating ourselves from our competitors.
We believe customer satisfaction is based not only on reliability and technology, but also on the
impact of the quality of sound or vision delivered by our products.
Leverage our leadership position in the car electronics business
We believe one of our strengths lies in our core business segment, the car electronics business.
We are one of the leading manufacturers in the world consumer market for car audio products and car
navigation systems. We were the first in the industry to introduce car navigation systems to the
Japanese consumer market in fiscal 1991 and have maintained a leading position by offering
affordably priced and easy-to-operate DVD-ROM and advanced HDD-equipped models. In addition, in
November 2002 we released in the consumer market the world's first car navigation system that
incorporates a data communication module for access to the latest map data. We intend to integrate
functions for car navigation, audio/video control and information technologies. Sales in this
category are gradually shifting from the consumer market to the OEM market as automobile
manufacturers place greater emphasis on differentiation of their cars, and we intend to expand our
market share by increasing OEM sales.
Focus on our strategic products targeting global markets
We focus on our strategic products where we are more likely to secure the "first-mover advantage"
as a means of establishing market leadership. As part of our efforts to secure these leading
market positions, we strive to play a major role in setting product standards. For example, we are
promoting the DVD-RW format in DVD recorders and recordable DVD drives. This format has already
gained support from other major consumer electronics companies. We also aim to differentiate
ourselves by introducing to targeted markets innovative plasma displays, OLED displays and car
navigation systems. We market
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these
strategic products on a global basis. Although certain technological customization is required,
most of our key products are currently sold in virtually all major markets in the world.
Adopt optimal production methods to maximize profitability
We strive to adopt ideal production methods catered to each type of product and market demand.
While we focus on reducing manufacturing and operating costs, our goal is to achieve overall
efficiency in production by taking into account, for example, the proximity of the end-market,
production facilities and labor costs. Consequently, we have increased the proportion of our
production in China. To meet the fast-growing demand for plasma displays, we have built a more
efficient production system at our plasma display panel manufacturing subsidiary. Moreover, the
acquisition of NPD was completed in September 2004. Following these measures, we established in
fall 2004 an overall production system capable of yielding more than one million panels annually.
To enhance cost competitiveness and achieve economies of scale, we sell our key products on an OEM
basis to other manufacturers. In addition, we introduced supply chain management to optimize
efficiency of inventory control worldwide.
Strategic Focus
—
"Pioneer Group Vision"
Consistent with the strategies described above, in fiscal 1999 we announced "Pioneer Group Vision,"
a medium-term initiative, with the intent of revitalizing Pioneer and its business through the
achievement of two financial targets by the end of March 2006, as well as four business targets.
They are as follows.
Financial targets for the fiscal year ending March 2006:
•
¥1.2 trillion of consolidated operating revenue
•
ROE (Return on Equity) in excess of 10%
Business targets:
•
No.1 in DVD worldwide
•
Establishing a business foundation for plasma displays and OLED displays
•
From stand-alone to network
•
Toward the key-device, key-technologies business
The midterm plan above has been guiding our management and business direction up to the present.
But we foresee that financial targets will be difficult to achieve due to the following factors:
sales of karaoke business and audio/video software business, and withdrawal from cable TV set-top
box business in North America, all of which dragged down the increase in our consolidated operating
revenue, harsher competition and lower prices than we projected. Considering the situation, we are
working hard to take action for early recovery, while we seek a new midterm business plan to get
back on the track to future growth.
Nature of operations
We develop, design, manufacture and sell electronics products such as audio, video and car
electronics on a global scale. We are one of the leading innovators of DVD products and plasma
displays. We are also one of the leading manufactures of car audio products and car navigation
systems in the consumer market.
Our principal production activities are carried out in Asia, including Japan. Our products are
generally sold under our own brand names, principally "Pioneer." Our primary markets are Japan,
North America,
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Europe and Asia and we sell our products to customers in consumer and business
markets through sales
offices in Japan, and through sales subsidiaries of Pioneer and independent distributors outside of
Japan. In addition, on an OEM basis, we market certain products, such as car electronics products,
recordable DVD drives, plasma displays and OLED displays to other companies.
As a result of the sale of subsidiaries in the audio/video software business in fiscal 2004, the
gain from such sale, as well as the operating results of the discontinued operations, are presented
net of tax as a separate line item in the consolidated statement of operations in accordance with
Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets."
Also, in fiscal 2004, we changed our business segment classification for certain businesses.
Results related to DVD drives for PCs have been moved from "Others" to "Home Electronics," and
results related to plasma displays for business use have been moved from "Home Electronics" to
"Others." Corresponding figures for the previous fiscal years have been restated accordingly.
(The consolidated financial statements included in this annual report and the financial information
are prepared in accordance with U.S. GAAP, except for segment data which is prepared in accordance
with relevant regulations under the Securities and Exchange Law of Japan. Specifically, such
segment information is required to be reported by reportable industrial segment, whereas segment
information is required to be reported by reportable operating segment under U.S. GAAP.)
The profit margins in the "Patent Licensing" segment are substantially higher than those in the
other three segments, since costs related to patent licensing are limited principally to
amortization of patent rights and expenses for licensing activities.
The following table sets forth our operating revenue from unaffiliated customers by business
segment for the respective periods indicated:
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Operating Revenue from Unaffiliated Customers by Business Segments
Year ended March 31
2003
2004
2005
(In millions of yen, except for percentage amounts)
Home Electronics
Domestic
¥
86,766
12.8
%
¥
78,798
11.2
%
¥
87,954
12.0
%
Overseas
191,202
28.2
202,684
29.0
213,274
29.1
Total
¥
277,968
41.0
%
¥
281,482
40.2
%
¥
301,228
41.1
%
Car Electronics
Domestic
¥
105,736
15.6
%
¥
121,708
17.4
%
¥
120,260
16.4
%
Overseas
175,354
25.9
170,479
24.3
183,150
25.0
Total
¥
281,090
41.5
%
¥
292,187
41.7
%
¥
303,410
41.4
%
Others
Domestic
¥
62,137
9.2
%
¥
62,792
9.0
%
¥
53,935
7.3
%
Overseas
43,480
6.4
52,603
7.4
64,838
8.8
Total
¥
105,617
15.6
%
¥
115,395
16.4
%
¥
118,773
16.1
%
Patent Licensing
¥
12,584
1.9
%
¥
11,821
1.7
%
¥
10,237
1.4
%
Total Operating Revenue
¥
677,259
100.0
%
¥
700,885
100.0
%
¥
733,648
100.0
%
Home Electronics:
This segment includes DVD players, DVD recorders, recordable DVD drives, DVD-ROM drives, home-use
plasma displays, stereo systems, individual stereo components, equipment for cable TV systems and
telephones.
Plasma displays worldwide accounted for the largest sales in this segment for fiscal 2005. In
addition, recordable DVD drives and DVD recorders also contributed significantly to sales in this
segment.
We believe the traditional home audio markets of Japan, North America and Europe have matured and
accordingly, price competition in these markets is strong. We do not expect the traditional home
audio markets in these regions to grow substantially. We believe growth will come from new
products, such as DVD-related products and plasma displays. In our DVD business, we are
emphasizing higher value-added DVD recorders with hard disk drives and DVD home theater systems.
Moreover, our DVD-related products such as computer peripherals have shifted from DVD-ROM drives to
recordable DVD drives. In our plasma display business, we continue to promote vigorously 40-inch
and larger models of high-definition plasma displays in the worldwide market. We are also
expanding our plasma display business on an OEM basis.
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Car Electronics:
This segment includes car stereos, car AV systems, car speakers and car navigation systems.
Overall, car stereos accounted for the largest sales in this segment for fiscal 2005. In Japan,
our car navigation systems accounted for the largest sales. In overseas, car stereos accounted for
the largest sales, while car navigation systems also contributed to sales in this segment. Sales
based on OEM accounted for 35.7% in this segment.
Both in Japan and outside Japan, sales in this group are generally made in the consumer market and
to automobile manufacturers on an OEM basis for installation in new cars on production lines or as
optional parts. Sales in this category are gradually shifting from the consumer market to the OEM
market, as automobile manufacturers place greater emphasis on differentiation of their cars. Our
strong brand recognition is helping us maintain our leading market share of car electronics
products in a global consumer market. We became the first manufacturer in the world to introduce
car navigation systems for the consumer market when we launched our first car navigation systems to
the Japanese market in fiscal 1991, and since then have maintained a leading position in the
consumer market in Japan by offering affordably-priced and easy-to-operate DVD-ROM and advanced
HDD-equipped models. We have started this business in Europe and North America, where the markets
are expanding recently, and plan to expand it in China. In the car audio business, we also strive
to widen our market share with new products and innovations, such as car CD players with OLED
displays and in-car entertainment systems. As we keep introducing innovative car electronics
products, we will continue to seek to distinguish our products from our competitors.
Patent Licensing:
This segment includes the licensing of patents related to laser optical disc technologies.
Most of the royalty revenue from this segment is obtained from licensing patents relating to laser
optical disc technologies that are held by Discovision Associates ("DVA"), our wholly-owned U.S.
partnership. The legal protections afforded these rights have a limited duration under applicable
laws, and the length of protection varies from country to country or by region. Although a
significant portion of these patents have expired in certain countries/regions such as Japan and
Europe, some have not expired and DVA continues to collect royalty revenue.
Revenue from the Patent Licensing segment is substantially less than from our other segments,
constituting approximately 1.4% of operating revenue for fiscal 2005. However, the contribution of
this segment to our income is significant compared to its contribution to our operating revenue.
Others:
This segment includes products primarily for business use, such as business-use plasma displays,
business-use AV systems, OLED display panels, factory automation systems and electronics devices
and parts.
Electronics devices and parts, including devices for cellular phones and semiconductors related to
laser pickups, accounted for the largest sales in this segment for fiscal 2005. Factory automation
systems also contributed materially to sales in this segment.
OLED displays, which are particularly well-suited for small size displays, such as cellular phone
displays are expected to become the next generation display. In fiscal 2000, we were the first in
the world to
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mass-produced
four-color OLED displays. In fiscal 2004, we started supplying passive-matrix full-color OLED display panels in cellular phones.
Principal markets
The following table sets forth our operating revenue from unaffiliated customers by geographic
market for the respective periods indicated:
Operating Revenue by Geographic Market
Year ended March 31
2003
2004
2005
(In millions of yen, except for percentage amounts)
Japan
¥
254,639
37.6
%
¥
263,298
37.6
%
¥
262,149
35.7
%
North America
190,147
28.1
170,711
24.3
174,120
23.7
Europe
132,977
19.6
146,250
20.9
150,770
20.6
Other Regions
99,496
14.7
120,626
17.2
146,609
20.0
Total
¥
677,259
100.0
%
¥
700,885
100.0
%
¥
733,648
100.0
%
Note:
Operating revenue by geographic market represents revenue from unaffiliated customers, based
on the geographic location of each unaffiliated customer.
Seasonality
Global sales of the consumer electronics products are seasonal. Sales for the third quarter
(ending December 31) of each fiscal year are generally higher than those of other quarters of the
same fiscal year, due to increased demand during the year-end holiday season. In Japan, sales of
car electronics products generally increase in the summer months, due to increased car usage for
summer vacations.
Marketing channels
We sell our products to a large number of retailers and distributors through our sales offices in
Japan and through Pioneer's sales subsidiaries and independent distributors outside Japan. In
addition, we market certain products, such as car electronics products and recordable DVD drives,
on an OEM basis to other manufacturers for resale under their own brand names. Our business is not
materially dependent upon any particular customer or group of customers. Most of our sales are
made from inventory rather than against customer orders. Our products are generally sold under our
own brand names, principally "Pioneer."
After-sales service
We maintain a policy of providing repair and other services in the countries where our products are
sold. In Japan, after-sales service is provided through Pioneer's wholly-owned service subsidiary,
Pioneer Services Network Corporation ("PSN"), and authorized servicing companies. Pioneer
established PSN in April 2000 to enhance the efficiency of our operations for after-sales services
and to offer such services with higher quality. In countries where Pioneer's subsidiaries are
located, such as the United States and certain European countries, after-sales services are
provided by such subsidiaries or through their authorized independent servicing companies. In
other countries, such services are generally performed by our local distributors.
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In line with general industry practice, most of the products we sell to consumers are provided with
a warranty for free repair work, generally for a period of one year from the date of purchase.
Parts are kept available for after-sales service for a period ranging generally from two to eight
years after discontinuation of production, depending on the characteristics of the parts.
Raw materials and sources of supply
We purchase a variety of raw materials and parts for use in the manufacture of our products. We
maintain two or more suppliers in principle to prevent a shortage of raw materials and parts.
Furthermore, in accordance with corporate policy, we develop and/or manufacture certain key parts
internally for our products, including plasma display panels, laser pickups and certain integrated
circuits ("ICs") and large-scale integrations ("LSIs"). We also purchase certain completed
products, then sell them under our own brand names.
No single source accounted for more than 10% of total supply purchases in fiscal 2005. We have not
experienced any material difficulties in obtaining raw materials, parts and products and believe
that we will continue to be able to obtain them to meet our needs.
Semiconductors account for the largest percentage of parts purchased in fiscal 2005 (on a yen
basis), representing approximately 40% of our total purchases. We purchase semiconductors from
various suppliers, mainly pursuant to the terms of our basic supply agreement. Our basic supply
agreement generally has a term of one year, with an automatic renewal clause. Where we depend on a
single supplier, we seek to strengthen our partnership with such supplier to reduce the risk of
shortages of key parts and, if necessary, other measures such as placing our order earlier than our
usual practice. We purchase a portion (approximately 5%) of our semiconductor parts, which are
custom-made for our needs in accordance with our designs and specifications, from
STMicroelectronics N.V. While we do not currently have an alternative source for the type of
semiconductors supplied by STMicroelectronics N.V., we have entered into a strategic alliance with
STMicroelectronics N.V. to secure a stable source of supply at favorable prices.
The rising price of crude oil has caused an increase in the price of plastic materials used in our
products. In addition, the rapid economic growth in China has caused a shortage of steel materials
and nonferrous metals. Although these conditions have not made a significant impact on our current
operations, we are continuing our efforts to procure a stable supply of these materials and
maintain costs at appropriate levels.
Patents and licenses
We hold a variety of patents, including those relating to laser optical disc technology, in Japan
and other countries, while we in turn are licensed to use a number of patents owned by third
parties. We consider certain patents licensed from third parties to be important to our business.
In particular, the patents licensed from Dolby Laboratories Licensing Corporation, U.S.A. for such
devices as noise reduction, from Koninklijke Philips Electronics N.V., the Netherlands for CD
products and LD products, from Thomson Licensing S.A., France for CD products and LD products, from
MPEG LA, L.L.C., U.S.A. for digital video products, from Fujitsu Limited, Japan for plasma display
panels and Gemstar-TV Guide International, Inc., U.S.A. for electronic program guide are utilized
in products accounting for a substantial portion of our net sales. Termination of such license
agreements would have a material adverse effect on our business, although we have no reason to
believe that such termination will occur.
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Competition
Our products, especially plasma displays and DVD-related products, are exposed to intense
competition in Japan and overseas. Our competitors, which vary in size, area of distribution,
range of products and financial resources, are principally companies based in Japan, Europe and
South Korea, some of which are large, integrated home electric or electronic appliance
manufacturers having substantially larger capital resources than us. The electronics industry in
general has been subject to substantial price competition as part of efforts by electronics
manufacturers to increase their market share. In addition, electronics companies in Asia,
particularly those from China, pose a severe threat through price competition. To counter this
intense competition, we place great emphasis on extensive marketing to stimulate demand for
innovative and value-added products. Furthermore, we concentrate our efforts on technological
research, quality control, sales promotion and the lowering of production costs by increasing
procurement of parts and products made outside Japan and other measures. See also "Item 3.D. Risk
factors—Competition generally, and especially on price and standardization of products, may
adversely affect our results of operations" and "Item 4.B. Business overview—Strategy."
Import restrictions
In certain areas of the world, our products encounter tariffs and other import restrictions.
Tariffs applied to our products vary depending upon the classification of such products and the
countries into which such products are imported. Import restrictions, such as prohibitions on
imports of certain products, vary from nation to nation. To respond to this situation, we
manufacture our products in certain locations outside Japan as well as commissioning their
production to independent manufacturers.
Governmental regulation
Our business activities are subject to various governmental regulations in countries in which we
operate, including regulations relating to business/investment approvals, export regulations
including those related to national security considerations, tariffs, antitrust, intellectual
property, consumer and business taxation, exchange controls, and environmental and recycling
requirements.
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C. Organizational structure
Our basic corporate structure, including some but not all of our operating subsidiaries, is shown
in the following chart:
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The following table sets forth the principal subsidiaries owned, directly or indirectly, by
Pioneer.
Ownership
Country of
interest and voting
Name of subsidiary
incorporation
interest
Principal business
Tohoku Pioneer
Corporation
Japan
67.0
%
Manufacture of car electronics
products, factory automation
systems and OLED display panels
Pioneer Display Products Corporation
Japan
100.0
%
Manufacture of plasma displays
Pioneer Plasma Display
Corporation
Japan
100.0
%
Manufacture of plasma displays
Pioneer North America,
Inc.
U.S.A.
100.0
%
Coordination of the activities of Pioneer's North American
subsidiaries and affiliates
Pioneer Electronics
(USA) Inc.
U.S.A.
100.0
%
Distribution of electronics products
Pioneer Electronics
Capital Inc.
U.S.A.
100.0
%
Financing to Pioneer and its
subsidiaries
Discovision Associates*
U.S.A.
100.0
%
Licensing of worldwide patents
relating to laser optical disc
technologies
Pioneer Europe NV
Belgium
100.0
%
Coordination of the activities of
Pioneer's European subsidiaries and
affiliates, and distribution of
electronics products
Pioneer Electronics
Asiacentre, Pte. Ltd.
Singapore
100.0
%
Coordination of the activities of
Pioneer's Asian subsidiaries and
affiliates, and manufacture and
distribution of electronics
products
Pioneer China Holding
Co., Ltd.
China
100.0
%
Coordination of the activities of
Pioneer's Chinese subsidiaries and
affiliates and distribution of
electronics products
*
Discovision Associates is a general partnership organized under the laws of the State of
California in the United States.
24
Table of Contents
D. Property, plants and equipment
Our manufacturing operations are conducted principally in Japan, Southeast Asia and China. The
following table sets forth information, as of March 31, 2005, with respect to our principal plants.
Name of plant
Floor space
(Name of company
(square feet)
which owns the plant)
Location
[leased space]
Principal products
Japan
Kagoshima
Plant
(Pioneer Plasma
Display Corporation)
Izumi, Kagoshima
1,197,000
Plasma displays
Yamanashi Plant
(Pioneer Display
Products Corporation)
Nakakoma, Yamanashi
874,000
Plasma displays
Shizuoka Plant
(Pioneer Display
Products Corporation)
Fukuroi, Shizuoka
730,000
Plasma displays
Kawagoe Plant
(Pioneer Corporation)
Kawagoe, Saitama
553,000
Car stereos, Car navigation systems
Tokorozawa Plant
(Pioneer Corporation)
Tokorozawa, Saitama
522,000
DVD recorders
Tendo Plant
(Tohoku Pioneer
Corporation)
Tendo, Yamagata
479,000
Car stereos, Car speakers,
Loudspeakers
Yonezawa Plant
(Tohoku Pioneer
Corporation)
Yonezawa, Yamagata
243,000
OLED displays
Kokubo Plant
(Pioneer Micro
Technology
Corporation)
Kofu, Yamanashi
194,000
ICs, LSIs
Tendo the 2nd Plant
(Tohoku Pioneer
Corporation)
Tendo, Yamagata
186,000
Factory automation systems
Mogami Plant
(Mogami Denki
Corporation)
Mogami, Yamagata
141,000
Speaker cone
25
Table of Contents
Name of plant
Floor space
(Name of company
(square feet)
which owns the plant)
Location
[leased space]
Principal products
Outside Japan
Shanghai Plant
(Shanghai Pioneer
Speakers Co., Ltd.)
Shanghai, China
458,000
Car speakers
Mexico Plant
(Pioneer Speakers,
S.A. de C.V.)
Baja California,
Mexico
397,000
Car speakers
Shanghai Plant
(Pioneer Technology
(Shanghai) Co.,
Ltd.)
Shanghai, China
374,000
DVD Recorders, Car AV systems, Car stereos
Thailand Plant
(Pioneer
Manufacturing
(Thailand) Co.,
Ltd.)
Ayutthaya, Thailand
300,000
Car stereos, Stereo systems
Guang Dong Plant
(Pioneer Technology
(Dongguan) Co.,
Ltd.)
Guang Dong, China
295,000
Recordable DVD drives
Guang Dong Plant
(Dongguan Monetech
Electronic Co.,
Ltd.)
Guang Dong, China
237,000
[237,000]
Speaker systems
Malaysia Plant
(Pioneer Technology
(Malaysia) Sdn.
Bhd.)
Johor, Malaysia
262,000
Stereo systems, Car stereos
California Plant
(Pioneer
Electronics
Technology, Inc.)
California, U.S.A.
186,000
Plasma displays, Speaker systems
U.K. Plant
(Pioneer Technology
(U.K.) Ltd.)
West Yorkshire,
United Kingdom
184,000
Plasma displays
Ohio Plant
(Pioneer Automotive
Technologies, Inc.)
Ohio, U.S.A.
157,000
Car stereos
26
Table of Contents
Most of the buildings of these plants and the land on which they are located are owned by us.
As of March 31, 2005, we owned our headquarters' buildings in Tokyo having an approximate aggregate
floor space of 336,000 square feet. We lease approximately 34,000 square feet as additional head
office space in Tokyo.
We also own an employee training center in Tokyo with an approximate floor space of 17,000 square
feet, and R&D facilities with an approximate aggregate floor space of 298,000 square feet.
Our sales office buildings in Japan and outside Japan are mainly leased. The head office buildings
of some distribution subsidiaries outside Japan are owned by us. Land and buildings for the Ohio
Plant and one of our headquarters' buildings with an aggregate book value of ¥5,999 million were
pledged as collateral for certain loans on March 31, 2005.
In fiscal 2005, we invested ¥27 billion in building a new manufacturing line for plasma displays at
the Yamanashi Plant, which started its operation in September 2004. On September 30, 2004, we
acquired 100% of the issued common stock of NPD and the intellectual property rights of NPD for
cash in an aggregate amount of ¥35 billion. NPD changed its name to Pioneer Plasma Display
Corporation on September 30, 2004. These investments resulted in increasing our plasma display
production capacity to about 1.1 million units a year.
We are reviewing our global production systems. For the past several years, we have been
accelerating the shift to overseas production. We currently plan to shift from our emphasis on
overseas manufacturing and focus more on an efficient response to fast-changing markets. We plan
to consolidate our production sites and aim to reduce the number of production sites from 39 to
approximately 30 worldwide.
We are constantly engaged in upgrading, modernizing and revamping the operations of our
manufacturing facilities, based on our assessment of market needs and prospects. As a result, it
would be unreasonably difficult to track the exact productive capacity and the extent of
utilization of each of our manufacturing facilities. We believe that our manufacturing facilities
are generally operating in the aggregate within normal operating capacity and not substantially
below capacity. Additionally, we believe that there does not exist any material environmental
issues that may affect the utilization of our assets.
We believe that our properties are adequate to carry on our current business, though additional
investment in plant and equipment is being made to support continued growth.
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Table of Contents
Item 5. Operating and Financial Review and Prospects
Overview
We develop, design, manufacture and sell home electronics products such as audio, video and car
electronics products on a global scale. We are one of the leading innovators of DVD products,
plasma displays and car navigation systems. We are also one of the leading manufacturers in the
world consumer market of car audio products and car navigation systems. In addition, we derive
revenue from the manufacture and sale of industrial electronics, such as factory automation systems
and parts and from the licensing of patents that we own.
During fiscal 2005, the global economy continued steady growth by strong consumer spending in the
U.S. and expanding economic growth in China, despite uncertainties in political situations and
rising crude oil prices. In Japan, where we have the largest sales, the economy showed favorable
growth in the first half of fiscal 2005 due to increased consumer spending. However, in the second
half, the economy exhibited signs of slowdown. In the consumer electronics market, the popularity
of newer products, such as flat panel TVs and DVD recorders, rose, due to the Athens Olympics,
while price competition for these products intensified worldwide. In foreign exchange markets, the
average value of the yen during fiscal 2005 was approximately 5% higher against the U.S. dollar and
approximately 2% lower against the euro compared with fiscal 2004. In these economic conditions,
our operating revenue for fiscal 2005 was ¥733.6 billion, up 4.7% from fiscal 2004. However, we
recorded a net loss of ¥8.8 billion, compared with net income ¥24.8 billion posted in fiscal 2004.
We classify our business groups into four segments: "Home Electronics," "Car Electronics," "Patent
Licensing" and "Others." Main products in each segment are as follows: "Home Electronics" includes
the manufacture and sale of audio/video equipment for home use, home telephones, computer
peripheral equipment, devices and others. "Car Electronics" includes the manufacture and sale of
car audio products, car navigation systems, and others. "Patent Licensing" includes the licensing
of patents related to optical disc recording and playback equipment, and others. "Others" includes
manufacture and sale of factory automation system, parts, and others. The following are operating
revenue and operating income by business segment for the three years ended March 31, 2005.
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Table of Contents
Operating Revenue by Business Segments
Year ended March 31
2003
2004
2005
(In millions of yen, except for percentage amounts)
Operating Revenue:
Home Electronics
¥
277,968
41.0
%
¥
281,482
40.2
%
¥
301,228
41.1
%
Car Electronics
281,090
41.5
292,187
41.7
303,410
41.4
Patent Licensing
12,584
1.9
11,821
1.7
10,237
1.4
Others
105,617
15.6
115,395
16.4
118,773
16.1
Total
¥
677,259
100.0
%
¥
700,885
100.0
%
¥
733,648
100.0
%
Note:
Operating revenue represents revenue from unaffiliated customers.
Our products are generally sold under our own brand names, principally "Pioneer." Our primary
markets are Japan, North America, Europe and Asia. We sell our products to customers in consumer
and business markets through sales offices in Japan, and through sales subsidiaries of Pioneer and
independent distributors outside of Japan. In addition, on an OEM basis, we market certain
products, such as car electronics products, recordable DVD drives, plasma displays and OLED
displays to other companies. The following are operating revenue from unaffiliated customers by
geographic market for the three years ended March 31, 2005.
Operating Revenue by Geographic Market
Year ended March 31
2003
2004
2005
(In millions of yen, except for percentage amounts)
Japan
¥
254,639
37.6
%
¥
263,298
37.6
%
¥
262,149
35.7
%
North America
190,147
28.1
170,711
24.3
174,120
23.7
Europe
132,977
19.6
146,250
20.9
150,770
20.6
Other Regions
99,496
14.7
120,626
17.2
146,609
20.0
Total
¥
677,259
100.0
%
¥
700,885
100.0
%
¥
733,648
100.0
%
Note:
Operating revenue by geographic market represents revenue from unaffiliated customers, based
on the geographic location of each unaffiliated customer.
29
Table of Contents
Home Electronics, Car Electronics and Others
In our home electronics business, we are exposed to significant price competition for DVD-related
products and plasma displays, which adversely affects our profitability, although we continue to
see strong growth in demand for DVD recorders, recordable DVD drives and plasma displays in
worldwide markets.
In our car electronics business, severe worldwide competition has led to strong downward pressure
on prices. However, the popularity of our car navigation systems, which we believe is a major area
of our operations, continues to increase.
The electronics industry is characterized by rapid technological changes, and our ability to
introduce attractive new products to the market significantly affects the operating results of our
electronics businesses.
The electronics industry is also characterized by continuing sales price decreases in most product
categories, making it important for us to continually improve the efficiency of our manufacturing,
distribution, service and administrative functions.
Also, in fiscal 2004, we changed our business segment classification for certain businesses.
Results related to DVD drives for PCs have been moved from "Others" to "Home Electronics," and
results related to plasma displays for business use have been moved from "Home Electronics" to
"Others." Corresponding figures for the previous fiscal year have been restated accordingly.
Patent Licensing
Our royalty revenue from Patent Licensing depends to a material extent on the sales of patented
products by our licensees, making it difficult for us to predict actual royalty revenue each year.
Therefore, trends in the PC market have an influence on our royalty revenue. In addition, a
significant portion of our patent rights in Japan and Europe relating to laser optical disc
technologies has expired. Accordingly, we have started to experience a substantial decrease in
operating revenue and segment income from this segment.
Currency fluctuations
We are affected to some extent by fluctuations in foreign currency exchange rates. We are
principally exposed to fluctuations in the value of the Japanese yen against the U.S. dollar, euro
and, to a much lesser extent, other currencies of countries where we conduct our business. Our
consolidated financial statements, which are presented in Japanese yen, are affected by foreign
currency exchange fluctuations through both translation risk and transaction risk.
Translation risk is the risk that our consolidated financial statements for a particular period or
for a particular date will be affected by changes in the prevailing exchange rates of the
currencies in which our subsidiaries prepare their financial statements against the Japanese yen.
The functional currency for all of our significant foreign operations is the local currency.
Generally, all asset and liability accounts of foreign operations are translated into Japanese yen
using the exchange rates at the balance sheet date and all revenue and expense accounts are
translated using the weighted average exchange rates for the periods. Even though the fluctuations
of currencies against the Japanese yen can be substantial and, therefore, significantly impact
comparisons with prior periods and among various geographic markets, the translation effect is a
reporting consideration, included in the other comprehensive income, and does not reflect our
underlying results of operations.
30
Table of Contents
Transaction risk is the risk that the currency structure of our costs and liabilities will deviate
from the currency structure of sales proceeds and assets. Transaction risk mainly derives from the
fact the currencies of the countries where we manufacture our products may be different from the
currencies where we sell our products.
Derivative financial instruments are utilized by us to reduce the risks from fluctuations in
foreign exchange rates but are not held or issued for trading purposes. To hedge certain purchase
and sale commitments anticipated and not yet committed transactions denominated other than
functional currencies, we enter into forward exchange contracts and purchases and writes currency
options. Written options are entered into only with purchased options in order to reduce the
hedging cost.
Critical accounting policies and estimates
The following analysis of financial conditions and results of operations discusses our consolidated
financial statements, which have been prepared in accordance with accounting principles generally
accepted in the United States of America, except for segment data which is prepared in accordance
with the regulations under the Securities and Exchange Law of Japan.
The preparation of the financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. On an ongoing basis, management evaluates its estimates and
judgments, including those related to customer incentives, bad debts, inventories, investments,
income taxes, warranty obligations, retirement benefits, and contingencies and litigation.
Management bases its estimates and judgments on historical experience and on various other factors
that are believed to be reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities and the reported amount of
revenue and expenses that are not readily apparent from other sources. Actual results may differ
from these estimates due to the inherent uncertainty involved in making estimates.
We believe the following critical accounting policies, among others, affect our more significant
judgments and estimates used in the preparation of our consolidated financial statements.
Revenue recognition
Sales are generally recorded when merchandise is shipped or delivered to customers. Recognition of
sales occurs when the title and risks and rewards of ownership are transferred to customers based
on sales contracts. In circumstances where sales are recorded when merchandise is shipped to
customers, the shipment date is equivalent to the delivery date because of a short delivery time.
In certain cases, terms of the contract require the product to pass customer inspection after
delivery and we record the sale upon satisfactory customer acceptance. Royalty revenue is
recognized based on royalty statements from licensees.
We normally do not accept returns except for warranty issues, noncompliance with purchase order
specifications and returns from end-users to certain dealers. The financial impact of the future
returns are estimated based on historical experience and adequately reserved.
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Table of Contents
Estimated reductions of revenue are recorded for cost incurred by us in connection with sales
incentive related to the customers' purchase or promotion of our products. Such costs include the
estimated cost of promotional discounts, dealer price protection, dealer rebates, consumer rebates,
cash discounts, and support for dealers' promotion of our products, although the terms of sales
incentive programs may be different by product, market and terms of sales contracts. Sales
incentives that are dependent on future customer performance are estimated and recorded at the
later of when the original sale is recorded or when the incentive is offered. Estimates of future
customer performance such as purchase volume, early payments and consumer rebate redemption rate
are based on historical experience. Should a greater proportion of customers redeem incentives than
we estimate, additional reductions of revenue may be required.
Promotional discounts are offered on specified products for specified periods. A price protection
discount, which is the discount for the dealers' inventory at the time of the announcement of the
promotional discount, to compensate for the difference between the discounted prices and higher
prices the dealers paid for their inventory, is often offered when the promotional discount program
is announced. Costs for a price protection program are accrued when the program is announced by
estimating discounts to be claimed by the dealers. Such estimates are based on forecasted order
quantities during the promotional period and assumptions as to the amount of inventory that dealers
have on hand. Dealer rebates include fixed-rate contractual rebates and volume-based rebates.
Contractual rebates are recorded at the time of sale. Volume-based rebates, for which the rebate
rate is dependent on the amount of the dealer's purchase during the specified period, are accrued
at the time of original sale, estimating the rebate rate the dealer will eventually achieve. We
occasionally offer incentives directly to consumers in the form of mail-in rebates. Consumer
rebates are accrued at the later of when the related sales are recognized or when the program is
announced. The actual amounts of consumer rebates are dependent on consumers' future actions, and
our estimates are based on assumptions as to quantities to be purchased by consumers during the
program period and consumer redemption rates, which is determined based on historical experience
about consumer response to consumer rebate programs. Cash discounts are given for early payments in
accordance with terms of the contract with customers and are recorded as a reduction of revenue at
the time of original sale. The estimate of the cash discounts is based upon information about
customers' payment histories. Also, we provide reimbursements for the purpose of supporting
dealers' sales promotions of our products. The cost mainly includes subsidies for advertising,
displays, cost of other sales promotion materials, and salaries of temporary floor sales personnel.
We account for all the subsidy reimbursements to dealers as reductions from sales. Certain
promotional allowances, such as co-op advertising, are determined as certain percentages of the
respective sales amount and are recorded at the time of sale. Although reimbursement for such
incentives requires dealers to perform sales promotions of our products, we assume, based on
historical experience, that almost all dealers will eventually perform such sales promotions and
submit claims for reimbursement. Other allowances, whose amounts are not determined by sales
factors, are recorded when the subsidy is offered and the amount becomes reasonably determinable.
Examples for this type of allowance are display allowances determined by the number of units
displayed on the sales floor, and allowances based on agreements to share costs incurred by dealers
for items such as new signboards, new display racks and salaries of temporary floor sales
personnel.
Warranties
We provide for the estimated cost of product warranties at the time revenue is recognized. While we
engage in extensive product quality programs and processes, including actively monitoring and
evaluating the quality of our component suppliers, our warranty obligation is affected by product
failure rates and service costs including parts and labor that may be incurred in correcting a
product failure. The estimate of warranty cost is based on historical information, and should
actual product failure rates or service costs differ from our estimates, revisions to the estimated
warranty liability may be required. Warranty reserve as of March 31, 2005 is ¥5.7 billion.
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Table of Contents
Inventories
The majority of our products are produced for the consumer electronics market, and our inventory is
susceptible to quickly changing demands and selling prices. For the purpose of properly valuing our
inventory, we record inventory reserves for excess, slow-moving and obsolete inventory. Inventory
with no potential for future sale or potential use by us is subject to write-off and, inventory
which is considered to be obsolete or slow-moving, but salable at reduced prices, is written down
to estimated net realizable value. Estimating net realizable value requires assumptions as to
uncertain matters such as selling prices and salable quantities to be made based upon judgment
about future market prices of competing products and customer demand, taking current market
conditions into consideration. As of March 31, 2005, an inventory reserve of ¥10.3 billion included
a ¥6.6 billion reserve for inventories to be written off
and a ¥3.7 billion reserve for inventories
written down to net realizable value.
The following table sets forth the changes in inventory reserve during fiscal 2005. Reversal was
made in connection with sale or disposal of the related inventory.
Beginning
Provision
Reversal
Other
End
(In billions of yen)
8.3
7.4
(6.3
)
0.9
10.3
Impairment of long-lived assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset group may not be recoverable. This review is performed using
estimates of future cash flows. If the carrying amount of an asset group is considered impaired, an
impairment loss is recorded for the amount by which the carrying amount of the asset group exceeds
its estimated fair value. Fair value is determined using the present value of estimated cash flows.
A weighted average cost of capital, which is derived from our capital structure, is used as a
discount rate for calculating the present value of the estimated cash flows. In fiscal 2005, we
recorded ¥4.5 billion impairment charges for plasma display production facilities of a domestic
subsidiary, production facilities of a foreign subsidiary to be closed and assets used for
manufacture of cable TV set-top boxes as the result of the review. While we believe that the
estimates of future cash flows and fair value are reasonable, changes in estimates resulting in
lower future cash flows and fair value would affect the valuations of those long-lived assets.
Deferred tax assets
We record a valuation allowance to reduce deferred tax assets to the amount that we believe is more
likely than not to be realized. While we have considered future taxable income and ongoing prudent
and feasible tax planning strategies in assessing the need for the valuation allowance, in the
event that we determine that we will not be able to realize all or part of the net deferred tax
assets in the future, an adjustment to the deferred tax assets would be charged to income in the
period such determination is made. Likewise, should we determine that we will be able to realize
deferred tax assets in the future in excess of the net recorded amount, an adjustment to the
deferred tax assets would increase income in the period such determination was made.
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Table of Contents
Pension benefit costs
Employee retirement benefit costs and obligations are dependent on assumptions used in the
actuarial calculations. These assumptions include discount rates, future compensation levels,
retirement rates and mortality rates which are based upon current statistical data, as well as
long-term returns on plan assets and other factors.
For pension plans of the parent company and domestic subsidiaries, the discount rates are
determined by using information about rates of return on currently available high-quality
fixed-income bonds. The expected long-term rate of return on pension plan assets is based on
weighted average of expected long-term returns on various categories of plan assets, reflecting the
current and target allocations of pension plan assets. Expected long-term return by asset category
is derived from historical studies by investment advisors. If actual results differ from the
assumptions or assumptions are changed, the resulting effects are accumulated and systematically
recognized over future periods and, therefore, generally affect recognized expense and the recorded
obligations in future periods.
As of March 31, 2005, the actual asset allocation was equity securities 53%, debt securities 34%,
other 13%, compared with target asset allocation of equity securities 56%, debt securities 41%,
other 3%.
The following table sets forth the effects of assumed changes in discount rates and the expected
long-term rate of return for pension plans in Japan.
Effect on shareholders' equity
Net periodic pension cost
as of March 31, 2005
for fiscal 2006
(In billions of yen)
Discount rare:
0.5% increase
5.0
(0.7
)
0.5% decrease
(5.6
)
0.7
Expected long-term rate of return:
0.5% increase
—
(0.3
)
0.5% decrease
—
0.3
34
Table of Contents
A. Operating results
Fiscal 2005 compared with fiscal 2004
Operating revenue
Net sales amounted to ¥723.4 billion, a 5.0% increase over fiscal 2004. Net sales in Japan came to
¥262.1 billion, down 0.4% from fiscal 2004, and overseas net sales increased 8.3% to ¥461.3
billion. Royalty revenue decreased 13.4% from fiscal 2004 to ¥10.2 billion.
Home Electronics
net sales increased 7.0% over fiscal 2004, amounting to ¥301.2 billion, primarily
as a result of increased sales of plasma displays and DVD recorders, while sales of recordable DVD
drives for PCs, DVD players, cable TV set-top boxes and audio products decreased. Sales of plasma
displays grew both in Japan and overseas, and sales of DVD recorders increased overseas. In Japan,
sales rose 11.6% to ¥88.0 billion, primarily due to a large increase in sales of plasma displays.
The increase was largely attributable to expansion of OEM product sales resulting from acquisition
of a plasma display production subsidiary, Pioneer Plasma Display Corporation ("PPD"). Pioneer
brand plasma display sales to consumer market increased as well. Sales of recordable DVD drives,
DVD recorders and audio products decreased in Japan. Sales decrease of recordable DVD drives and
DVD recorders were mainly attributable to the impact of a price decline resulting from intensified
competition. Overseas sales also rose 5.2% to ¥213.3 billion, due to an increase in sales worldwide
of plasma displays and DVD recorders, despite a decrease in sales of audio products and DVD players
worldwide, recordable DVD drives in Europe and North America and DVD-ROM drives in Europe, as well
as our decision to no longer sell cable TV set-top boxes in North America. In general, the market
is shifting from DVD players to DVD recorders worldwide.
Car Electronics
net sales rose 3.8% to ¥303.4 billion, primarily as a result of sales growth of car
navigation systems overseas. In Japan, net sales decreased 1.2% to ¥120.3 billion, mainly
influenced by slow demand for car navigation systems in the consumer market, reflecting shifting
demand from the consumer market to the OEM market, although car navigation systems for automobile
manufacturers increased. Overseas net sales increased 7.4% to ¥183.2 billion, primarily due to
increased sales of car audio products for the OEM market and car navigation systems, despite
decreased sales of car audio products for the consumer market in Europe and North America. Sales of
car navigation systems for the consumer market, particularly map-type DVD models grew in North
America and Europe. Also, sales of car audio products for the consumer market increased in Russia
and South and Central America.
Royalty revenue from
Patent Licensing
decreased 13.4% to ¥10.2 billion, compared to that of fiscal
2004. This was attributable to expiration of patents included in a larger portfolio of patents
licensed to the optical disc industry.
Net sales for
Others
increased 2.9% over fiscal 2004 to ¥118.8 billion, reflecting primarily
increased sales of factory automation (FA) systems and component parts for cellular phones. In
Japan, net sales decreased 14.1% to ¥53.9 billion. This primarily resulted from decrease in sales
of organic light-emitting diode (OLED) display panels, mainly for cellular phone manufacturers, and
semiconductors for laser pickups, despite an increase in sales of FA systems. Decrease in sales of
semiconductors for laser pickups is due to a sales shift from Japan to China. Overseas, net sales
were up 23.3% over fiscal 2004 to ¥64.8 billion. The increase is primarily due to increased sales
in China of devices for cellular phones and semiconductors for laser pickups, and in Asia of
speaker devices for cellular phones, while sales of plasma displays for business use decreased in
North America and Europe.
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Table of Contents
Other revenues (Revenues excluding net sales and royalty revenue)
Other revenues include interest income and other income. Interest income increased from ¥1.4
billion to ¥1.9 billion due to increased return on short-term investment of proceeds from
convertible bonds issued in March 2004. Other income increased from ¥0.5 billion to ¥3.4 billion,
mainly due to a ¥2.3 billion gain on sale of available for sale securities.
Net loss from transfer of the substitutional portion of employee welfare pension plan
In fiscal 2005, we transferred the benefit obligation of the substitutional portion of employee
welfare pension plan in Japan and related portion of the plan assets to the Japanese government.
The transfer resulted in recording of a ¥48.7 billion gain as subsidy from the government. At the
same time, we recognized an expense of ¥49.5 billion mainly for settlement loss of the
substitutional portion, and allocated ¥25.3 billion to cost of sales and ¥24.2 billion to selling,
general and administrative (SGA) expenses. Note 10 of the notes to consolidated financial
statements provides detailed information.
Cost and expenses
Cost of sales
increased to ¥584.1 billion from fiscal 2004's ¥487.3 billion. After excluding ¥25.3
billion of one-time pension cost recognized as a result of the transfer of the substitutional
portion of employee welfare pension plan to the Japanese government, cost of sales represented
76.2% of operating revenue, up by 6.7 percentage points from fiscal 2004's 69.5%. The increase is
primarily due to the adverse effects of harsh price competition, particularly for Home Electronics
products such as plasma displays, DVD recorders and recordable DVD drives. We estimate that the
average selling prices for these products dropped 20—30% during fiscal 2005. Clearing out inventory
for cable TV set-top boxes in North America at reduced prices also had an adverse effect on gross
profit margin. Gross profit margin in the Car Electronics business also decreased. Gross profit
margin decreased for car navigation systems in the consumer market in Japan, and the decline in
sales prices of car CD players worldwide decreased gross profit margin as well. Increased provision
for inventory reserve, mainly for excess stock of Home Electronics products, was another reason for
the higher cost of sales.
SGA expenses
increased to ¥195.7 billion from fiscal 2004's ¥166.4 billion. The difference was ¥5.1
billion after excluding ¥24.2 billion one-time pension cost resulting from the transfer of the
substitutional portion of employee welfare pension plan. Increase in shipping and handling cost and
warranty cost accounted for the majority of the increase. Shipping and handling cost increased by
¥1.5 billion in line with the increase in shipment of the number of plasma display units. Provision
for warranty reserve increased by ¥2.0 billion due to extension of warranty period for plasma
displays as a part of a sales promotion measure.
R&D expenditures
, which are included in cost of sales and SGA expenses, increased 8.6% to ¥55.9
billion, representing 7.6% of operating revenue. The increase reflected R&D activities to enhance
our technological advantage in our strategic products such as car navigation systems, plasma
displays, DVD recorders and OLED displays.
Loss on sale and disposal of fixed assets
decreased by ¥3.4 billion. The decrease was attributable
mainly to losses recorded in fiscal 2004 for relocation and replacement of production facilities
for the purpose of improving production efficiencies, mainly in DVD products and plasma display
panels.
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Other deductions
increased from ¥1.6 billion to ¥6.3 billion. The difference is mainly due to ¥4.5
billion impairment losses recognized in fiscal 2005. An impairment loss of ¥3.4 billion was
recorded for production facilities of PPD due to the downward revision of sales forecast for PPD's
products after the acquisition. This downward revision resulted from decreased orders from our
main OEM customers in the second half of fiscal 2005, reflecting changes in business circumstances.
We also recorded a ¥0.6 billion impairment loss on assets used in manufacturing cable TV set-top
boxes as a result of our decision to no longer sell cable TV set-top boxes in North America. Also,
an impairment loss of ¥0.5 billion was recorded for production facilities of a foreign subsidiary,
for which closure is planned as a part of reorganization of overseas production sites. Another
reason for the difference was the losses incurred in connection with our decision not to sell cable
TV set-top boxes in North America any longer. ¥1.8 billion was recorded for asset disposal, employee
termination benefits and contract termination costs, in addition to the impairment loss discussed
above.
Income (loss) before income taxes
As a result of factors discussed above, we posted ¥0.2 billion loss before income taxes in fiscal
2005, compared with income of ¥41.8 billion in fiscal 2004.
Income taxes
In fiscal 2005, the provision for income taxes was ¥4.8 billion against ¥0.2 billion loss before
taxes. The relationship between loss before taxes and tax expense was distorted mainly due to
valuation allowance set up for deferred tax assets of the subsidiaries which posted losses. In
fiscal 2004, income taxes as a percentage of pre-tax income was 44.4%, which was 2.4% higher than
the normal statutory tax rate of 42.0% in Japan.
Equity in losses of affiliated companies
Equity in losses of affiliated companies was ¥3.1 billion in fiscal 2005, compared with ¥2.2
billion in fiscal 2004. The increase in loss is mainly attributable to the increase in loss
incurred by ELDis, Inc., which manufactures and markets thin film transistor substrates for
active-matrix OLED display panels.
Net income (loss)
Net loss in fiscal 2005 was ¥8.8 billion, compared with net income of ¥24.8 billion posted in
fiscal 2004. Basic net loss per share of common stock in fiscal 2005 was ¥50.11, compared with net
income per share of ¥141.58 in fiscal 2004.
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Fiscal 2004 compared with fiscal 2003
Operating revenue
Net sales amounted to ¥689.1 billion, a 3.7% increase over fiscal 2003. Net sales in Japan came to
¥263.3 billion, up 3.4% from fiscal 2003, and overseas net sales increased 3.8% to ¥425.8 billion.
Home Electronics
net sales increased 1.3% over fiscal 2003, amounting to ¥281.5 billion, primarily
as a result of increased sales of plasma displays, DVD recorders and recordable DVD drives for PCs,
while sales of DVD players, set-top boxes and audio products decreased. Sales of plasma displays
grew overseas while sales in Japan decreased. Sales of DVD recorders, particularly models with a
hard disk drive, increased both in Japan and overseas to more than twice the levels in fiscal 2003
in terms of units sold, while the amount of net sales did not grow so fast because of declining
average selling prices. Sales of recordable DVD drives increased overseas. In Japan, Home
Electronics sales decreased by 9.2% to ¥78.8 billion as a result of decreased sales of plasma
displays and DVD players, although sales of DVD recorders increased. Overseas, sales increased by
6.0% to ¥202.7 billion. This primarily reflects a large increase in the sale of plasma displays in
each overseas market, DVD recorders in North America and Europe, and recordable DVD drives in
Europe and Asia, offsetting sales declines of digital cable TV set-top boxes in North America,
digital broadcast set-top boxes in Europe and audio products in North America and Europe.
Car Electronics
net sales rose 3.9% to ¥292.2 billion, primarily as a result of sales growth of car
navigation systems. In Japan, net sales increased 15.1% to ¥121.7 billion, mainly due to increased
sales of car navigation systems in the consumer market and to automobile manufacturers. Sales of
car audio products to automobile manufacturers increased as well. Overseas net sales decreased 2.8%
to ¥170.5 billion, primarily due to decreased sales of car audio products to automobile
manufacturers in North America. Sales of car navigation systems rose in North America and Europe,
and sales of car audio products increased in other regions.
Royalty revenue from
Patent Licensing
decreased 6.1% to ¥11.8 billion, compared to that of fiscal
2003. This was attributable to expiration of our optical disc-related patents in certain regions.
Net sales for
Others
rose 9.3% over fiscal 2003 to ¥115.4 billion, reflecting primarily increased
sales of FA systems, OLED display panels and other component parts. In Japan, net sales increased
slightly by 1.1% to ¥62.8 billion. This primarily resulted from increased sales of cellular
phone-related devices, mainly OLED display panels, partially offset by a decrease in sales of
commercial karaoke products resulting from the sale of karaoke business subsidiaries in fiscal
2003. Overseas, net sales were up 21.0% over fiscal 2003 to ¥52.6 billion, primarily due to
increased sales of FA systems, mainly optical disc manufacturing systems in Asia. The increasing
popularity of DVDs as recording media is a major factor of increased orders for the optical disc
manufacturing systems. Sales of semiconductors related to laser pickups in China and business-use
plasma displays worldwide increased as well.
Other revenues (Revenues excluding net sales and royalty revenue)
Interest income decreased from ¥2.2 billion to ¥1.4 billion reflecting lower interest rates on
short-term investment, mainly in the United States of America. Also, other revenues in fiscal 2003
included a ¥0.8 billion gain on sale of subsidiaries' stock resulting from the sale of karaoke
business subsidiaries in fiscal 2003.
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Cost and expenses
Cost of sales
increased to ¥487.3 billion from fiscal 2003's ¥473.2 billion, consistent with the
increase in net sales. However, cost of sales as a percentage of operating revenue declined 0.4
percentage points to 69.5%, despite the adverse effects of keen price competition, particularly for
Home Electronics products such as plasma displays and DVD recorders. Gross profit margin in the Car
Electronics business improved as a result of cost reductions in car navigation systems. For
recordable DVD drives, gross profit margin improved as well. Also, exchange rate fluctuations
favorably affected gross profit margin. A weaker yen against the euro increased net sales in terms
of yen, and a stronger yen against currencies in Asian countries, where our major production
facilities are located, reduced production costs in terms of yen.
SGA expenses
decreased by 1.4% or ¥2.3 billion over fiscal 2003 to ¥166.4 billion. This primarily
reflected decreases in personnel-related expenses, special retirement allowances and various
operating expenses. Personnel-related expenses decreased by ¥1.9 billion, reflecting the sale of
karaoke business subsidiaries in fiscal 2003. The decrease of special retirement allowances was due
to ¥1.4 billion special termination benefits recorded by Tohoku Pioneer Corporation for its
voluntary early retirement plan implemented in June 2002. Such benefits were not incurred in fiscal
2004. In addition to these decreases, reductions in various operating expenses caused an overall
decrease of SGA expenses, offsetting the unfavorable impact of a $14 million one-time payment to
Gemstar-TV Guide International, Inc. to resolve pending litigation, ¥2.0 billion provided for
estimated costs for free inspection and repair of certain plasma displays, and a ¥1.7 billion
increase in advertising expenses. The ratio of SGA expenses to operating revenue decreased by 1.2
percentage points to 23.7%.
R&D expenditures
, which are included in cost of sales and SGA expenses, increased 13.4% to ¥51.5
billion, representing 7.3% of operating revenue. The increase primarily reflected R&D activities to
enhance our technological advantage in our strategic products such as car navigation systems,
plasma displays, DVD recorders and OLED displays.
Loss on sale and disposal of fixed assets
decreased by ¥1.1 billion. The decrease was mainly
attributable to losses recorded in fiscal 2003 for the conversion of optical disc production
facilities at the Yamanashi Plant, Japan into plasma display panel production facilities.
Other deductions
decreased from ¥3.4 billion to ¥1.6 billion. Foreign exchange loss decreased by
¥0.8 billion to a ¥1.2 billion loss from ¥2.0 billion loss in fiscal 2003. The losses in fiscal
2004 primarily arose from conversion of U.S. dollar receivables into yen due to the yen's
appreciation against the U.S. dollar during fiscal 2004, although such losses decreased when
compared with losses incurred in fiscal 2003. Write-down of investments decreased by ¥1.2 billion
to ¥0.2 billion from ¥1.4 billion losses recorded in fiscal 2003. During fiscal 2004, the prices of
stock in our portfolio recovered, and significant write-downs were not recorded.
Income before income taxes
Income before income taxes in fiscal 2004 increased 49.0% to ¥41.8 billion from ¥28.1 billion in
fiscal 2003, mainly due to increased operating income.
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Income taxes
Income taxes as a percentage of pre-tax income (the effective tax rate) was 44.4%, an increase of
12.2 percentage points compared with 32.2% in fiscal 2003 and was 2.4% higher than the normal
statutory tax rate of 42.0% in Japan. In fiscal 2003, valuation allowances, which had been provided
for a tax benefit, the realization of which had been judged as unlikely, were reversed as
profitability of subsidiaries particularly in Japan improved. The reversal was the main reason for
the lower effective tax rate for fiscal 2003. The 2.4% deviation from the normal statutory tax rate
was due mainly to ¥0.7 billion in charges resulting from the settlement of a proposed assessment
from U.S. tax authorities, and losses incurred at certain subsidiaries. Meanwhile, a 1.0% reduction
of the tax rate in Japan effective from fiscal 2005 had an effect of increasing deferred income
taxes by ¥0.4 billion and by ¥0.8 billion in fiscal 2004 and 2003, respectively.
Equity in losses of affiliated companies
Equity in losses of affiliated companies was ¥2.2 billion in fiscal 2004 compared with ¥3.1 billion
in fiscal 2003. The decrease in loss is mainly attributable to the decrease of research and
development costs incurred by ELDis, Inc.
Income from continuing operations
Income from continuing operations in fiscal 2004 increased 27.7% to ¥20.4 billion from ¥15.9
billion in fiscal 2003 mainly due to the increase in operating income.
Income from discontinued operations, net of tax
Income from discontinued operations, net of tax, of ¥4.5 billion in fiscal 2004 is comprised mainly
of a ¥1.8 billion gain on the sale of discontinued operations and ¥2.3 billion tax benefit
primarily in connection with loss on investments in stocks of subsidiaries sold. ¥0.1 billion in
fiscal 2003 solely represented net income of the subsidiaries sold.
Net income
Net income in fiscal 2004 was ¥24.8 billion, a 54.5% increase compared with fiscal 2003's ¥16.1
billion. Basic net income per share of common stock in fiscal 2004 was ¥141.58, compared with
¥90.24 in fiscal 2003. Diluted net income per share in fiscal 2004 was ¥140.52 compared with ¥90.24
in fiscal 2003.
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Table of Contents
Segment information
The following segment information was prepared pursuant to relevant regulations under the
Securities and Exchange Law of Japan, which has been disclosed in Japan, and is not in accordance
with U.S. GAAP.
Business Segments
Year ended March 31, 2005
Corporate and
Home Electronics
Car Electronics
Patent Licensing
Others
Eliminations
Consolidated
(In millions of yen)
Operating revenue:
Unaffiliated customers
¥
301,228
¥
303,410
¥
10,237
¥
118,773
—
¥
733,648
Inter-segment
1,960
1,321
1,362
39,725
¥
(44,368
)
—
Total
¥
303,188
¥
304,731
¥
11,599
¥
158,498
¥
(44,368
)
¥
733,648
Segment income (loss)
¥
(22,127
)
¥
18,591
¥
9,389
¥
(272
)
¥
(2,989
)
¥
2,592
Identifiable assets
¥
227,567
¥
167,346
¥
2,852
¥
106,101
¥
221,301
¥
725,167
Depreciation and
amortization
¥
21,388
¥
12,514
¥
311
¥
9,299
¥
3,478
¥
46,990
Capital expenditures
(additions to fixed assets)
¥
32,261
¥
12,358
—
¥
10,299
¥
9,568
¥
64,486
Year ended March 31, 2004
Corporate and
Home Electronics
Car Electronics
Patent Licensing
Others
Eliminations
Consolidated
(In millions of yen)
Operating revenue:
Unaffiliated customers
¥
281,482
¥
292,187
¥
11,821
¥
115,395
—
¥
700,885
Inter-segment
1,399
2,460
2,057
36,860
¥
(42,776
)
—
Total
¥
282,881
¥
294,647
¥
13,878
¥
152,255
¥
(42,776
)
¥
700,885
Segment income
¥
3,247
¥
29,963
¥
11,398
¥
2,273
¥
292
¥
47,173
Identifiable assets
¥
182,001
¥
158,913
¥
3,447
¥
109,582
¥
268,599
¥
722,542
Depreciation and
amortization
¥
15,858
¥
13,798
¥
362
¥
8,272
¥
2,621
¥
40,911
Capital expenditures
(additions to fixed assets)
¥
32,783
¥
13,648
¥
248
¥
7,340
¥
4,434
¥
58,453
Note:
Effective from fiscal 2005, the Company presented segment income (loss) as operating revenue
less cost of sales, selling, general and administrative expenses and subsidy from the
government recognized in fiscal 2005 in connection with transfer of substitutional portion of
employee welfare pension plan to Japanese government. Previously reported amounts for fiscal
2004 have been reclassified accordingly.
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Table of Contents
Income (loss) by business segments
Home Electronics
segment recorded a loss of ¥22.1 billion, compared to income of ¥3.2 billion in
fiscal 2004. Despite increased sales, mainly for plasma displays and DVD recorders, lowered prices for DVD
products, AV systems and plasma displays worsened gross profit margins. Clearing out inventory for
cable TV set-top boxes in North America at reduced prices also had an adverse effect to gross
profit margin.
Car Electronics
segment recorded a profit of ¥18.6 billion, down 38.0% from ¥30.0 billion in fiscal
2004. Worsened gross profit margin was the main reason. Gross profit margin decreased for car
navigation systems in the consumer market in Japan, and prices of car CD players fell worldwide.
Patent licensing
posted ¥9.4 billion profit, down 17.6% from ¥11.4 billion in fiscal 2004. Decrease
in royalty revenue is the reason for the drop in profit.
Others
recorded a loss of ¥0.3 billion, compared with ¥2.3 billion profit in fiscal 2004. Although
profit for factory automation systems increased due to increased sales, profitability for
business-use plasma displays and organic light-emitting diode display panels suffered from
decreased sales.
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Table of Contents
Geographic Segments
Year ended March 31, 2005
Corporate and
Japan
North America
Europe
Other Regions
Eliminations
Consolidated
(In millions of yen)
Operating revenue:
Unaffiliated customers
¥
300,722
¥
171,961
¥
149,117
¥
111,848
—
¥
733,648
Inter-area
294,922
5,405
805
176,198
¥
(477,330
)
—
Total
¥
595,644
¥
177,366
¥
149,922
¥
288,046
¥
(477,330
)
¥
733,648
Segment income (loss)
¥
(9,010
)
¥
(1,716
)
¥
(308
)
¥
7,029
¥
6,597
¥
2,592
Identifiable assets
¥
315,252
¥
60,799
¥
60,463
¥
112,312
¥
176,341
¥
725,167
Depreciation and
amortization
¥
31,880
¥
2,394
¥
2,444
¥
6,794
¥
3,478
¥
46,990
Capital expenditures
(additions to fixed assets)
¥
44,730
¥
1,953
¥
1,005
¥
7,230
¥
9,568
¥
64,486
Year ended March 31, 2004
Corporate and
Japan
North America
Europe
Other Regions
Eliminations
Consolidated
(In millions of yen)
Operating revenue:
Unaffiliated customers
¥
294,198
¥
168,194
¥
145,390
¥
93,103
—
¥
700,885
Inter-area
278,071
8,082
967
182,929
¥
(470,049
)
—
Total
¥
572,269
¥
176,276
¥
146,357
¥
276,032
¥
(470,049
)
¥
700,885
Segment income
¥
22,003
¥
11,487
¥
2,015
¥
9,511
¥
2,157
¥
47,173
Identifiable assets
¥
233,601
¥
46,034
¥
61,754
¥
99,237
¥
281,916
¥
722,542
Depreciation and
amortization
¥
26,014
¥
2,450
¥
2,130
¥
7,696
¥
2,621
¥
40,911
Capital expenditures
(additions to fixed assets)
¥
40,314
¥
2,650
¥
2,113
¥
8,942
¥
4,434
¥
58,453
Notes:
1.
Operating revenue reported in geographic segment information above represents that of
Pioneer and its domestic subsidiaries in Japan, and each subsidiary in North America, Europe,
and Other Regions.
2.
Effective from fiscal 2005, the Company presented segment income (loss) as operating revenue
less cost of sales, selling, general and administrative expenses and subsidy from the
government recognized in fiscal 2005 in connection with transfer of substitutional portion of
employee welfare pension plan to Japanese government. Previously reported amounts for fiscal
2004 have been reclassified accordingly.
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B. Liquidity and capital resources
Cash flows
Summarized Consolidated Statements of Cash Flows
Year ended March 31
2004
2005
(In millions of yen)
Net cash provided by operating activities
¥
60,378
¥
19,946
Net cash used in investing activities
(52,754
)
(93,516
)
Net cash provided by (used in) financing activities
51,827
(4,019
)
Effect of exchange rate changes on cash and cash equivalents
(9,512
)
1,851
Net increase (decrease) in cash and cash equivalents
¥
49,939
¥
(75,738
)
Net cash provided by operating activities in fiscal 2005 was ¥19.9 billion, a decrease of ¥40.4
billion compared to fiscal 2004. Net loss and changes in operating assets and liabilities were the
primary cause for the decreased cash flows from operating activities. Among operating assets and
liabilities, trade receivables increased due to increases in net sales. Inventories decreased
primarily for plasma displays, AV systems, recordable DVD drives for PCs and factory automation
systems, reflecting our effort to control and reduce inventories.
Net cash used in investing activities was ¥93.5 billion for fiscal 2005, an increase of ¥40.8
billion compared to ¥52.8 billion in fiscal 2004. The difference was mainly the result of payments
for an acquisition of a plasma display production subsidiary, and an increase in the investments
for expansion of plasma display production facilities.
Net cash used in financing activities was ¥4.0 billion, compared with ¥51.8 billion cash provided
in fiscal 2004. Financing activities in fiscal 2004 included issuance of zero coupon convertible
bonds (bonds with stock acquisition rights) due 2011 with net proceeds of ¥60.5 billion. In fiscal
2005, cash was used primarily for reducing long-term debt, payment of dividends and repurchase of
shares of Pioneer's common stock. On the other hand, short-term borrowings increased. Cash used in
reducing long-term debt including capital lease obligations was ¥6.2 billion. Cash used in dividend
payments amounted to ¥4.4 billion, almost the same level of fiscal 2004. Also, ¥2.0 billion was
used for repurchase of shares of Pioneer's common stock.
As a result of these activities and the effect of changes in exchange rate on cash and cash
equivalents of overseas subsidiaries, cash and cash equivalents decreased by ¥75.7 billion to
¥116.7 billion at the end of fiscal 2005, from ¥192.4 billion at the end of fiscal 2004.
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Table of Contents
Capital requirements
Our requirements for operating capital primarily are for the purchase of raw materials and parts
for manufacturing our products. Also, operating expenses, including manufacturing expenses and
selling, general and administrative expenses, require a substantial amount of operating capital.
Payroll and payroll-benefits, and marketing expenses, such as those for advertising and sales
promotion, account for a primary portion of operating expenses. Our expenditure for R&D is recorded
as a part of various operating expenses, and payroll for R&D-related personnel accounts for a
material portion of R&D expenses.
We believe that our ability to generate positive operating cash flows and liquidity discussed in
the following financial management section provide sufficient resources to fund future operating
capital requirements and capital expenditures.
Financial management
At present, funds required for operating capital and capital expenditure are generally financed
through internally generated cash and debt or equity financing. With regard to debt financing,
short-term debt financing with maturity of one year or less is utilized to fund operating capital
requirements. Short-term borrowing is generally arranged locally by each consolidated subsidiary
based on its capital requirements. As of March 31, 2005, short-term borrowings of ¥33.2 billion
were principally in Japanese yen, U.S. dollar, and euro. On the other hand, to finance long-term
funding requirements such as investment in production facilities, financing through debt and equity
securities markets are arranged in Japan, and long-term borrowing from financial institutions is
arranged locally by each consolidated subsidiary. As of March 31, 2005, substantially all of the
long-term debt of ¥100.5 billion, including the portion due within one year, was comprised of ¥61.8
billion zero coupon convertible bonds due 2011 including ¥1.8 billion unamortized issue premium,
¥15.0 billion unsecured bonds due 2005, ¥10.0 billion unsecured bonds due 2008, and capital lease
obligations and other loans arranged locally.
During fiscal 2004, we issued zero coupon convertible bonds due 2011 in aggregate principal amount
of ¥60.0 billion to finance capital requirements for expansion of plasma display business and
enhancement of distribution channels.
During fiscal 2005, we repurchased 1,000,000 shares of Pioneer's common stock in the market for
¥2.0 billion pursuant to the resolution of the board of directors in March 2005.
We believe that our sound financial position and ability to generate positive operating cash flows,
together with uncommitted and unused credit lines of ¥235.1 billion, provide sufficient resources
to fund future requirements for operating capital and for capital expenditures to sustain the
growth of Pioneer. Also, the parent company and its four subsidiaries in Japan and China have
entered a three-year global credit facility agreement for the amount of ¥70.0 billion effective
from May 2005. This will ensure that these companies in Japan and China have an efficient and
stable financing for their operational funding needs.
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C. Research and development, patents and licenses, etc.
Our R&D activities have played a crucial role in the development of our business. Our R&D program
currently centers on high-density recording, flat-panel displays, digital signal processing,
information/communications, and core LSIs. In fiscal 2003, 2004 and
2005, our R&D expenses were
¥45,388 million, ¥51,483 million and ¥55,897 million, respectively, or 6.7%, 7.3% and 7.6%,
respectively, of our operating revenue. We currently plan to continue to spend more than 6% of
operating revenue on R&D each year.
Our research and development of new technologies is carried out mainly in Japan at the Corporate
Research & Development Laboratories, as well as the Optical Disc & Systems Development Center,
Information & Communication Development Center, PDP Development Center and Mobile Systems
Development Center. At Pioneer Research Center USA, Inc. ("PRA"), one of our overseas wholly-owned
subsidiaries, we are also actively engaged in research of new technologies, and development of
system software related to digital TV and of digital network technologies. At another wholly-owned
overseas subsidiary in the United Kingdom, Pioneer Digital Design Centre, Ltd., we are researching
cutting-edge technologies related to digital TV for use in Europe. Product development and
production improvement activities are the responsibility of each business unit, and are carried out
in our various manufacturing facilities both in Japan and overseas.
Venturing to Innovate Flexible Displays
The Integrative Industry-Academia Partnership, including Mitsubishi Chemical Corporation, Rohm Co.,
Ltd. and Pioneer Corporation, with Kyoto University at the core, has developed two components for
flexible displays: an organic light-emitting transistor (OLET) and the world's first transparent
substrate made of Bio Nanofiber with a low thermal expansion coefficient. Pioneer's expertise in
organic electronics devices has greatly contributed to this development.
The OLET has an electroluminescence (EL) function built into an organic transistor. Due to its
embedded driver transistors and light-emitting devices, a display device comprised of OLETs
requires substantially fewer components than a conventional organic EL display. The substrate, Bio
Nanofiber Composite, reinforces transparent polymer with microscopic nanofibers derived from
bacteria. It features a low thermal expansion to prevent circuit breakage or damage in the circuit
mounting process. These innovations not only hold great promise to make display devices more
light, flexible and durable; they also come at an opportune time for the next digital generation of
new mobile devices, e-books, e-newspapers, e-posters and other display products coming through the
commercial pipeline to gain traction in the global marketplace.
D. Trend information
The following is a description of the most significant recent trends in each of our business
segments.
Home Electronics
Traditional audio/video products continue to be exposed to downward price pressure and slower
sales. This, in turn, has negatively impacted our production levels and our inventory. We have
responded and expect to continue to respond to such downward pressure in sales and production
through the introduction of new value-added products and models in Home Electronics, including home
theater systems, DVD-related products and plasma displays.
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DVD recorders.
Although the DVD recorder market is expanding and our sales in it are increasing,
we, exposed to falling prices, increasing competitors and evolving product functionality, have
found it difficult to maintain a competitive advantage in this business. In order to regain
competitiveness, we plan to shorten the development time by 30% by renovating IT infrastructure and
enhancing software development efficiency. We aim for twice-a-year launches of new models
simultaneously worldwide. We plan to cut manufacturing lead time and reduce inventory through a new
production system which integrates all stages of DVD product manufacturing, from laser pickups to
finished products, at our Dongguan facilities in China. We will thereby reduce costs and timely
release attractive products that meet customer demands.
Recordable DVD drives.
Our recordable DVD drives for PCs generate sales. However, competitors in
Taiwan and South Korea are dropping prices aggressively on increasingly competitive products, so we
cannot expect a return to earlier levels of high profitability. We plan to increase our share and
maintain profit margins for these products, as we will focus on slim drives for notebook computers
and sell more drives to both the OEM market and the consumer market worldwide. We will also take
advantage of the strong synergy between our recordable DVD drive business and our home-use DVD
recorder business.
Plasma displays.
The large-screen display market for plasma displays has been expanding in recent
years, and there are several manufacturers in Japan and South Korea. As competition for market
shares is higher, the product prices continue to decrease rapidly. In the market for displays
under the 40-inch size, plasma displays are also subject to increasingly intense competition from
liquid crystal displays. Currently, demand for plasma displays consists of those for standard
models and high-definition models. We expect that shifting from analog TV broadcasting to digital
will increase demand for high-definition plasma displays. As a result of this trend, we plan to
focus on new products such as 40-inch and larger models, which have higher resolution.
Japan Electronics and Information Technology Industries Association ("JEITA") forecasts an
approximately 28% increase in consumer DVD player and DVD recorder sales worldwide, from 85 million
units in 2004 to 109 million in 2009, and strong growth in recordable DVD drives from 54 million
units in 2004 to 127 million units in 2007 worldwide. It also forecasts that sales of plasma
displays worldwide will increase 5 times, from 2.3 million units in 2004 to 11.6 million in 2009.
Car Electronics
Severe competition in the car electronics business worldwide has led to strong downward pressure on
prices. However, the popularity of car navigation systems, which we believe is a major area of our
operations, continues to increase. In Japan, the increase in demand for car navigation systems has
been conspicuous and the markets in North America and Europe show signs of expansion. In both
markets we introduced in the spring of 2004 compact 1-DIN-sized units featuring all car navigation
system functions as well as those for CD/MP3/DVD-Video playback. We plan to integrate functions
for car navigation, audio/video control and information gathering inside and outside the vehicle,
creating systems that are compatible with both home and mobile environments. In the car audio
business, we will strengthen our activity in growing markets such as Brazil, Russia, India and
China.
There is also a trend in the car electronics industry that OEM sales to car manufacturers are
increasing. We intend to increase our efforts to market ourselves towards such car manufacturers
and strengthen our foothold in OEM sales as well.
JEITA forecasts that sales of car navigation systems worldwide will increase approximately 2 times,
from 6 million units in 2004 to 11 million in 2009.
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Patent Licensing
In the current patent business environment, nearly every company follows a policy of actively
protecting their patent rights, and the number of patent lawsuits has increased considerably. The
value of patents is increasingly recognized, and companies are seeking to maximize the utility of
their patents through the transfer or licensing of patent rights. While poor economic conditions
favor purchasers of patent rights, purchase prices generally are increasing because of the growing
importance of such intellectual property.
Our royalty revenue from the worldwide licensing of patents relating to laser optical disc
technologies has declined substantially from previous years, as a significant portion of our
patents in Japan and Europe has expired. See "Item 4.B. Business overview—Nature of
operations—
Patent licensing
" for more information on our patent licensing business.
Others
OLED displays
. With the entry of other companies, market competition in OLED displays is becoming
even more intense, while each company in this market is proceeding with the development of
full-color OLED displays.
E. Off-balance sheet arrangements
We provide guarantees to third parties who provide loans to our affiliated companies. For each
guarantee, we would have to pay the guaranteed amount, if our affiliated companies were to default
on a payment within contract periods of one year to eight years. The maximum potential amount of
undiscounted future payments we could be required to make under the guarantee is ¥25.4 billion as
of March 31, 2005. Out of this ¥25.4 billion, ¥25.0 billion is a guarantee for ELDis, Inc. which
manufactures and markets thin film transistor substrates for active-matrix OLED, which is one of
our new products. ELDis, Inc. is 47.5% owned by Tohoku Pioneer Corporation, a 67% owned subsidiary
and is accounted for by the equity method of accounting.
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F. Tabular disclosure of contractual obligation
The following summarizes our contractual obligations at March 31, 2005.
Payment Due by Period
Less than
More than
Total
1 year
1-3 years
3-5 years
5 years
(In billions of yen)
Contractual obligations:
Long-term debt
98.7
19.3
6.0
11.4
62.0
Operating leases
19.7
6.3
8.5
2.3
2.6
Purchase commitment
4.0
4.0
Interest payments
1.9
0.7
0.9
0.2
0.1
Contribution to
defined benefit
plans
6.5
6.5
Notes:
1.
Total long-term debt of ¥98.7 billion does not include ¥1.8 billion
unamortized issue premium on convertible bonds.
2.
Long-term debt includes capital lease obligations.
3.
Contractual obligations do not include ¥0.7 billion deferred income which is presented as
other long-term liabilities on the consolidated balance sheet.
4.
The amount that the Company will contribute under its defined pension plans are based on a
number of factors, primarily rate of salary increase and the number of employees. As such,
the Company has estimated the amount of such contribution for the year ending March 31, 2006
and not the contribution for the years thereafter.
The ¥4.0 billion purchase commitment outstanding as of March 31, 2005 was for property, plant and
equipment and advertising. This included a part of our ¥47.0 billion capital expenditure plan in
fiscal 2006. The planned decrease in capital expenditures from ¥63.9 billion in fiscal 2005 mainly
reflects decrease of investment in production facilities for plasma displays.
New Accounting Standards
Inventory Costs
In November 2004, the FASB issued SFAS No. 151, "Inventory Costs — an amendment of ARB No. 43,
Chapter 4." SFAS No. 151 clarifies the language used in Accounting Research Bulletin No. 43 with
respect to accounting for abnormal amounts of idle facility expenses, freight, handling costs and
spoilage. SFAS No. 151 is effective for fiscal years beginning after June 15, 2005, and is required
to be adopted by the Company effective April 1, 2006. The adoption of this standard is not expected
to have any material impact on the Company's consolidated statements of operations or financial
position.
Exchanges of Nonmonetary Assets
In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets — an amendment of
Accounting Principles Board ("APB") Opinion No. 29," which will become effective for nonmonetary asset exchanges occurring in
fiscal periods beginning after June 15, 2005. APB Opinion No. 29
generally requires that exchanges of nonmonetary assets be measured based on fair value of the
assets exchanged but provided an exception for nonmonetary exchanges of similar productive assets,
which did not result in a change in carrying value for the new asset acquired even if the cash
flows
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resulting from the exchange would change significantly. SFAS No. 153 eliminates the exception for
nonmonetary exchanges of similar productive assets and replaces it with a general exception for
exchanges of nonmonetary assets that do not have commercial substance. Nonmonetary exchanges lack
commercial substance if the cash flows to the entity will not change significantly as a result of
the exchange. The adoption of this standard is not expected to have any material impact on the
Company's consolidated statements of operations or financial position.
Share-Based Payment
In December 2004, the FASB issued SFAS No. 123 (revised 2004), "Share-Based Payment." The revised
SFAS No. 123 supersedes APB Opinion No. 25, which requires recognition of an expense when goods or
services are provided, and eliminates the ability to account for these instruments under the
intrinsic value method prescribed by APB Opinion No. 25, and allowed under the original provisions
of SFAS No. 123. The adoption of this standard is not expected to have any material impact on the
Company's consolidated statements of operations or financial position because the Company accounts
for its stock-based compensation agreements using the fair value based method, not the intrinsic
value method prescribed by APB Opinion No. 25.
The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments
In March 2004, the EITF confirmed as a consensus EITF Issue No. 03-1, "The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments" ("EITF 03-1"). The
objective of this issue is to provide guidance on determining when an investment is considered
impaired, whether that impairment is other-than-temporary, and the measurement of an impairment
loss. The guidance also includes accounting considerations subsequent to the recognition of an
other-than-temporary impairment and requires certain disclosures about unrealized losses that have
not been recognized as other-than-temporary impairments. In September 2004, the FASB issued FASB
Staff Position EITF 03-1-1 that delays the effective date for the measurement and recognition
guidance included in EITF 03-1. The disclosures required by EITF 03-1 have not been deferred and
are effective for the annual periods ending after June 15, 2004.
Accounting for Conditional Asset Retirement Obligations
In March 2005, the FASB issued FIN No. 47, "Accounting for Conditional Asset Retirement
Obligations—an interpretation of FASB Statement No. 143" FIN No.47 clarifies that the term
"conditional asset retirement obligation" as used in SFAS No. 143, "Accounting for Asset Retirement
Obligations," refers to a legal obligation to perform an asset retirement activity in which the
timing and (or) method of settlement are conditional on a future event that may or may not be
within the control of the entity. The obligation to perform the asset retirement activity is
unconditional even though uncertainty exists about the timing and (or) method of settlement. SFAS
No. 143 acknowledges that in some cases, sufficient information may not be available to reasonably
estimate the fair value of an asset retirement obligation. FIN No. 47 also clarifies when an entity
would have sufficient information to reasonably estimate the fair value of an asset retirement
obligation. FIN No. 47 is effective no later than the end of fiscal years ending after December 15,
2005. The Company has not completed the study of what effect FIN No. 47 will have on its financial
position and results of operations.
Accounting Changes and Error Corrections
In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections—a replacement
of APB Opinion No. 20 and FASB Statement No. 3." SFAS No. 154 replaces APB No. 20, "Accounting
Changes," and SFAS No. 3, "Reporting Accounting Changes in Interim Financial
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Statements," and changes the requirements for the accounting for and reporting of a change in
accounting principle. SFAS No. 154 applies to all voluntary changes in accounting principle. SFAS
No. 154 also applies to changes required by an accounting pronouncement in the unusual instance
that the pronouncement does not include specific transition provisions. SFAS No. 154 is effective
for accounting changes and corrections of errors made in fiscal years beginning after December 15,
2005, with earlier adoption permitted. Accordingly, the Company can not reasonably estimate the
ultimate impact of SFAS No. 154.
Item 6. Directors, Senior Management and Employees
A. Directors and senior management
Pioneer's Directors, Executive Officers and Corporate Auditors as of September 1, 2005, and their
pertinent information, such as position and business experience, are as follows:
Directors
Name
Current Position
(Date of birth)
(Month and year of expiration)
Prior Position
Kanya Matsumoto
(June 12, 1930)
Chairman and Representative Director
(June 2006)
June 1996:
Vice Chairman and Representative
Director
Kaneo Ito
(Apr. 30, 1936)
President and Representative
Director;
Chief Executive Officer
(June 2006)
June 1991:
Senior Managing Director and
Representative Director; General
Manager of International Business
Group; and in charge of overseas
operations and Public Relations
Division
Tamihiko Sudo
(Apr. 28, 1947)
Executive Vice President and
Representative Director;
Chief Financial Officer; and
in charge of Corporate
Strategy Planning Group, Corporate Management Group,
Export Management and Quality
Control in general
(June 2006)
June 2004:
Senior Managing Director and
Representative Director; President
of Pioneer's Mobile Entertainment
Company
Akira Niijima
(Mar. 9, 1944)
Senior Managing Director and
Representative Director; in
charge of Japanese domestic
subsidiaries
(June 2006)
June 2004:
Senior Managing Director and
Representative Director;
Chief Financial Officer; and
in charge of administration and
export management in general
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Name
Current Position
(Date of birth)
(Month and year of expiration)
Prior Position
Hajime Ishizuka
(May 3, 1947)
Senior Managing Director and
Representative Director;
President of Pioneer's Home
Entertainment Business Company and AV Business
Company; and in charge of
Procurement Group
(June 2006)
June 2003:
Director; President of Pioneer's
Components Business Company; and in
charge of International Business
Division
Osamu Yamada
(Mar. 16, 1944)
Senior Managing Director;
General Manager of Research & Development Group and
Corporate Research &
Development Laboratories
(June 2006)
June 2003:
Managing Director; General Manager
of Research & Development Group and
Corporate Research & Development
Laboratories
Tadahiro Yamaguchi
(Mar. 24, 1946)
Managing Director; Executive Vice President of Pioneer's
Plasma Display Business
Company (in charge of
technologies and production);
and Plant Manager of Ohmori
Plant
(June 2006)
June 2002:
Managing Director; Executive Vice
President of Pioneer's Home
Entertainment Company (in charge of
technologies, production and quality
control); in charge of Cable &
Satellite Systems Division; and
Plant Manager of Tokorozawa Plant
Satoshi Matsumoto
(Apr. 15, 1954)
Managing Director; General
Manager of Environmental
Preservation Group and Environmental Preservation
Division
(June 2006)
June 2002:
Managing Director; General Manager
of Environmental Preservation
Division
Koichi Shimizu
(Feb. 3, 1944)
Managing Director; Chairman
of Pioneer China Holding Co.,
Ltd.
(June 2006)
June 2004:
Managing Director; in charge of
technologies, production and quality
control in general; General Manager
of Procurement Center; and in charge
of Strategic IT Division
Yoichi Sato
(Jan. 15, 1950)
Managing Director; Deputy
General Manager of Research & Development Group and General
Manager of PDP Development
Center
(June 2006)
July 2004:
Executive Officer; Deputy General
Manager of Research & Development
Group and General Manager of PDP
Development Center
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Name
Current Position
(Date of birth)
(Month and year of expiration)
Prior Position
Akira Haeno
(Feb. 14, 1949)
Managing Director; President
of Pioneer's Mobile
Entertainment Company
(June 2006)
June 2004:
Executive Officer; Plant Manager of
Kawagoe Plant; and General Manager
of Production Division of Kawagoe
Plant of Pioneer's Mobile
Entertainment Company
Tatsuhiro Ishikawa
(Apr. 4, 1939)
Director
(June 2006)
Dec. 2001 to present:
Attorney-at-Law
Shunichi Sato
(Feb. 10, 1941)
Director
(June 2006)
Apr. 2000:
Japanese Ambassador Extraordinary
and Plenipotentiary to Belgium
Executive Officers
Name
Current Position
(Date of birth)
(Month and year of expiration)
Prior Position
Masaru Saotome
(Aug. 20, 1944)
Senior Managing Executive
Officer; President of
Pioneer's Plasma Display
Business Company
(June 2006)
June 2003:
Senior Managing
Executive Officer;
Executive Vice
President of
Pioneer's Home
Entertainment
Company (in charge
of sales and
marketing); and
General Manager of
Display Business
Division
Kazunori Yamamoto
(Oct. 21, 1942)
Senior Managing Executive
Officer; General Manager of
International Business Group
(June 2006)
June 2001:
Senior Executive
Officer; President
of Pioneer North
America, Inc.
Seiichiro Kurihara
(Mar. 15, 1943)
Senior Executive Officer;
General Manager of Intellectual Property
Division of Research &
Development Group
(June 2006)
June 2001:
Executive Officer;
General Manager of
Intellectual
Property Division
Masao Kawabata
(Aug. 10, 1948)
Senior Executive Officer;
General Manager of Corporate
Branding and Communications
Division
(June 2006)
June 2001:
Executive Officer;
General Manager of
Corporate
Communications
Division
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Name
Current Position
(Date of birth)
(Month and year of expiration)
Prior Position
Yoshio Taniyama
(Nov. 9, 1948)
Senior Executive Officer; General Manager of Corporate
Planning Division
(June 2006)
June 2001:
Executive Officer;
General Manager of
Finance Division
Hideki Okayasu
(May 12, 1950)
Senior Executive Officer; General Manager of Finance
and Accounting Division
(June 2006)
June 2001:
Executive Officer;
General Manager of
Accounting Division
Buntarou Nishikawa
(Mar. 24, 1946)
Executive Officer; Executive
Vice President of Pioneer's
Mobile Entertainment Company;
and General Manager of OEM
Sales Division
(June 2006)
June 2001:
Executive Officer;
General Manager of
Domestic Sales
Division of
Pioneer's Mobile
Entertainment
Company
Osamu Takada
(July 27, 1948)
Executive Officer; General Manager of Personnel Division
(June 2006)
June 1998:
General Manager of
Personnel Division
Sumitaka Matsumura
(Oct. 10, 1948)
Executive Officer; Deputy
General Manager of Research &
Development Group; and in
charge of Optical Disc &
Systems Development Center
(June 2006)
Jan. 2001:
Deputy General
Manager of Research
& Development
Group; and General
Manager of AV &
Network Development
Center
Chojuro Yamamitsu
(Mar. 26, 1946)
Executive Officer; Deputy
General Manager of
Environmental Preservation
Group (in charge of Eco
Products)
(June 2006)
Sept. 2002:
Executive Officer;
Deputy General
Manager of Research
& Development
Group; General
Manager of
Engineering; and in
charge of
Information &
Communication
Development Center
and PDP Development
Center
Kenji Sato
(Aug. 29, 1947)
Executive Officer; General
Manager of General
Administration Division
(June 2006)
June 1998:
General Manager of
General
Administration
Division
Susumu Kotani
(Apr. 12, 1950)
Executive Officer; Chairman & Managing Director of Pioneer
Europe NV
(June 2006)
Sept. 2002:
Managing Director
of Pioneer Europe
NV
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Name
Current Position
(Date of birth)
(Month and year of expiration)
Prior Position
Tsutomu Haga
(June 2, 1948)
Executive Officer; President
& Chief Operating Officer of
Pioneer North America, Inc.
(June 2006)
July 2003:
President & Chief
Operating Officer
of Pioneer
Electronics (USA)
Inc.
Kenji Tokuyama
(Dec. 16, 1945)
Executive Officer; Executive
Vice President of Plasma
Display Business Company (in
charge of OEM); and President of Pioneer Plasma Display
Corporation
(June 2006)
Jan. 2003:
President of NEC
Plasma Display
Corporation
Kaoru Sato
(July 27, 1948)
Executive Officer; Vice President of Home
Entertainment Business
Company; and Plant Manager of
Tokorozawa Plant
(June 2006)
June 2004:
President of
Components Business
Company of Home
Entertainment
Business Company
Keiichi Yamauchi
(Apr. 12, 1952)
Executive Officer; General
Manager of Mobile Systems
Development Center of
Research & Development Group
(June 2006)
Nov. 2003:
General Manager of
Mobile Systems
Development Center
of Research &
Development Group
Kazumi Kuriyama
(Sept. 12, 1953)
Executive Officer; Deputy
General Manager of Corporate
Research & Development
Laboratories of Research &
Development Group
(June 2006)
Sept. 2002:
General Manager of
Nano Process
Technology
Department of
Corporate Research
& Development
Laboratories of
Research &
Development Group
Corporate Auditors
Name
Current Position
(Date of birth)
(Month and year of expiration)
Prior Position
Makoto Koshiba
(Nov. 21, 1943)
Corporate Auditor (full time)
(June 2007)
Sept. 1999:
Director; General Manager of
Accounting Division; in charge of
Finance Division
Shinji Yasuda
(June 10, 1945)
Corporate Auditor (full time)
(June 2007)
July 2001:
Director; Managing Director of
Pioneer China Holding Co., Ltd.
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Name
Current Position
(Date of birth)
(Month and year of expiration)
Prior Position
Terumichi Tsuchida
(Aug. 22, 1921)
Corporate Auditor
(June 2008)
July 1998 to present:
Advisor of Meiji Yasuda Life
Insurance Company
Isao Moriya
(Sept. 5, 1937)
Corporate Auditor
(June 2007)
Mar. 1968 to present:
Certified Public Accountant
Keiichi Nishikido
(May 2, 1953)
Corporate Auditor
(June 2007)
Jan. 1994 to present:
Attorney-at-Law;
Managing Partner of Kohwa Sohgoh
Law Offices, Japan
All of the above persons, with the exception of Messrs. Tatsuhiro Ishikawa, Shunichi Sato,
Terumichi Tsuchida, Isao Moriya and Keiichi Nishikido devote themselves full time to our business.
None of the persons listed above was selected as a director, corporate auditor or member of senior
management pursuant to an arrangement or understanding with our major shareholders, customers,
suppliers or others.
Mr. Kaneo Ito is married to a first cousin of Mr. Kanya Matsumoto. Mr. Satoshi Matsumoto is a
nephew of Mr. Kanya Matsumoto. Mr. Yoshio Taniyama is a first cousin of Mr. Kanya Matsumoto and a
brother-in-law of Mr. Kaneo Ito.
B. Compensation
The aggregate amount of compensation (including bonuses and stock-based compensation) paid by
Pioneer to all Directors, Executive Officers and Corporate Auditors of Pioneer as a group for
fiscal 2005 totaled ¥1,136 million. Also, as part of Pioneer's incentive compensation, Pioneer has
issued share acquisition rights for its shares of common stock to Directors, Executive Officers,
and certain employees, and certain directors/officers of certain of its subsidiaries from fiscal
2003. See "Item 6.E. Share ownership" for further information.
The aggregate amount set aside as lump-sum severance indemnities by Pioneer during fiscal 2005 for
Directors, Executive Officers and Corporate Auditors of Pioneer totaled ¥790 million. The
aggregate amount is calculated by the formula as defined in the regulations of Pioneer concerning
the retirement allowance. Provision is made for lump-sum severance payments for Directors,
Executive Officers and Corporate Auditors of Pioneer on a basis considered adequate for such future
payments as may be approved by the shareholders. (See Note 10 in "Notes to Consolidated Financial
Statements.")
C. Board practices
Pioneer's Articles of Incorporation provide for a Board of Directors of three or more members and
for three or more Corporate Auditors. All Directors and Corporate Auditors are elected at general
meetings of shareholders. In general, under the Articles of Incorporation of Pioneer, the term of
office of Directors expires at the conclusion of the ordinary general meeting of shareholders held
with respect to the last closing of accounts within one year after their assumption of office and
in the case of Corporate Auditors, within four years after their assumption of office; however,
Directors and Corporate Auditors may serve any number of consecutive terms. For information
regarding the expiration of the term of office for each of the Directors and Corporate Auditors,
see "Item 6.A. Directors and senior management."
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The Directors constitute the Board of Directors, which has the ultimate responsibility for
administration of our affairs. The Board of Directors may elect from among its members a Chairman
and Director, a Vice Chairman and Director, a President and Director, one or more Executive Vice
Presidents and Directors, Senior Managing Directors and Managing Directors. From among the
Directors referred to above, the Board of Directors elects one or more Representative Directors.
Each of the Representative Directors has the authority to individually represent Pioneer in the
conduct of its affairs.
Pioneer introduced a Corporate Executive Officer (
shikko yakuin
) system in June 1999 to improve
management efficiency and speed up decision-making. Executive Officers are basically elected at
the meeting of the Board of Directors held immediately after the ordinary general meeting of
shareholders. In general, the term of office of Executive Officers expires at the conclusion of
the ordinary general meeting of shareholders held with respect to the last closing of accounts
within one year after their assumption of office. For information regarding the expiration of the
term of office of each of the Executive Officers, see "Item 6.A. Directors and senior management."
The Board of Directors may elect from among Executive Officers one or more Senior Managing
Executive Officers and Senior Executive Officers. Each of the Executive Officers has the authority
to individually operate businesses of which he or she is in charge under the control of the Board
of Directors and Representative Directors.
The Corporate Auditors of Pioneer are not required to be certified public accountants. However, at
least one of the Corporate Auditors is required to be a person who has not been a director,
executive officer, general manager or employee of Pioneer or any of its subsidiaries during the
five-year period prior to his or her election as a Corporate Auditor. After the conclusion of the
ordinary general meeting of shareholders to be held with respect to the first fiscal year ending on
and after May 1, 2005, at least half of the Corporate Auditors will be required to be persons who
have not been a director, executive officer, general manager or employee of Pioneer or any of its
subsidiaries at any time prior to their election as Corporate Auditors. The Corporate Auditors may
not at the same time be directors, executive officers, general managers or employees of Pioneer or
any of its subsidiaries.
Each Corporate Auditor has the statutory duty to supervise the administration by the Directors of
Pioneer's affairs and also to examine financial statements and business report to be submitted by a
Representative Director at the general meeting of shareholders. They shall attend meetings of the
Board of Directors but are not entitled to vote. In addition to Corporate Auditors, independent
certified public accountants or an audit corporation must be appointed by general meetings of
shareholders. Such independent certified public accountants or audit corporation have, as their
primary statutory duties, the duties to examine the financial statements proposed to be submitted
by a Representative Director at general meetings of shareholders and to report their opinion
thereon to the Board of Corporate Auditors and the Representative Director.
The Corporate Auditors constitute the Board of Corporate Auditors. The Board of Corporate Auditors
has a statutory duty to prepare and submit its audit report to a Representative Director each year.
A Corporate Auditor may note his or her opinion in the audit report if his or her opinion is
different from the opinion expressed in the audit report. The Board of Corporate Auditors is
empowered to establish audit principles, method of examination by Corporate Auditors of Pioneer's
affairs, and financial position and other matters concerning the performance of the Corporate
Auditors' duties.
There are no contractual arrangements providing for benefits to Directors upon termination of
service. Also see "Item 10.B. Memorandum and articles of association—Directors."
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Significant Differences in Corporate Governance Practices Between Pioneer Corporation and U.S.
Companies Listed on the NYSE
Companies listed on the NYSE must comply with certain listing
standards regarding corporate governance ("NYSE Corporate Governance"). Listed companies that are
foreign private issuers, such as Pioneer, however, are permitted to
follow home country practices in lieu of NYSE Corporate Governance.
Pioneer's corporate
governance practices which comply with Japanese laws, regulations and stock exchange rules, and
NYSE Corporate Governance followed by U.S. listed companies have the following significant
differences:
Directors
Pioneer currently has two (2) non-executive directors on its board of directors who satisfy the
requirements of "outside directors" under the Commercial Code of Japan. "Outside director" is
defined as a director who does not engage in the execution of business operations of a company and
who (i) has not been a director responsible for the execution of business operations, executive
officer, manager or employee of the company or any of its subsidiaries, and (ii) is not a director
responsible for the execution of business operations or executive officer of any subsidiary of the
company, and (iii) is not a manager or other employee of the company or any of its subsidiaries.
The Commercial Code of Japan and related legislation (including the Law concerning Exceptional
Measures to the Commercial Code with respect to Auditing, etc. of Joint Stock Corporations (the
"Special Exception Law"), and collectively, the "Code") do not require Japanese companies with
boards of corporate auditors, such as Pioneer, to have any independent (in the meaning given by
the NYSE listing standards) or outside (in the meaning given by the Code) directors on their boards
of directors. Consistent with most Japanese companies, but unlike NYSE Corporate Governance, Pioneer's non-management directors do not hold regularly scheduled sessions without management.
Moreover, the Code does not require, and accordingly Pioneer does not have, an internal
corporate body or committee comprised of only independent or outside directors.
Committees
Under the Code, Pioneer has elected to structure its corporate governance system as a company
with a board of corporate auditors, which has a statutory duty to monitor, review and report on the
administration of the affairs as well as accounts of Pioneer. Pioneer, consistent with
other Japanese companies with boards of corporate auditors, but unlike NYSE Corporate Governance,
does not have specified committees, including those that are responsible for director nomination,
corporate governance and executive compensation.
Pursuant to the Code, Pioneer's board of directors nominates and submits a proposal for
election of directors for shareholder approval. The shareholders elect directors by a simple
majority of votes at Pioneer's general meeting of shareholders. The Code requires that the
total amount of remuneration to be paid to all directors and the total amount of remuneration to be
paid to all corporate auditors must be determined by a resolution of the general meeting of
shareholders, unless their remuneration is provided for in the Articles of Incorporation. The
distribution of remuneration among directors is broadly delegated to the board of directors and the
distribution of remuneration among corporate auditors is determined by consultation among the
corporate auditors.
Audit Committee
Pioneer avails itself of paragraph (c) (3) of Rule 10A-3 of the U.S. Securities Exchange Act of
1934 as amended, which provides a general exemption from the audit committee requirements for
foreign
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private issuers with a board of corporate auditors, subject to certain requirements which continue
to be applicable under Rule 10A-3.
Consistent
with the requirements of the Code, Pioneer elects its corporate auditors by a
resolution at a general meeting of shareholders. Pioneer currently has five (5) corporate
auditors, which exceeds a minimum of three (3) corporate auditors required by the Code.
Unlike NYSE Corporate Governance, the Code, among others, does not require corporate auditors to
have expertise in accounting or other special knowledge and experience. Under the Code, the board
of corporate auditors may determine the auditing policies, method of investigating the conditions
of the business and the assets of a company, and may resolve other matters concerning the execution
of the corporate auditor's duties, prepare corporate auditors' reports and give consent to
proposals of the nomination of corporate auditors and accounting auditors. Corporate auditors may
not at the same time be directors, executive officers, managers or employees of Pioneer or any
of its subsidiaries.
Unlike NYSE Corporate Governance, the Special Exception Law currently requires at least one of the
corporate auditors of a company must be a person who has not been a director, executive officer,
manager or employee of the company or any of its subsidiaries during the five-year period prior to
such corporate auditor's election. However, after the conclusion of the ordinary general meeting of
shareholders to be held with respect to the first fiscal year ending on and after May 1, 2005, at
least half of the corporate auditors must be persons who have not been directors, executive
officers, managers or employees of the company or any of its subsidiaries at any time prior to such
corporate auditors' election. Pioneer already has, out of a total of five (5) corporate
auditors, three (3) "outside auditors" who satisfy such new requirements.
Corporate Governance Guidelines
Unlike NYSE Corporate Governance, under Japanese laws and regulations, including the Code and the
Securities and Exchange Law and stock exchange rules, Pioneer is not required to adopt or
disclose corporate governance guidelines. However, Pioneer is required to disclose policies and
the present status of its corporate governance in its annual securities report and certain other
disclosure documents in accordance with the Securities and Exchange Law of Japan and regulations
thereunder, and stock exchange rules in respect of timely disclosure.
Code of Business Conduct and Ethics
Unlike NYSE Corporate Governance, under Japanese laws and regulations, including the Code and the
Securities and Exchange Law and stock exchange rules, Pioneer is not required to adopt or
disclose a code of business conduct and ethics for directors, officers and employees. However, Pioneer maintains a "Pioneer Group Code of Conduct" which Pioneer believes is consistent with
the code of ethics described under Section 406 of the U.S. Sarbanes-Oxley Act of 2002. See "Item
16B. Code of Ethics."
Shareholder Approval of Equity Compensation Plans
Unlike NYSE Corporate Governance, in which material revisions to equity-compensation plans of the
listed companies are subject to shareholder approval, pursuant to the Code, if Pioneer desires
to adopt an equity-compensation plan in which stock acquisition rights are granted on specially
favorable terms to the plan's recipients, then Pioneer must obtain shareholder approval by a
"special resolution" of a general meeting of shareholders, where the quorum is one-third of the
total number of voting rights and the approval of at least two-thirds of the voting rights represented at the
meeting is required.
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D. Employees
The following table sets forth the number of our employees at the end of the period indicated.
Year ended March 31
2003
2004
2005
Number of employees
34,656
36,360
39,362
Pioneer and nine of its subsidiaries in Japan have their respective labor unions for the employees
of each company. Each such labor union is affiliated with the Japanese Electrical Electronic &
Information Union. All employees except management, supervisory and certain other employees must
become union members. We have not been materially affected by any work stoppages or difficulties
in connection with labor negotiations or disputes and consider our labor relations to be good.
E. Share ownership
The total number of shares of Pioneer's common stock owned by our Directors, Executive Officers and
Corporate Auditors as a group as of June 30, 2005 is as follows:
Title of class
Identity of person or group
Number of shares owned
Percent of class
Common Stock
Directors, Executive
Officers and Corporate
Auditors as a group
3,448,892 shares*
1.91
%
*
Except for Mr. Kanya Matsumoto, Chairman of Pioneer, who owns 2,935,359 shares of common
stock, which constitutes 1.63% of all outstanding shares as of June 30, 2005, none of
Pioneer's Directors, Executive Officers and Corporate Auditors is the owner of more than one
percent of Pioneer's common stock.
Pioneer has granted the following share subscription rights for its shares of common stock to
certain of its employees.
Total number of
shares covered by
Current exercise
Number of shares
option
price
exercised
Fiscal year granted
(in thousands)
Exercise period
per share
(in thousands)
2001
191
From July 1, 2002 to
June 30, 2005
¥
4,400
—
2002
191
From July 1, 2003 to
June 30, 2006
¥
3,791
—
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Pioneer has granted the following share acquisition rights for its shares of common stock to its
Directors, Executive Officers and certain employees, and certain directors/officers of certain of
its subsidiaries.
Total number of
shares covered by
Current exercise
Number of shares
option
price
exercised
Fiscal year granted
(in thousands)
Exercise period
per share
(in thousands)
2003
564
From July 1, 2004 to
June 29, 2007
¥
2,477
4
2004
313
From July 1, 2005 to
June 30, 2008
¥
2,951
—
2005
316
From July 3, 2006 to
June 30, 2009
¥
2,944
—
2006
315
From July 2, 2007 to
June 30, 2010
¥
1,828
—
As of March 31, 2005, Pioneer holds 5,635,190 shares as treasury stock with the purchase of
1,007,095 shares and disposal of 4,867 shares both in the market in fiscal 2005.
Item 7. Major Shareholders and Related Party Transactions
A. Major shareholders
Major shareholders that owned 5% or more of Pioneer's voting securities as of March 31, 2005 on the
register of shareholders were as follows:
Number of shares
Percentage of
Title of class
Name
(in thousands)
outstanding shares
Common Stock
The Master Trust Bank of Japan, Ltd.
(Trust Account)
13,804
7.66
%
Common Stock
Japan Trustee Services Bank, Ltd.
(Trust Account)
11,666
6.47
%
Common Stock
Societe Generale Paris
SGOP/DAI Paris 6Z
10,403
5.77
%
The Master Trust Bank of Japan, Ltd. and Japan Trustee Services Bank, Ltd. are securities
processing services companies. Societe Generale Paris SGOP/DAI Paris 6Z is one of the trust
accounts of Societe Generale Paris. We understand that these shareholders are not the beneficial
owner of our voting securities, but we do not have available further information concerning such
beneficial ownership.
To our knowledge, there are no major shareholders that were beneficial owners of 5% or more of
Pioneer's voting securities during the past three years.
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All shareholders of Pioneer have the same voting rights, subject to the limitation on exercise as
set forth in "Item 10.B. Memorandum and articles of association—Common stock—
Voting rights
."
As of March 31, 2005, there were 174,428,646 shares of common stock outstanding, of which 2,218,904
shares (1.27%) were held in the form of American Depositary Receipts
("ADRs") and 10,571,645 shares
(6.06%) were held of record in the form of common stock by residents in the United States (based
solely on their addresses). The number of registered ADR holders of record (including DTC) was 92,
and the number of registered holders of record in the United States (based solely on their
addresses) of shares of common stock, including those who held shares through a Japanese securities
clearing system, was 68.
To our knowledge, Pioneer is not directly or indirectly owned or controlled by any other
corporation or by the Japanese or any foreign government.
To our knowledge, there is no arrangement, the operation of which may at a subsequent date result
in a change in control of Pioneer.
B. Related party transactions
None
C. Interests of experts and counsel
Not applicable
Item 8. Financial Information
A. Consolidated statements and other financial information
Consolidated financial statements
See the Consolidated Financial Statements beginning on page F-1.
Legal proceedings
In common with numerous other industrial companies conducting a global business, we are party to
various lawsuits and administrative proceedings in the ordinary course of our business. Based on
the advice of counsel in the respective matters, except as described below, we do not expect such
lawsuits or administrative proceedings, individually or in the aggregate, to have a material effect
on our financial condition and business results.
During the year ended March 31, 2001, we received a notice of proposed assessment from the German
tax authorities for approximately EUR21 million (¥2,916 million translated at the current foreign
exchange rate at March 31, 2005) relating to a tax position taken in prior years concerning
intercompany purchase prices. We officially challenged the proposed assessment by arbitration
procedures. There was no progress in this matter during the year ended March 31, 2005. In the
opinion of management, it is not possible at this time to determine the ultimate resolution of this
matter.
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On April 15, 2005, Pioneer Speakers, Inc. ("PSI"), a wholly-owned U.S. subsidiary of Tohoku Pioneer
Corporation, a 67% owned subsidiary received notice from the United States Customs and Border
Protection ("CBP") assessing additional customs duties and penalties of approximately $26 million
(¥2,792 million translated at the foreign exchange rate at March 31, 2005) for alleged erroneous
claims for preferential treatment of duties on products imported by PSI for the period from June
23, 1997 through December 31, 1999. In addition, on June 21, 2005, PSI received CBP's notice that
it may assess further penalties of approximately $16 million (¥1,718 million translated at the
foreign exchange rate at March 31, 2005) for alleged record-keeping violations for products
imported by PSI for the period from June 12, 1998 through December 23, 1999. PSI has requested CBP
on July 19, 2005 to consider settling both of these assessments for $7.8 million (¥837 million
translated at the foreign exchange rate at March 31, 2005). In the opinion of management, it is
not possible at this time to determine the ultimate outcome of this matter. No provision was made
for the year ended March 31, 2005.
Dividend policy
Pioneer normally pays cash dividends twice per year. Pioneer's Board of Directors recommends
year-end dividends to be paid following the end of each fiscal year. This recommended year-end
dividend must then be approved by shareholders at the ordinary general meeting of shareholders
usually held in June of each year. Immediately following approval of the dividend at the
shareholders' meeting, Pioneer pays the dividend to shareholders and pledges of record at the
preceding March 31. In addition to these year-end dividends, Pioneer may pay interim dividends in
the form of cash distributions from its retained earnings to its shareholders of record as of
September 30 in each year by resolution of its Board of Directors and without shareholder approval.
Pioneer normally pays interim dividends in December. See "Item 10.B. Memorandum and articles of
association—Common stock—
Dividends.
"
The following table sets forth the dividends paid by Pioneer for each of the periods shown. The
U.S. dollar equivalents for the dividends shown are based on the noon buying rate for cable
transfers in New York City as certified for customs purposes by the Federal Reserve Bank of New
York for yen on the date of the dividend payment:
Dividend per share
Record date
Yen
Dollars
March 31, 2001
7.50
0.06
September 30, 2001
7.50
0.06
March 31, 2002
7.50
0.06
September 30, 2002
7.50
0.06
March 31, 2003
10.00
0.08
September 30, 2003
12.50
0.12
March 31, 2004
12.50
0.11
September 30, 2004
12.50
0.12
March 31, 2005
12.50
0.11
Pioneer's policy on dividends allows for continued and stable dividend payment. In addition,
Pioneer determines the appropriate dividend amount taking into consideration its financial
condition, consolidated business results and other factors.
B. Significant changes
There were no significant changes nor have any relevant facts occurred after the date of the
financial statements included in this annual report other than disclosed therein.
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Item 9. The Offer and Listing
A. Offer and listing details
The following table sets forth for the period indicated the reported high and low sales prices per
share of Pioneer's Common Stock on the Tokyo Stock Exchange and per share of Pioneer's ADSs on the New York Stock Exchange. See "Item 9.C. Markets," regarding the
markets for Pioneer's shares.
Tokyo Stock Exchange
New York Stock Exchange
Price per share of Common Stock
Price per share of ADS
(yen)
(U.S. dollars)
High
Low
High
Low
Annual highs and lows
Year ended March 31,
2001
¥
4,940
¥
2,085
$
45.38
$
20.50
2002
4,250
2,150
34.70
16.75
2003
2,860
1,805
21.98
14.83
2004
3,370
2,225
31.25
18.90
2005
3,390
1,820
30.85
17.11
Quarterly highs and lows
Fiscal 2004
1st quarter
2,840
2,225
23.75
18.90
2nd quarter
3,030
2,515
25.75
20.85
3rd quarter
2,995
2,505
28.31
23.30
4th quarter
3,370
2,875
31.25
27.01
Fiscal 2005
1st quarter
3,390
2,635
30.85
23.75
2nd quarter
2,850
2,215
25.90
20.30
3rd quarter
2,430
1,820
21.85
18.05
4th quarter
2,055
1,827
19.90
17.11
Fiscal 2006
1st quarter
2,040
1,655
18.82
15.15
Monthly highs and lows
2005
March
2,015
1,827
19.18
17.60
April
2,040
1,760
18.82
16.60
May
1,815
1,703
17.34
16.00
June
1,783
1,655
16.64
15.15
July
1,687
1,604
15.23
14.35
August
1,785
1,634
16.10
14.55
B. Plan of distribution
Not applicable
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C. Markets
The primary market for shares of Pioneer's common stock is the Tokyo Stock Exchange ("TSE").
Pioneer's shares of common stock have been listed on the TSE since October 1961 and on the Osaka
Securities Exchange since April 1968.
Since December 1976, Pioneer's ADSs have been listed and traded on the New York Stock Exchange
("NYSE"), having been traded on the United States over-the-counter market since February 1970.
Pioneer's ADSs, each representing one share of common stock, are evidenced by ADRs issued by
Citibank, N.A., New York, as Depositary.
In addition, Curaçao Depositary Shares of Pioneer, evidenced by Curaçao Depositary Receipts, have
been listed and traded on the Euronext Amsterdam since February 1969.
D. Selling shareholders
Not applicable
E. Dilution
Not applicable
F. Expenses of the issue
Not applicable
Item 10. Additional Information
A. Share capital
Not applicable
B. Memorandum and articles of association
Organization
Pioneer is a joint stock corporation
(kabushiki kaisha)
incorporated in Japan under the Commercial
Code
(shoho)
of Japan. It is registered in the Commercial Register
(shogyo tokibo)
maintained by
the Meguro Branch Office of the Tokyo Legal Affairs Bureau.
Objects and purposes
Article 2 of the Articles of Incorporation of Pioneer provides that its purpose is to engage in the
following lines of business:
•
manufacture and sale of electronic and electrical machinery and appliances;
•
manufacture and sale of optical instruments, medical instruments, and other machinery and appliances;
•
planning, production, manufacture and sale of audio, video and computer software;
•
manufacture and sale of woodwork;
•
manufacture and sale of agricultural products and plants for their cultivation;
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•
sale of food and beverages, including liquor, and operation of restaurants and amusement facilities;
•
sale and purchase, rental and lease, and management of real estate and real estate agency business;
•
publishing and printing business, advertising agency business, construction business and non-life insurance agency
business;
•
acquisition, management and transfer of industrial property rights, copyrights and other intellectual property rights;
and
•
all business incidental and related to each and every one of the businesses in the preceding paragraphs.
Directors
Each Director has executive powers and duties to manage the affairs of Pioneer and each
Representative Director, who is elected from among the Directors by the Board of Directors, has the
statutory authority to represent Pioneer in all respects. Under the Commercial Code, the Directors
must refrain from engaging in any business competing with Pioneer unless approved by the Board of
Directors and any Director who has a material interest in the subject matter of a resolution to be
taken by the Board of Directors cannot vote on such resolution. The total amount of remuneration
to Directors and that to Corporate Auditors are subject to the approval of the general meeting of
shareholders.
Except as stated below, neither the Commercial Code nor Pioneer's Articles of Incorporation make
special provisions as to the Directors' or Corporate Auditors' power to vote in connection with
their compensation; the borrowing power exercisable by a Representative Director (or a Director who
is given power by a Representative Director to exercise such power), the Directors' or Corporate
Auditors' retirement age or requirement to hold any shares of capital stock of Pioneer. The
Commercial Code specifically requires the resolution of the Board of Directors for a company to
acquire or dispose of material assets; to borrow a substantial amount of money; to employ or
discharge from employment important employees, such as general managers; and to establish, change
or abolish material corporate organization such as branch offices. The Regulations of the Board of
Directors of Pioneer require a resolution of the Board of Directors for Pioneer to borrow a
substantial amount of money or to give guarantees in a substantial amount. There is no written
rule as to what constitutes a "substantial" amount in these contexts. However, it has been the
general practice of Pioneer's Board of Directors to adopt a resolution for borrowing or
guaranteeing in an amount not less than ¥100 million or its equivalent.
Common stock
General
Except as otherwise stated, set forth below is information relating to Pioneer's Common Stock,
including brief summaries of the relevant provisions of Pioneer's Articles of Incorporation and
Share Handling Regulations, as currently in effect, and of the Commercial Code of Japan and related
legislation.
A bill to modernize and make overall amendments to the Commercial Code by replacing the current
provisions with regard to corporations with a new company law (the "New Company Law") was
promulgated on July 26, 2005. The New Company Law will come into effect within one year and half
after its promulgation, and currently, it is expected that it will take effect in May 2006.
In order to assert shareholders' rights against Pioneer, a shareholder must have its name and
address registered on Pioneer's register of shareholders, in accordance with Pioneer's Share
Handling Regulations. The registered holder of deposited shares underlying the ADSs is the
Depositary for the ADSs. Accordingly, holders of ADSs will not be able to directly assert
shareholders' rights to Pioneer.
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A holder of shares may choose, at its discretion, to participate in the central clearing system for
share certificates under the Law Concerning Central Clearing of Share Certificates and Other
Securities of Japan. Participating shareholders must deposit certificates representing all of the
shares to be included in this clearing system with the Japan Securities Depository Center, Inc.
("JASDEC"). If a holder is not a participating institution in JASDEC, it must participate through
a participating institution, such as a securities company or a commercial bank having a clearing
account with JASDEC. All shares deposited with JASDEC will be registered in the name of JASDEC on
Pioneer's register of shareholders. Each participating shareholder will in turn be registered on
Pioneer's register of beneficial shareholders and be treated in the same way as shareholders
registered on Pioneer's register of shareholders. For the purpose of transferring deposited
shares, delivery of share certificates is not required. Entry of the share transfer in the book
maintained by JASDEC for participating institutions, or in the book maintained by a participating
institution for its customers, has the same effect as delivery of share certificates. The
registered beneficial shareholders may exercise the rights attached to the shares, such as voting
rights, and will receive dividends (if any) and notices to shareholders directly from Pioneer. The
shares held by a person as a registered shareholder and those held by the same person as a
registered beneficial shareholder are aggregated for these purposes. Beneficial shareholders may
at any time withdraw their shares from deposit and receive share certificates.
A new law to establish a new central clearing system for shares of listed companies and to
eliminate the issuance and use of certificates for such shares was promulgated in June 2004 and the
relevant part of the law will come into effect within five years of the date of the promulgation.
On the effective date, a new central clearing system will be established and the shares of all
Japanese companies listed on any Japanese stock exchange, including the shares of Common Stock of
Pioneer, will be subject to the new central clearing system. On the same day, all existing share
certificates will become null and void and the companies are not required to withdraw those share
certificates from shareholders. The transfer of such shares will be effected through entry in the
books maintained under the new central clearing system.
Authorized capital
Article 5 of the Articles of Incorporation of Pioneer provides that the total number of shares
authorized to be issued by Pioneer is four hundred million (400,000,000) shares.
As of March 31, 2005, 180,063,836 shares of common stock were issued (including 5,635,190 shares
held as treasury stock).
All shares of common stock of Pioneer have no par value.
Dividends
Dividends — General
The Articles of Incorporation of Pioneer provide that the accounts shall be closed on March 31 of
each year. Year-end cash dividends, if any, shall be paid to shareholders, beneficial shareholders
and pledgees of record as of the end of such day. After the close of the fiscal period, the Board
of Directors prepares, among other things, a proposed allocation of profits for dividends and other
purposes; this proposal is submitted to the Board of Corporate Auditors of Pioneer and to
independent certified public accountants and then submitted for approval to the ordinary general
meeting of shareholders, which is held in June each year. In addition to provisions for dividends,
if any, and for the legal reserve and other reserves, the allocation of profits customarily
includes a bonus to Directors and Corporate Auditors.
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Under the New Company Law, subject to certain limitations on the distributable surplus as described
below, dividends, if any, may be paid to shareholders, beneficial shareholders, and pledgees of
record as of a record date as set forth either by the Articles of Incorporation of Pioneer or as
determined by the Board of Directors from time to time. Dividends shall be paid by way of
distribution of surplus. Dividends may be distributed in cash or in kind. In distributing
dividends, Pioneer may determine the kind of assets to be distributed, the book value of such
assets, matters regarding allocation of such assets, and the effective date of such dividends, by a
resolution of a general meeting of shareholders. However, Pioneer may generally determine such
matters by a resolution of the Board of Directors if (a) the Articles of Incorporation of Pioneer
so provide, (b) the term of its Directors is set to be until the conclusion of the ordinary general
meeting of shareholders held with respect to the last closing of accounts within one year after
such Director's assumption of office, and (c) certain requirements regarding the financial
statements and certain documents of Pioneer as set forth in an ordinance of the Ministry of Justice
are met; provided, however, that when Pioneer is to make in-kind dividends without giving
shareholders the right to request payment of cash dividends in lieu of in-kind dividends, it shall
determine such matters by a special shareholders resolution (as defined in "Voting Rights"). When
Pioneer makes payment of dividends, it shall allocate such dividends in proportion to the number of
shares of any specific class held by each shareholder.
Dividends — Interim cash dividends
In addition to year-end cash dividends, the Board of Directors may by its resolution declare a cash
distribution pursuant to Article 293-5 of the Commercial Code (an "interim dividend") to
shareholders, beneficial shareholders and pledgees of record as of the end of September 30 of each
year, without shareholders' approval, but subject to the limitations described below.
Under the New Company Law, notwithstanding the necessity of obtaining approval of a general meeting
of shareholders in general under the New Company Law as described above, Pioneer is allowed to make
payment of interim dividends during a fiscal year by way of distribution of surplus by resolution
of the Board of Directors; provided, however, that such payment of interim dividends shall be
limited to cash dividends and also limited to once per fiscal year.
Dividends — Legal reserve
The Commercial Code provides that a company may not make any distribution of profit by way of
dividends or interim dividends for any fiscal period unless it has set aside in its legal reserve
an amount equal to at least one-tenth of the amount paid by way of appropriation of retained
earnings for such fiscal period or equal to one-tenth of the amount of such interim dividends,
until the aggregate amount of additional paid-in capital and legal reserve is at least one-quarter
of its stated capital on a non-consolidated basis.
The New Company Law provides that when a joint stock company such as Pioneer makes a distribution
of surplus, it shall set aside in its legal reserve an amount equal to 10% of the amount of the
surplus to be decreased as a result of such distribution of surplus in accordance with the
provisions set forth in an ordinance of the Ministry of Justice.
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Dividends — Distributable amount
Under the Commercial Code, Pioneer is permitted to distribute profits by way of year-end or interim
dividends out of the excess of its net assets, on a non-consolidated basis, over the aggregate of:
(i)
its stated capital;
(ii)
its additional paid-in capital;
(iii)
its accumulated legal reserve;
(iv)
the legal reserve to be set aside in respect of the fiscal period concerned; and
(v)
such other amounts as are set out in an ordinance of the Ministry of Justice.
In the case of interim dividends, the net assets are calculated by reference to the
non-consolidated balance sheet as at the last date of the preceding fiscal year, but adjusted to
reflect; (a) the legal reserve to be set aside in respect of interim dividends; (b) any subsequent
payment by way of appropriation of retained earnings and transfer to legal reserve in respect
thereof; (c) any subsequent transfer of retained earnings to stated capital; (d) if Pioneer has
been authorized, pursuant to a resolution of an ordinary general meeting of shareholders, a
resolution of the Board of Directors or both, to purchase shares of its common stock (see
"
Acquisition by Pioneer of its common stock
" below), the total amount of the purchase price of such
shares so authorized by such resolution that may be paid by Pioneer; and (e) such other amounts as
are set out in an ordinance of the Ministry of Justice, provided that (x) if Pioneer reduces its
stated capital, additional paid-in capital or accumulated legal reserve after the end of the
preceding fiscal year, the amount so reduced, less the amount paid to shareholders upon such
reduction and certain other amounts, and (y) such other amounts as are set out in an ordinance of
the Ministry of Justice, shall be added to the amount distributable as interim dividends as
described above. Interim dividends may not be paid if it is anticipated that at the end of the
fiscal year net assets, on a non-consolidated basis, will be less than the aggregate of the amounts
referred to in (i) through (v) above.
Under the New Company Law, Pioneer is permitted to make a distribution of surplus to the extent
that the aggregate book value of the assets to be distributed to shareholders does not exceed the
Distributable Amount (as defined below) as at the effective date of such distribution of surplus.
The amount of surplus at any given time shall be the amount of Pioneer's assets and the book value
of Pioneer's treasury stock after subtracting the amounts of the following items (1) through (4) as
they appear on Pioneer's non-consolidated balance sheet as at the end of Pioneer's last fiscal
year, and after reflecting the changes in Pioneer's surplus after the end of Pioneer's last fiscal
year, by adding the amounts of the following items (5), (6) and (7) and/or subtracting the amounts
of the following items (8), (9) and (10):
(1)
its liabilities;
(2)
its stated capital;
(3)
its additional paid-in capital and accumulated legal reserve;
(4)
other amounts as provided for by an ordinance of the Ministry of Justice;
(5)
(if Pioneer transferred its treasury stock after the end of the last fiscal year) the
transfer price of its treasury stock after subtracting the book value thereof;
(6)
(if Pioneer decreased its stated capital after the end of the last fiscal year) the amount of
decrease in its stated capital (excluding the amount transferred to the additional paid-in
capital or legal reserve);
(7)
(if Pioneer decreased its additional paid-in capital or legal reserve after the end of the
last fiscal year) the amount of decrease in its additional paid-in capital or legal reserve
(excluding the amount transferred to the stated capital);
(8)
(if Pioneer cancelled its treasury stock after the end of the last fiscal year) the book
value of its treasury stock so cancelled;
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(9)
(if Pioneer distributed surplus to shareholders after the end of the last fiscal year) the
assets distributed to shareholders by way of such distribution of surplus; and
(10)
other amounts as provided for by an ordinance of the Ministry of Justice.
The Distributable Amount of Pioneer at any given time shall be the aggregate amount of (a) the
surplus, (b) the amount of profit as recorded for the period after the end of Pioneer's last fiscal
year until the date of an extraordinary settlement of account (if any) as provided for in an
ordinance of the Ministry of Justice and (c) the transfer price of its treasury stock in the same
period, after subtracting the amounts of the following items:
(1)
the book value of its treasury stock;
(2)
(if Pioneer transferred its treasury stock after the end of the last fiscal year) the
transfer price of its treasury stock;
(3)
the losses as recorded for the period after the end of Pioneer's last fiscal year until the
date of an extraordinary settlement of account (if any) as provided for in an ordinance of the
Ministry of Justice; and
(4)
other amounts as provided for by an ordinance of the Ministry of Justice.
Dividends — Prescription
Under its Articles of Incorporation, Pioneer is not obligated to pay any dividends which are left
unclaimed for a period of three years after the date on which they first became payable.
Dividends — Liabilities
Under the Commercial Code, if Pioneer makes interim dividends and at the end of the fiscal year
there is no excess of net assets over the aggregate of the amounts referred to in (i) through (v)
in "Dividends — Distributable amount" above, Directors who have made such interim dividends shall
be jointly and severally liable to Pioneer for the smaller of the amount of such deficit or such
dividends unless such Directors prove that they did not fail to exercise due care in determining
such interim dividends.
Under the New Company Law, in cases where the distribution of surplus was made, if the aggregate
amount of the following items (1), (2) and (3) as at the end of the relevant fiscal year exceeds
the amount of surplus, the Directors who have distributed such dividends, shall be liable to
Pioneer for the smaller of such amount in excess or the amount of money or book value of such
distributed surplus unless such Directors prove that they did not fail to exercise due care in
determining such distribution:
(1)
the book value of Pioneer's treasury stock;
(2)
(if Pioneer transferred its treasury stock after the end of the last fiscal year) the
transfer price of its treasury stock after the end of Pioneer's last fiscal year; and
(3)
other amounts as provided for by an ordinance of the Ministry of Justice.
However, the Directors shall not be liable to Pioneer for the distributions of surplus made
pursuant to the resolution of the ordinary general meeting of shareholders.
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Stock splits
Pioneer may at any time split shares in issue into a greater number of shares by resolution of the
Board of Directors, and may amend its Articles of Incorporation to increase the number of the
authorized shares to be issued to allow such stock split pursuant to a resolution of the Board of
Directors, rather than relying on a special resolution of a general meeting of shareholders, which
is otherwise required for amending the Articles of Incorporation.
In the event of a stock split, generally, shareholders will not be required to exchange share
certificates for new share certificates, but certificates representing the additional shares
resulting from the stock split will be issued to shareholders. When a stock split is to be made,
Pioneer must give public notice of the stock split, specifying the record date therefor, at least
two weeks prior to such record date. In addition, promptly after the stock split takes effect,
Pioneer must give notice to each shareholder specifying the number of shares to which such
shareholder is entitled by virtue of the stock split. After the New Company Law becomes effective,
no such notice to each shareholder is required.
Consolidation of Shares
Pioneer may at any time consolidate shares in issue into a smaller number of shares by a special
shareholders resolution (as defined in "Voting Rights"). When a consolidation of shares is to be
made, Pioneer must give public notice and notice to each shareholder that, within a period of not
less than one month specified in the notice, share certificates must be submitted to Pioneer for
exchange. A representative director of Pioneer must disclose the reason for the consolidation of
shares at the general meeting of shareholders.
General meeting of shareholders
The ordinary general meeting of shareholders of Pioneer for each fiscal year is held in June in
each year in or near Meguro-ku or in Minato-ku, Tokyo, Japan. In addition, Pioneer may hold an
extraordinary general meeting of shareholders whenever necessary by giving notice of convocation
thereof at least two weeks prior to the date set for the meeting.
Notice of convocation of a shareholders' meeting, setting forth the place, time and purpose
thereof, must be mailed to each shareholder having voting rights (or, in the case of a non-resident
shareholder, to his or her standing proxy or mailing address in Japan) at least two weeks prior to
the date set for the meeting. Such notice may be given to shareholders by electronic means,
subject to the consent of the relevant shareholders. The record date for an ordinary general
meeting of shareholders is March 31 of each year.
Any shareholder or group of shareholders holding at least 3% (or, when the New Company Law becomes
effective and in the event that Pioneer's Articles of Incorporation provide for a percentage lower
than 3%, such lower percentage) of the total number of voting rights for a period of six months
(or, when the New Company Law becomes effective and in the event that Pioneer's Articles of
Incorporation provide for a period shorter than six months, such period) or more may require the
convocation of a general meeting of shareholders for a particular purpose. Unless such
shareholders' meeting is convened promptly or a convocation notice of a meeting which is to be held
not later than eight weeks (or, when the New Company Law becomes effective and in the event that
Pioneer's Articles of Incorporation provide for a period shorter than eight weeks, such a period)
from the day of such demand is dispatched, the requiring shareholder may, upon obtaining a court
approval, convene such shareholders' meeting.
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Any shareholder or group of shareholders holding at least 300 (or, when the New Company Law becomes
effective and in the event that Pioneer's Articles of Incorporation provide for a number less than
300, such number) voting rights or 1% (or, when the New Company Law becomes effective and in the
event that Pioneer's Articles of Incorporation provide for a percentage lower than 1%, such lower
percentage) of the total number of voting rights for a period of six months (or, when the New
Company Law becomes effective and in the event that Pioneer's Articles of Incorporation provide
for a period shorter than six months, such shorter period) or more may propose a matter to be
considered at a general meeting of shareholders by submitting a written request to a Representative
Director at least eight weeks (or, when the New Company Law becomes effective and in the event that
Pioneer's Articles of Incorporation provide for a period shorter than eight weeks, such shorter
period) prior to the date set for such meeting.
Voting rights
So long as Pioneer maintains the unit share system (see "
'Unit' share system
" below; currently 100
shares constitute one unit) a holder of shares constituting one or more full units is entitled to
one voting right per unit of shares subject to the limitations on voting rights set forth in the
following two sentences. A corporate shareholder more than one-quarter of whose total voting
rights are directly or indirectly owned by Pioneer (or, when the New Company Law becomes effective,
management of which is being controlled in substance by Pioneer as provided for by an ordinance of
the Ministry of Justice) may not exercise its voting rights with respect to shares of common stock
of Pioneer that it owns. In addition, Pioneer may not exercise its voting rights with respect to
its shares that it owns. If Pioneer eliminates from its Articles of Incorporation the provisions
relating to the unit of shares, holders of common stock will have one voting right for each share
they hold. Except as otherwise provided by law or by the Articles of Incorporation, a resolution
can be adopted at a general meeting of shareholders by a majority of the number of voting rights of
all the shareholders present at the meeting. The Commercial Code (or, when the New Company Law
becomes effective, the New Company Law) and Pioneer's Articles of Incorporation provide, however,
that the quorum for the election of Directors and Corporate Auditors shall not be less than
one-third of the total number of voting rights of all the shareholders. Pioneer's shareholders are
not entitled to cumulative voting in the election of Directors. Shareholders may exercise their
voting rights through proxies, provided that the proxies are also shareholders holding voting
rights. Pioneer's shareholders also may cast their votes in writing, or exercise their voting
rights by electronic means pursuant to the method thereof determined by the Board of Directors.
The Commercial Code (or, when the New Company Law becomes effective, the New Company Law) and
Pioneer's Articles of Incorporation require a special shareholders resolution (as defined below) in
order to amend the Articles of Incorporation and in certain other instances. A special
shareholders resolution is a resolution for which the quorum shall be one-third of the total voting
rights of all the shareholders, and the approval by at least two-thirds (or, when the New Company
Law becomes effective and in the event that Pioneer's Articles of Incorporation provide for a
percentage greater than two-thirds, such greater percentage) of the voting rights of all the
shareholders represented at the meeting is required (in addition, when the New Company Law becomes
effective and in the event that Pioneer's Articles of Incorporation provide that the approval by
certain number of shareholders is required, such approval is also required). The instances
requiring a Special Shareholders Resolution include:
(1)
acquisition of its own shares from a specific party;
(2)
consolidation of shares;
(3)
any offering of new shares at a "specially favorable" price (or any offering of stock
acquisition rights to subscribe for or acquire shares of capital stock, or bonds with stock
acquisition rights at "specially favorable" conditions) to any persons other than
shareholders;
(4)
the removal of a Director or Corporate Auditor (when the New Company Law becomes effective,
the removal of a Director who is elected by cumulative voting);
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(5)
the exemption of liability of a Director or Corporate Auditor with certain exceptions;
(6)
a reduction of stated capital (when the New Company Law becomes effective, with certain
exceptions in which a shareholders' resolution is not required);
(7)
(when the New Company Law becomes effective ) a distribution of in-kind dividends which meets
certain requirements;
(8)
dissolution, merger, or consolidation with certain exceptions in which a shareholders'
resolution is not required;
(9)
the transfer of the whole or a material part of the business;
(10)
the taking over of the whole of the business of any other corporation with certain exceptions
in which a shareholders' resolution is not required;
(11)
share exchange or share transfer for the purpose of establishing 100 percent
parent-subsidiary relationships with certain exceptions in which a shareholders' resolution is
not required; or
(12)
separating of the corporation into two or more corporations with certain exceptions in which
a shareholders' resolution is not required.
Issue of additional shares and pre-emptive rights
Holders of Pioneer's shares of common stock have no pre-emptive rights under its Articles of
Incorporation. Authorized but unissued shares may be issued at such times and upon such terms as
the Board of Directors determines, subject to the limitations as to the issue of new shares at a
"specially favorable" price mentioned under "
Voting rights
" above. The Board of Directors may,
however, determine that shareholders shall be given subscription rights regarding a particular
issue of new shares, in which case such rights must be given on uniform terms to all shareholders
as at a record date of which not less than two weeks' prior public notice must be given. Each of
the shareholders to whom such rights are given must also be given notice of the expiry thereof at
least two weeks prior to the date on which such rights expire.
Subject to certain conditions, Pioneer may issue share acquisition rights or bonds with share
acquisition rights by a resolution of the Board of Directors. Holders of share acquisition rights
or bonds with share acquisition rights may exercise their rights to acquire a certain number of
shares within the exercise period as prescribed in the terms of their share acquisition rights and
bonds with share acquisition rights. Upon exercise of share acquisition rights, Pioneer will be
obliged to issue the necessary number of new shares or alternatively to transfer the relevant
number of shares held by it as treasury stock.
In cases where a particular issue of new shares or stock acquisition rights (i) violates laws and
regulations or Pioneer's Articles of Incorporation, or (ii) will be performed in a manner
materially unfair, and shareholders may suffer disadvantages therefrom, such shareholder may file
an injunction to enjoin such issue with a court.
Liquidation rights
In the event of a liquidation of Pioneer, the assets remaining after payment of all debts,
liquidation expenses and taxes will be distributed among shareholders in proportion to the
respective numbers of shares of common stock held by them.
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Record date
March 31 is the record date for Pioneer's year-end dividends. So long as Pioneer maintains the
unit share system, the shareholders and beneficial shareholders who are registered as the holders
of one or more full units of shares in Pioneer's register of shareholders and/or that of beneficial
shareholders at the end of each March 31 are entitled to exercise shareholders' rights at the
ordinary general meeting of shareholders with respect to the fiscal year ending on such March 31.
September 30 is the record date for interim dividends. In addition, Pioneer may set a record date
for determining the shareholders and/or beneficial shareholders entitled to other rights pertaining
to the shares of Common Stock of Pioneer, and for other purposes, by a resolution of the Board of
Directors and giving at least two weeks' prior public notice.
The price of shares generally goes ex-dividend or ex-rights on Japanese stock exchanges on the
third business day prior to a record date (or if the record date is not a business day, the fourth
business day prior thereto), for the purpose of dividends or rights offerings.
Acquisition by Pioneer of its common stock
Pioneer may acquire its own shares (a) through a stock exchange on which such shares are listed
(pursuant to an ordinary resolution of an ordinary general meeting of shareholders or a resolution
of the Board of Directors) or by way of tender offer (pursuant to an ordinary resolution of an
ordinary general meeting of shareholders or a resolution of the Board of Directors); (b) by
purchase from a specific party other than a subsidiary of Pioneer (pursuant to a special resolution
of an ordinary general meeting of shareholders); or (c) by purchase from a subsidiary of Pioneer
(pursuant to a resolution of the Board of Directors). Under the New Company Law, not only ordinary
general meetings of shareholders but also extraordinary general meetings of shareholders will be
able to approve the acquisition by Pioneer of its own shares in the cases of (a) and (b) above. If
shares are purchased by Pioneer pursuant to a resolution of the Board of Directors, then the reason
for the purchase, as well as the kind, number and aggregate purchase price of such shares must be
reported to the shareholders at the ordinary general meeting of shareholders to be held immediately
after such purchase of shares. When such acquisition is made by Pioneer from a specific party
other than a subsidiary of Pioneer, any other shareholder may make a request to a Representative
Director, more than five calendar days prior to the relevant shareholders' meeting, to include him
or her as a seller in the proposed purchase. Under the New Company Law, however, the acquisition
of its own shares at a price not exceeding the then market price to be provided under an ordinance
of the Ministry of Justice will not trigger the right of any shareholder to include him or her as
the seller of his or her shares in such proposed purchase. Any such acquisition of shares must
satisfy the requirements under the Commercial Code. In cases other than the acquisition by Pioneer
of its own shares pursuant to a resolution of the Board of Directors, the total amount of the
purchase price may not exceed the amount of the retained earnings available for dividend payments
after taking into account any reduction, if any, of the stated capital, additional paid-in capital
or legal reserve (if such reduction of the stated capital, additional paid-in capital or legal
reserve has been authorized pursuant to a resolution of the relevant ordinary general meeting of
shareholders), minus the amount to be paid by way of appropriation of retained earnings for the
relevant fiscal year and the amount to be transferred from retained earnings to stated capital. If
Pioneer purchases shares pursuant to a resolution of the Board of Directors, the total amount of
the purchase price may not exceed the amount of the retained earnings available for an interim
dividend payment minus the amount of any interim dividend Pioneer actually paid. However, if it is
anticipated that the net assets on the non-consolidated balance sheet as at the end of the relevant
fiscal year will be less than the aggregate amount of the stated capital, additional paid-in
capital and other items as described in (i) through (v) in "
Dividends  — Distributable
amount
" above, Pioneer may not acquire such shares. Under the New Company Law, the
restriction on the source of funds for
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the acquisition by Pioneer of its own shares will be integrated into those for the distribution of
surplus to the shareholders. See "
Dividends
."
Shares acquired by Pioneer may be held by it for any period or may be cancelled by a resolution of
the Board of Directors. Pioneer may also transfer to any person the shares held by it, subject to
a resolution of the Board of Directors, and subject also to other requirements similar to those
applicable to the issuance of new shares, as described in "
Issue of additional shares and
pre-emptive rights
" above. Pioneer may also utilize its treasury stock for the purpose of transfer
to any person upon exercise of share acquisition rights or for the purpose of acquiring another
company by way of merger, share exchange or corporate split through exchange of treasury stock for
shares or assets of the acquired company.
"Unit" share system
The Articles of Incorporation of Pioneer provide that 100 shares constitute one unit of shares of
stock. Although the number of shares constituting one unit is included in the Articles of
Incorporation, any amendment to the Articles of Incorporation reducing (but not increasing) the
number of shares constituting one unit or eliminating the provisions for the unit of shares may be
made by the resolution of the Board of Directors rather than by the special shareholders
resolution, which is otherwise required for amending the Articles of Incorporation. The number of
shares constituting one new unit, however, cannot exceed 1,000 or one two-hundredth (1/200) of all
issued shares.
Shareholders shall have one voting right for each unit of shares that they hold. Any number of
shares less than a full unit will carry no voting rights.
Unless Pioneer's shareholders amend the Articles of Incorporation by a special shareholders
resolution to eliminate the provision not to issue share certificates for less than a unit of
shares, a share certificate for any number of shares less than one full unit will in general not be
issued. As the transfer of shares normally requires the delivery of the share certificates
therefor, any fraction of a unit for which no share certificates are issued is not transferable.
A holder of shares constituting less than one unit may require Pioneer to purchase such shares at
their market value in accordance with the provisions of the Share Handling Regulations of Pioneer.
In addition, the Articles of Incorporation of Pioneer provide that a holder of shares constituting
less than one full unit may request Pioneer to sell to such holder such amount of shares which
will, when added together with the shares constituting less than one full unit held by such holder,
constitute one full unit of stock, in accordance with the provisions of the Share Handling
Regulations of Pioneer.
A holder who owns ADRs evidencing less than 100 ADSs will indirectly own less than one full unit of
shares of common stock. Although, as discussed above, under the unit share system holders of less
than one full unit have the right to require Pioneer to purchase their shares or sell shares held
by Pioneer to such holders, holders of ADRs evidencing ADSs that represent other than integral
multiples of a unit are unable to withdraw the underlying shares of common stock representing less
than one full unit and, therefore, are unable, as a practical matter, to exercise the rights to
require Pioneer to purchase such underlying shares or sell shares held by Pioneer to such holders
unless Pioneer's Articles of Incorporation are amended to eliminate the provision not to issue
share certificates for the numbers of shares less than a unit. As a result, access to the Japanese
markets by holders of ADRs through the withdrawal mechanism will not be available for dispositions
of shares of common stock in lots less than one full unit. The unit share system does not affect
the transferability of ADSs, which may be transferred in lots of any size.
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Sale by Pioneer of shares held by shareholders whose location is unknown
Pioneer is not required to send a notice to a shareholder if a notice to such shareholder fails to
arrive at the registered address of the shareholder in Pioneer's register of shareholders or at the
address otherwise notified to Pioneer continuously for five years or more.
In addition, Pioneer may sell or otherwise dispose of shares of common stock for which the location
of the shareholder is unknown. Generally, if (i) notices to a shareholder fail to arrive
continuously for five years or more at the shareholder's registered address in Pioneer's register
of shareholders or at the address otherwise notified to Pioneer, and (ii) the shareholder fails to
receive dividends on the shares continuously for five years or more at the address registered in
Pioneer's register of shareholders or at the address otherwise notified to Pioneer, Pioneer may
sell or otherwise dispose of the shareholder's shares at the then market price of the shares by a
resolution of the Board of Directors and after giving at least three months' prior public and
individual notice, and may hold or deposit the proceeds of such sale or disposal of shares for such
shareholder.
Reporting of substantial shareholdings
The Securities and Exchange Law of Japan and regulations thereunder require any person, regardless
of residence, who has become, beneficially and solely or jointly, a holder(s) of more than 5% of
the total issued shares of capital stock of a company listed on any Japanese stock exchange or
whose shares are traded on the over-the-counter market in Japan to file with the Director—General
of a competent Local Finance Bureau of the Ministry of Finance within five business days a report
concerning such shareholdings.
A similar report must also be filed in respect of any subsequent change of 1% or more in any such
holding or any change in material matters set out in reports previously filed, with certain
exceptions. For this purpose, shares issuable to such person upon conversion of convertible
securities or exercise of share subscription warrants or share acquisition rights are taken into
account in determining both the number of shares held by such holder and the issuer's total issued
share capital. Copies of such report must also be furnished to the issuer of such shares and all
Japanese stock exchanges on which the shares are listed.
Except for the general limitations under Japanese anti-trust and anti-monopoly regulations against
holding of shares of capital stock of a Japanese corporation which leads or may lead to a restraint
of trade or monopoly, and except for general limitations under the Commercial Code or Pioneer's
Articles of Incorporation on the rights of shareholders applicable regardless of residence or
nationality, there is no limitation under Japanese laws and regulations applicable to Pioneer or
under its Articles of Incorporation on the rights of non-resident or foreign shareholders to hold
the shares of common stock of Pioneer or exercise voting rights thereon.
There is no provision in Pioneer's Articles of Incorporation that would have an effect of delaying,
deferring or preventing a change in control of Pioneer and that would operate only with respect to
merger, consolidation, acquisition or corporate restructuring involving Pioneer.
C. Material contracts
None
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D. Exchange controls
The Foreign Exchange and Foreign Trade Law of Japan and its related cabinet orders and ministerial
ordinances (the "Foreign Exchange Regulations") govern the acquisition and holding of shares of
common stock of Pioneer by "exchange non-residents" and by "foreign investors." The Foreign
Exchange Regulations currently in effect do not, however, affect transactions between exchange
non-residents to purchase or sell shares outside Japan using currencies other than Japanese yen.
Exchange non-residents are:
•
individuals who are not resident in Japan; and
•
corporations whose principal offices are located outside Japan.
Generally, branches and other offices of non-resident corporations that are located within Japan
are regarded as exchange residents of Japan. Conversely, branches and other offices of Japanese
corporations located outside Japan are regarded as exchange non-residents.
Foreign investors are:
•
individuals who are exchange non-residents;
•
corporations that are organized under the laws of foreign
countries or whose principal offices are located outside Japan;
and
•
corporations (1) of which 50% or more of their shares are held by
individuals who are exchange non-residents and/or corporations (a)
that are organized under the laws of foreign countries or (b)
whose principal offices are located outside Japan or (2) a
majority of whose officers, or officers having the power of
representation, are individuals who are exchange non-residents.
In general, the acquisition of shares of a Japanese company (such as the shares of common stock of
Pioneer) by an exchange non-resident from an exchange resident of Japan is not subject to any prior
filing requirements. In certain limited circumstances, however, the Minister of Finance may
require prior approval of an acquisition of this type. While prior approval, as described above,
is not required, in the case where an exchange resident of Japan transfers shares of a Japanese
company (such as the shares of common stock of Pioneer) for consideration exceeding ¥100 million to
an exchange non-resident, the exchange resident of Japan who transfers the shares is required to
report the transfer to the Minister of Finance within 20 days from the date of the transfer, unless
the transfer was made through a bank, securities company or financial futures trader licensed under
Japanese law.
If a foreign investor acquires shares of a Japanese company that is listed on a Japanese stock
exchange (such as the shares of common stock of Pioneer) or that is traded on an over-the-counter
market in Japan and, as a result of the acquisition, the foreign investor, in combination with any
existing holdings, directly or indirectly holds 10% or more of the issued shares of the relevant
company, the foreign investor must file a report of the acquisition with the Minister of Finance
and any other competent Ministers having jurisdiction over that Japanese company within 15 days
from and including the date of the acquisition, except where the offering of the company's shares
was made overseas. In limited circumstances, such as where the foreign investor is in a country
that is not listed on an exemption schedule in the Foreign Exchange Regulations, a prior
notification of the acquisition must be filed with the Minister of Finance and any other competent
Ministers, who may then modify or prohibit the proposed acquisition.
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Under the Foreign Exchange Regulations, dividends paid on and the proceeds from sales in Japan of
shares of common stock of Pioneer held by exchange non-residents of Japan may generally be
converted into any foreign currency and repatriated abroad.
E. Taxation
The following discussion is a summary of the principal Japanese national and U.S. federal income
tax consequences of the acquisition, ownership and disposition of shares of common stock or ADSs.
This summary does not purport to address all material tax consequences that may be relevant to
holders of shares of common stock or ADSs, and does not take into account the specific
circumstances of any particular investors, some of which (such as tax-exempt entities, banks,
insurance companies, broker-dealers, traders in securities that elect to use a mark-to-market
method of accounting for their securities holdings, regulated investment companies, real estate
investment trusts, investors liable for alternative minimum tax, investors that own or are treated
as owning 10% or more of Pioneer's voting stock, investors that hold shares of common stock or ADSs
as part of a straddle, hedge, conversion or constructive sale transaction or other integrated
transaction, persons that hold shares of common stock or ADSs through a partnership or other
pass-through entity and U.S. Holders (as defined below) whose functional currency is not the U.S.
dollar) may be subject to special tax rules. This summary is based on the national or federal
income tax laws and regulations of Japan and of the United States, judicial decisions, published
rulings and administrative pronouncements as in effect at the date hereof, as well as on the
current income tax convention between the United States and Japan (the "Treaty"), all of which are
subject to change (possibly with retroactive effect) and/or to differing interpretations.
This summary is based in part upon the representations of the depositary and the assumption that
each obligation in the deposit agreement for ADSs and in any related agreement will be performed in
accordance with its terms.
For purposes of this discussion, a "U.S. Holder" is any beneficial owner of shares of common stock
or ADSs that, for U.S. federal income tax purposes, is:
•
a citizen or individual resident of the United States,
•
a corporation or other entity taxable as a corporation for U.S. federal income tax purposes organized
in or under the laws of the United States, any State, or the District of Columbia,
•
an estate the income of which is subject to U.S. federal income tax without regard to its source, or
•
a trust that is (i) subject to the primary supervision of a U.S. court and the control of one or more
U.S. persons, or (ii) that has a valid election in effect under applicable Treasury regulations to be
treated as a U.S. person.
An "Eligible U.S. Holder" is a U.S. Holder that:
•
is a resident of the United States for purposes of the Treaty,
•
does not maintain a permanent establishment in Japan (i) with which shares of common stock or ADSs are
effectively connected or (ii) of which shares of common stock or ADSs form part of the business
property, and
•
is eligible for benefits under the Treaty with respect to income and gain derived in connection with
the shares of common stock or ADSs.
The U.S. federal income tax consequences of a partner in a partnership holding shares of common
stock or ADSs generally will depend on the status of the partner and the activities of the
partnership. Partners in a partnership holding shares of common stock or ADSs should consult their
own tax advisors. This
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summary does not address any aspects of U.S. federal tax law other than income taxation, and does
not discuss any aspects of Japanese tax law other than national income taxation, inheritance and
gift taxation. This summary also does not cover any state or local, or non-U.S., non-Japanese tax
considerations. Investors are urged to consult their tax advisors regarding the U.S. federal,
state and local and Japanese and other tax consequences of acquiring, owning and disposing of
shares of common stock or ADSs. In particular, where relevant, investors are urged to confirm
their status as Eligible U.S. Holders with their tax advisors and to discuss with their tax
advisors any possible consequences of their failure to qualify as Eligible U.S. Holders.
In general, taking into account the earlier assumption, for purposes of the Treaty and for U.S.
federal income and Japanese income tax purposes, beneficial owners of ADRs evidencing ADSs will be
treated as the owners of the shares of common stock represented by those ADSs, and exchanges of
shares of common stock for ADSs, and exchanges of ADSs for shares of common stock, will not be
subject to U.S. federal income tax or Japanese income tax.
The discussion below is intended for general information only and does not constitute a
complete analysis of all tax consequences relating to the acquisition, ownership and disposition of
shares of common stock or the ADSs. Investors in shares of common stock or the ADSs should consult
their own tax advisors concerning the tax consequences of their particular situations.
Japanese taxation
The following is a summary of the principal Japanese tax consequences (limited to national taxes)
to holders of shares of common stock of Pioneer or ADRs evidencing ADSs representing shares of
common stock of Pioneer who are either individuals who are not residents of Japan or non-Japanese
corporations, without a permanent establishment in Japan ("non-resident Holders").
Generally, an individual who is a non-resident of Japan or a non-Japanese corporation is subject to
Japanese withholding tax on dividends paid by a Japanese corporation. Pioneer withholds taxes from
dividends it pays as required by Japanese law. Stock splits in themselves are not subject to
Japanese income tax.
In the absence of an applicable tax treaty, convention or agreement reducing the maximum rate of
Japanese withholding tax or allowing exemption from Japanese withholding tax, the rate of Japanese
withholding tax applicable to dividends paid by Japanese corporations to individuals who are
non-residents of Japan or non-Japanese corporations is 20%. However, with respect to dividends
paid on listed shares issued by a Japanese corporation (such as the shares of common stock of
Pioneer) to any corporate or individual shareholders (including those shareholders who are
non-Japanese corporations or Japanese non-resident individuals, such as non-resident Holders),
except for any individual shareholder who holds 5% or more of the total issued shares of the
relevant Japanese corporation, the aforementioned 20% withholding tax rate is reduced to (i) 7% for
dividends due and payable on or before March 31, 2008, and (ii) 15% for dividends due and payable
on or after April 1, 2008. At the date of this annual report, Japan has income tax treaties,
conventions or agreements whereby the above-mentioned withholding tax rate is reduced, in most
cases to 15 percent for portfolio investors with, among other countries, Australia, Belgium,
Canada, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, New
Zealand, Norway, Singapore, Spain, Sweden, Switzerland, and the U.K.
Under the Treaty, the maximum rate of Japanese withholding tax which may be imposed on dividends
paid by a Japanese corporation to Eligible U.S. Holders that are portfolio investors is generally
limited to 10% of the gross amount actually distributed, and dividends paid by a Japanese
corporation to Eligible U.S. Holders that are pension funds is exempt from Japanese taxation by way
of withholding or otherwise
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unless such dividends are derived from the carrying on of a business, directly or indirectly, by
such pension funds.
If the maximum tax rate provided for in the income tax treaty applicable to dividends paid by
Pioneer to any particular non-resident Holder is lower than the withholding tax rate otherwise
applicable under Japanese tax law or any particular non-resident Holder is exempt from Japanese
income tax with respect to such dividends under the income tax treaty applicable to such particular
non-resident Holder, such non-resident Holder who is entitled to a reduced rate of or exemption
from Japanese withholding tax on payment of dividends on Pioneer's shares of common stock is
required to submit an Application Form for Income Tax Convention Regarding Relief from Japanese
Income Tax on Dividends in advance through Pioneer to the relevant tax authority before such
payment of dividends. A standing proxy for non-resident Holders of a Japanese corporation may
provide this application service. With respect to ADSs, this reduced rate or exemption is
applicable if the Depositary or its agent submits two Application Forms (one before payment of
dividends, the other within eight months after Pioneer's fiscal year-end or semi-fiscal year-end)
to the Japanese tax authorities. To claim this reduced rate or exemption, any relevant
non-resident Holder of ADSs will be required to file a proof of taxpayer status, residence and
beneficial ownership (as applicable) and to provide other information or documents as may be
required by the Depositary. A non-resident Holder who is entitled, under an applicable tax treaty,
to a reduced treaty rate lower than the withholding tax rate otherwise applicable under Japanese
tax law or an exemption from the withholding tax, but failed to submit the required application in
advance will be entitled to claim the refund of withholding taxes withheld in excess of the rate
under an applicable tax treaty (if such non-resident Holder is entitled to a reduced treaty rate
under the applicable income tax treaty) or the whole of the withholding tax withheld (if such
non-resident Holder is entitled to an exemption under the applicable income tax treaty) from the
relevant Japanese tax authority. Pioneer does not assume any responsibility to ensure withholding
at the reduced treaty rate or not withholding for shareholders who would be eligible under an
applicable tax treaty but do not follow the required procedures as stated above.
Gains derived from the sale of shares of common stock or ADSs outside Japan by a non-resident
Holder holding such shares or ADSs as a portfolio investor are, in general, not subject to Japanese
income or corporation tax. Eligible U.S. Holders are not subject to Japanese income or corporation
tax with respect to such gains under the Treaty.
Japanese inheritance and gift taxes at progressive rates may be payable by an individual who has
acquired shares of common stock or ADSs as a legatee, heir or donee even though neither the
individual nor the deceased nor donor is a Japanese resident.
Holders of shares of common stock of Pioneer or ADSs should consult their tax advisors regarding
the effect of these taxes and, in the case of U.S. Holders, the possible application of the Estate
and Gift Tax Treaty between the U.S. and Japan.
U.S. federal income taxation
U.S. Holders
The following discussion is a summary of the principal U.S. federal income tax consequences to
holders of shares of common stock and ADSs that are U.S. Holders and that hold those shares of
common stock or ADSs as capital assets (generally, for investment purposes).
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Taxation of Dividends
Subject to the passive foreign investment company rules discussed below, the gross amount of any
distribution made by us in respect of shares of common stock or ADSs (without reduction for
Japanese withholding taxes) will constitute a taxable dividend to the extent paid out of current or
accumulated earnings and profits, as determined under U.S. federal income tax principles. The U.S.
dollar amount of such a dividend generally will be included in the gross income of a U.S. Holder,
as ordinary income, when the dividend is actually or constructively received by the U.S. Holder, in
the case of shares of common stock, or by the depositary, in the case of ADSs. Dividends paid by
us will not be eligible for the dividends received deduction generally allowed to U.S. corporations
in respect of dividends received from other U.S. corporations.
Subject to certain exceptions for short-term and hedged positions, and provided that we are not a
passive foreign investment company (as discussed below), dividends received by certain U.S. Holders
(including individuals) prior to January 1, 2009 with respect to the shares of common stock or ADSs
will be subject to U.S. federal income taxation at a maximum rate of 15%. Investors should be
aware that the U.S. Treasury Department has announced its intention to promulgate rules pursuant to
which shareholders (and intermediaries) will be permitted to rely on certifications from issuers to
establish that dividends qualify for the reduced rate of U.S. federal income taxation. Because
such procedures have not yet been issued, we are not certain that we will be able to comply with
them. U.S. Holders of ADSs or shares of common stock should consult their own tax advisors
regarding the availability of the reduced rate in the light of their own particular circumstances.
The U.S. dollar amount of a dividend paid in Japanese yen will be determined based on the Japanese
yen/U.S. dollar exchange rate in effect on the date that dividend is included in the gross income
of the U.S. Holder, regardless of whether the payment is converted into dollars on such date.
Generally, any gain or loss resulting from currency exchange fluctuations during the period from
the date the dividend payment is included in the gross income of a U.S. Holder through the date
that payment is converted into U.S. dollars (or the U.S. Holder otherwise disposed the Japanese
yen) will be treated as U.S. source ordinary income or loss. U.S. Holders should consult their own
tax advisors regarding the calculation and U.S. federal income tax treatment of foreign currency
gain or loss.
To the extent, if any, that the amount of any distribution received by a U.S. Holder in respect of
shares of common stock or ADSs exceeds our current and accumulated earnings and profits as
determined under U.S. federal income tax principles, the distribution first will be treated as a
tax-free return of capital to the extent the U.S. Holder's adjusted tax basis in those shares or
ADSs, and thereafter as U.S. source capital gain.
Distributions of additional shares of common stock that are made to U.S. Holders with respect to
their shares of common stock or ADSs and that are part of a pro rata distribution to all of our
shareholders generally will not be subject to U.S. federal income tax.
For U.S. foreign tax credit purposes, dividends included in gross income by a U.S. Holder in
respect of shares of common stock or ADSs will constitute income from sources outside the United
States and will be subject to various classifications and other limitations. Subject to generally
applicable limitations under U.S. federal income tax law and the Treaty, any Japanese withholding
tax imposed in respect of a dividend paid by us in respect of shares of common stock or ADSs may be
claimed either as a credit against the U.S. federal income tax liability of a U.S. Holder or, if
the U.S. Holder does not elect to take a credit for any foreign taxes paid that year, as a
deduction from that U.S. Holder's taxable income. In general, special rules will apply to the
calculation of foreign tax credits in respect of dividend income that is subject to preferential
rates of U.S. federal income tax. Additionally, special rules apply to individuals
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whose foreign source income during the taxable year consists entirely of "qualified passive income"
and whose creditable foreign taxes paid or accrued during the taxable year do not exceed $300 ($600
in the case of a joint return). Further, under some circumstances, a U.S. Holder that:
•
has held shares of common stock or ADSs for less than a specified minimum period, or
•
is obligated to make payments related to our dividends,
will not be allowed a foreign tax credit for foreign taxes imposed on our dividends. U.S. Holders
are urged to consult their tax advisors regarding the availability of the foreign tax credit under
their particular circumstances. The Internal Revenue Service (the "IRS") has expressed concern
that parties to whom ADSs are released may be taking actions that are inconsistent with the
claiming of foreign tax credits by U.S. Holders of ADSs. Accordingly, investors should be aware
that the discussion above regarding the creditability of Japanese withholding tax on dividends
could be affected by future actions that may be taken by the IRS.
Taxation of Capital Gains
In general upon a sale or other taxable disposition of shares of common stock or ADSs, a U.S.
Holder will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the
difference between the amount realized on the sale or other taxable disposition and the U.S.
Holder's adjusted tax basis in those shares of common stock or ADSs (which is generally the U.S.
dollar cost thereof). Subject to the passive foreign investment company rules discussed below,
such gain or loss recognized on the sale or other taxable disposition generally will be capital
gain or loss and, if the U.S. Holder's holding period for those shares or ADSs exceeds one year,
will be long-term capital gain or loss. Certain U.S. Holders, including individuals, are eligible
for preferential rates of U.S. federal income tax in respect of long-term capital gain. Under U.S.
federal tax law, the deduction of capital losses is subject to limitations. Any gain or loss
recognized by a U.S. Holder in respect of the sale or other taxable disposition of shares of common
stock or ADSs generally will be treated as derived from U.S. sources for U.S. foreign tax credit
purposes.
Passive Foreign Investment Companies
Based on current estimates of our income and asset, we do not believe that we are a passive foreign
investment company (a "PFIC") for U.S. federal income tax purposes, and we intend to continue our
operations in such a manner that it is highly unlikely that we would become a PFIC in the future
although no assurances can be made regarding determination of our PFIC status in the current or any
future taxable year. The PFIC determination is made annually and generally is based on either the
portion of our assets (including goodwill) or the portion of our income being characterized as
passive under the PFIC rules.
If we become a PFIC, unless a U.S. Holder elects to be taxed annually on a mark-to-market basis
with respect to its shares of common stock or ADSs, any gain realized on a sale or other taxable
disposition of shares of common stock or ADSs and certain "excess distributions" (generally
distributions in excess of 125% of the average distribution over a three-year period, or shorter
holding period for the shares of common stock or ADSs) would be treated as realized ratably over
the U.S. Holder's holding period for the shares of common stock or ADSs; amounts allocated to prior
years during which we were a PFIC would be taxed at the highest ordinary income tax rate in effect
for each such year, and an additional interest charge may apply to the portion of the U.S. federal
income tax liability on such gains or distributions treated under the PFIC rules as having been
deferred by the U.S. Holder. Moreover, dividends that a U.S. Holder receives from us will not be
eligible for the reduced U.S. federal income tax rates described above if we are a PFIC either in
the taxable year of the dividend or the preceding taxable year (and instead will be taxable at
rates applicable to ordinary income).
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If a mark-to-market election were made, a U.S. Holder would take into account each year the
appreciation or depreciation in value of its shares of common stock or ADSs, which would be treated
as ordinary income or (subject to limitations) ordinary loss, as would gains or losses on actual
dispositions of shares of common stock or ADSs.
Any U.S. Holder who owns shares of common stock or ADSs during any taxable year that we are a PFIC
would be required to file Internal Revenue Service Form 8621. U.S. Holders are urged to consult
their tax advisors concerning the U.S. federal income tax consequences of holding our shares of
common stock or ADSs if we were considered a PFIC in any year.
Non-U.S. Holders
The following discussion is a summary of the principal U.S. federal income tax consequences to
beneficial holders of shares of common stock or ADSs that are neither U.S. Holders nor partnerships
for U.S. federal income tax purposes ("Non-U.S. Holders").
Subject to the discussion below on "Backup withholding and information reporting," distributions
received by a Non-U.S. Holder in respect of shares of common stock or ADSs generally will not be
subject to any U.S. federal income or withholding tax, unless the Non-U.S. Holder conducts trade or
business within the United States, and the distributions are effectively connected with that trade
or business.
Subject to the discussion below on "Backup withholding and information reporting," a Non-U.S.
Holder generally will not be subject to U.S. federal income tax in respect of gain recognized on a
sale or other disposition of shares of common stock or ADSs, unless the gain is effectively
connected with a trade or business conducted by the Non-U.S. Holder within the United States, or
the Non-U.S. Holder is an individual who was present in the United States for 183 or more days in
the taxable year of the disposition and other conditions are met.
If an income tax treaty applies to a Non-U.S. Holder, it may require, as a condition for the
Non-U.S. Holder to be subject to U.S. federal income taxation on dividends or capital gains that
are effectively connected with trade or business conducted by a Non-U.S. Holder in the United
States, that the dividends or capital gains be attributable to a permanent establishment or fixed
base that the Non-U.S. Holder maintains in the United States.
Income that is effectively connected with a U.S. trade or business of a Non-U.S. Holder, and, if an
income tax treaty applies and so requires, is attributable to a U.S. permanent establishment or
fixed base of the Non-U.S. Holder, generally will be taxed in the same manner as the income of a
U.S. Holder. In addition, however, under certain circumstances, any such effectively connected
income that is realized by a corporate Non-U.S. Holder may be subject to an additional "branch
profits tax" at the rate of 30% or at a lower rate that may be prescribed by an applicable income
tax treaty.
Backup withholding and information reporting
In general, except in the case of certain exempt recipients (such as corporations) information
reporting requirements will apply to dividends on shares of common stock or ADSs paid to U.S.
Holders in the United States or through certain U.S. related financial intermediaries and to the
proceeds received upon the sale, exchange or redemption of shares of common stock or ADSs by U.S.
Holders within the United States or through certain U.S. related financial intermediaries.
Furthermore, backup withholding currently at a rate of 28% may apply to those amounts if a U.S.
Holder fails to provide an accurate tax
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identification number or to report interest and dividends required to be shown on its U.S. federal
income tax returns or makes other appropriate certifications in the required manner.
Dividends on shares of common stock or ADSs paid to Non-U.S. Holders and proceeds received upon the
sale, exchange or redemption of shares of common stock or ADSs by Non-U.S. Holders generally are
exempt from information reporting and backup withholding. However, a Non-U.S. Holder may be
required to provide certification of non-U.S. status in order to obtain that exemption.
Persons required to establish their exempt status generally must provide such certification, under
penalty of perjury, on IRS Form W-9, entitled Request for Taxpayer Identification Number and
Certification, in the case of U.S. persons, and on IRS Form W-8BEN, entitled Certificate of Foreign
Status (or other appropriate IRS Form W-8), in the case of non-U.S. persons. Backup withholding is
not an additional tax. The amount of backup withholding imposed on a payment generally may be
claimed as a credit against the holder's U.S. federal income tax liability provided that the
required information is properly furnished to the IRS.
THE SUMMARY OF U.S. FEDERAL INCOME AND JAPANESE TAX CONSEQUENCES SET OUT ABOVE IS INTENDED FOR
GENERAL INFORMATION PURPOSES ONLY. INVESTORS IN THE COMMON STOCK OR ADSs ARE URGED TO CONSULT WITH
THEIR OWN TAX ADVISORS WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF OWNING OR
DISPOSING OF COMMON STOCK OR ADSs, BASED ON THEIR PARTICULAR CIRCUMSTANCES.
F. Dividends and paying agents
Not applicable
G. Statement by experts
Not applicable
H. Documents on display
It is possible to read and copy documents referred to in this annual report on Form 20-F that have
been filed with the SEC at the SEC's public reference room located at 100 F Street, N.E.,
Washington, D.C. 20549. You can also access the documents at the SEC's website
(http://www.sec.gov/).
I. Subsidiary information
Not applicable
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Item 11. Quantitative and Qualitative Disclosures About Market Risk
We operate internationally, giving rise to exposure to market risks from changes in foreign
exchange rates and interest rates. In an effort to manage potential adverse effects caused by
market fluctuations in foreign exchange rates and interest rates, we hedge these market risks by
selectively using derivative financial instruments. However, we do not hedge all of our exposure,
and the extent of hedge as well as type of hedging instruments to be used depends on factors
including, but not limited to, type of risks exposed, market conditions and hedging cost. We do
not hold or issue derivative financial instruments for trading purposes. To minimize credit risks
from derivative financial instruments, we limit counterparties to reputable international financial
institutions.
Marketable securities held by us are exposed to risk from changes in equity prices and consist
entirely of available-for-sale securities. We do not take hedging measures against the market
exposures on those securities.
Foreign exchange risk
To hedge certain purchase and sale commitments and anticipated but not yet committed transactions
denominated in other than functional currencies, we enter into forward exchange contracts and
purchase- and write-currency options. In order to minimize the risk, written options are entered
into only with purchased options.
The following table provides information about our derivative financial instruments related to
foreign currency exchange transactions as of March 31, 2005, which have been translated into yen at
the rate as of such date, together with the related weighted average contractual exchange rates at
March 31, 2005. All of the contracts mature within one year. There are no option contracts
outstanding as of March 31, 2005.
March 31, 2005
Forward exchange contract
Functional
Yen
Yen
EUR
A$
THB
THB
NT$
Total
currency
US$/
Yen/
EUR/
A$/
THB/
US$/
US$/
Sell/Buy
Yen
US$
Yen
US$
US$
THB
NT$
(In millions of yen except average rates)
Contract amounts
¥
12,456
¥
490
¥
18,949
¥
1,440
¥
181
¥
1,063
¥
371
¥
34,950
average contractual
exchange rates
104.50
102.00
135.93
0.7741
39.1100
38.9461
31.2325
Fair value
¥
(243
)
¥
23
¥
(293
)
¥
16
¥
0
¥
(5
)
¥
(3
)
¥
(505
)
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To change the currency and interest rate features of intercompany finance transactions, we
have entered into currency swap contracts with banks. Currency swap contracts effectively changed,
in substance, U.S. dollars floating interest rate intercompany borrowings into yen fixed interest
rate borrowings and Euro floating interest rate borrowings. The foreign exchange risk inherent in
our currency swap as of March 31, 2005 are summarized as follows:
Currency swap as of March 31, 2005
Expected maturity date
Contract amounts
(year ending March 31)
Buy
Sell
2006
2007
2008
Total
Fair value
(In millions except average rates)
Functional currency: Yen
¥
24,540
US$200
¥
18,665
¥
5,875
¥
24,540
¥
(3,009
)
Average contractual exchange rate
124.43
117.50
Functional currency: Euro
EUR76
US$100
¥
10,506
¥
10,506
¥
189
Average contractual exchange rate
1.3218
Functional currency: Euro
EUR3
GBP2
¥
443
443
¥
1
Average contractual exchange rate
0.6901
With respect to interest rate risk inherent in our currency swaps as of March 31, 2005, see
"
Interest rate risk
" below.
Interest rate risk
The following table provides information about interest rate risk inherent in the aforementioned
currency swaps as of March 31, 2005. Variable interest rates are determined using formulas such as
LIBOR+
a
.
Currency swap as of March 31, 2005
Expected maturity date
Contract amounts
(year ending March 31)
Buy
Sell
2006
2007
2008
Total
Fair value
(In millions except average rates)
Functional currency: Yen
Variable (US$) to Fixed (Yen)
¥
12,590
US$100
¥
12,590
¥
12,590
¥
(1,761
)
Average pay rate
0.41
%
Average receive rate
2.17
%
Fixed (US$) to Fixed (Yen)
¥
11,950
US$100
¥
6,075
¥
5,875
¥
11,950
¥
(1,248
)
Average pay rate
(0.65
)%
(1.35
)%
Average receive rate
2.88
%
1.21
%
Functional currency: Euro
Variable (US$) to Fixed (Euro)
EUR76
US$100
¥
10,506
¥
10,506
¥
189
Average pay rate
2.22
%
Average receive rate
2.96
%
Functional currency: Euro
Fixed (GBP) to Fixed (Euro)
EUR3
GBP2
¥
443
¥
443
¥
1
Average pay rate
2.20
%
Average receive rate
4.61
%
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The following table provides information about principal cash flows by expected maturity dates,
weighted average interest rates, and fair value of our debt obligations as of March 31, 2005. The
interest rate on the variable rate debt is determined based on prevailing market rates for
tax-exempt municipal bonds in the U.S.
Long-term debt (including due within one year) as of March 31, 2005
Functional
Expected maturity date (year ending March 31)
Currency
2006
2007
2008
2009
2010
Thereafter
Total
Fair value
(In millions of yen except average rates)
Fixed rate (Yen)
Yen
¥
15,294
244
244
10,244
244
62,519
¥
88,789
¥
83,724
Average interest rate
2.36
%
2.90
%
2.90
%
2.80
%
2.90
%
0.03
%
0.78
%
Variable rate (US$)
US$
537
537
537
Average interest rate
1.70
%
1.70
%
Interest free loan
(EUR)
EUR
4
7
7
22
40
40
Total
¥
15,835
251
251
10,266
244
62,519
¥
89,366
¥
84,301
Market price risks on available-for-sale securities
We do not own any marketable securities for trading purposes. Our equity investment portfolio
consists almost entirely of securities issued by Japanese companies. The following table sets forth
maturity dates and cost and fair values of debt securities in our investment portfolio, and the
cost and fair values of equity securities therein, at March 31, 2005.
2005
Cost
Fair value
(In millions of yen)
Debt securities (by contractual maturities)
Maturing over one year
¥
94
¥
98
Equity securities
¥
5,734
¥
22,170
Item 12. Description of Securities Other than Equity Securities
Not applicable
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PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
None
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
Not applicable
Item 15. Controls and Procedures
Pioneer performed an evaluation of the effectiveness of the design and operation of its disclosure
controls and procedures as of the end of the fiscal 2005. Disclosure controls and procedures are
designed to ensure that the material financial and non-financial information required to be
disclosed in the reports that Pioneer files under the Exchange Act is accumulated and communicated
to its management including the chief executive officer and the principal accounting and financial
officer to allow timely decisions regarding required disclosure. The disclosure controls and
procedures also ensures that the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the Commission's
rules and forms. The evaluation was performed under the supervision of Kaneo Ito, Pioneer's Chief
Executive Officer and Tamihiko Sudo, Pioneer's Chief Financial Officer. Pioneer's disclosure and
controls and procedures are designed to provide reasonable assurance of achieving its objectives.
Managerial judgment was necessary to evaluate the cost-benefit relationship of possible controls
and procedures. Mr. Ito and Mr. Sudo have concluded that Pioneer's disclosure controls and
procedures are effective at the reasonable assurance level.
There have been no changes in Pioneer internal control over financial reporting during fiscal
period ended March 31, 2005 that have materially affected, or are reasonably likely to materially
affect, Pioneer's internal control over financial reporting.
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Item 16. [Reserved]
Item 16A. Audit Committee Financial Expert
Pioneer maintains a corporate auditor system, in accordance with the Japanese Commercial Code (the
"Code") and the Law concerning Exceptional Measures to the Commercial Code with respect to
Auditing, etc. of Joint Stock Corporations (the "Special Exception Law"). Pioneer's Board of
Corporate Auditors is comprised of five Corporate Auditors, three of whom are outside Corporate
Auditors. Each Corporate Auditor has been appointed at its shareholders' meetings and has certain
statutory powers under the Code and the Special Exception Law, including auditing the business
affairs and accounts of Pioneer.
Pioneer's Board of Corporate Auditors has determined that it does not have an audit committee
financial expert serving on the Board of Corporate Auditors. The qualifications for, and powers
of, the Corporate Auditor specified in the Code and the Special Exception Law are different from
those anticipated for audit committee financial expert. Corporate Auditors have the authority to
be given reports from a certified public accountant or an accounting firm concerning audits,
including technical accounting matters. At the same time, each Corporate Auditor has the authority
to consult internal and external experts on accounting matters. Pioneer's Board of Corporate
Auditors has confirmed that each Corporate Auditor should fulfill the requirements under Japanese
laws and regulations and otherwise follow Japanese corporate governance practices. In addition,
its Board of Corporate Auditors has a former General Manager of Accounting Division of Pioneer, Mr.
Makoto Koshiba, as a full time Corporate Auditor, and a certified public accountant of Japan, Mr.
Isao Moriya, as an outside Corporate Auditor. Accordingly, it is not necessarily fundamental for
Pioneer to nominate as Corporate Auditor a person who meets the definition of audit committee
financial experts. Although Pioneer does not have an audit committee financial expert on its Board
of Corporate Auditors, Pioneer believes that Pioneer's current corporate governance system, taken
as a whole, including the Corporate Auditors' ability to consult internal and external experts, is
functionally equivalent to a system having an audit committee financial expert on its Board of
Corporate Auditors.
Item 16B. Code of Ethics
We have adopted the Pioneer Group Code of Conduct (the "Code of Conduct") for all officers and
employees of the Pioneer Group. The Code of Conduct is publicly available on our website at
www.pioneer.co.jp. If we make any substantive amendments to the Code of Conduct or grant any
waivers, including any implicit waiver, from a provision of this code to our chief executive
officer, principal financial officer or corporate controller, we will disclose the nature of such
amendment or waiver on our website.
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Item 16C. Principal Accountant Fees and Services
Aggregate fees billed to the Company for the fiscal years ended March 31, 2004 and 2005 by our
principal accounting firm, Deloitte Touche Tohmatsu (a Japanese member firm of Deloitte Touche
Tohmatsu, Swiss Verein), the other member firms of Deloitte Touche Tohmatsu (Swiss Verein), and
their respective affiliates (collectively, "Deloitte Touche Tohmatsu"), were as follows.
Year ended March 31
2004
2005
(In millions of yen)
Audit Fees (1)
¥
339
¥
343
Audit-Related Fees (2)
42
48
Tax Fees (3)
43
58
All Other Fees (4)
7
42
Total
¥
431
¥
491
(1)
Includes fees for the audit of our annual financial statements included in our Form 20-F and
for services provided in connection with statutory and regulatory filings or engagements.
This also includes fees billed for issuance of comfort letters and consent letters.
(2)
Includes fees for assurance and related services that are performed by the independent
accountant which include employee benefit plan audits, accounting consultations and audits in
connection with internal control reviews, attest services that are not required by statute or
regulation and consultation concerning financial accounting and reporting standards.
(3)
Includes fees for services related to tax compliance, including the preparation of tax
returns and claims for refund, tax planning and tax advice.
(4)
Includes fees for other than the services reported in paragraphs (1) through (3). All other
fees for fiscal 2005 include consulting services relating to compliance control.
Policy and procedures of the Board of Corporate Auditors for pre-approval
In accordance with the regulations of the SEC, the Board of Corporate Auditors has adopted the
policy and procedures for the pre-approval regarding the engagements of the independent audit firm
and its affiliates (the "auditor"). The following is a summary of the policy and procedures.
All audit and permissible non-audit services provided by the auditor to Pioneer and its
consolidated subsidiaries must be pre-approved by the Board of Corporate Auditors, prior to the
engagement of the auditor. In the case that pre-approvals are requested, the description of the
services including types of the service, periods of the service, and estimated fees, must be
submitted to the Board of Corporate Auditors. Our pre-approval procedures have two different
forms, "Comprehensive pre-approval" and "Individual pre-approval." Under the "Comprehensive
pre-approval" procedure, all audit and permissible non-audit services scheduled for the following
fiscal year are pre-approved by resolution of the Board of Corporate Auditors meeting. All audit
and permissible non-audit services regarding the specific projects which are not included in the
"Comprehensive pre-approval" must be subject to the "Individual pre-approval." For the purpose of
providing such pre-approval in a timely manner, the Board of Corporate Auditors may delegate
"Individual pre-approval" authority to full time Corporate Auditors. Full-time Corporate Auditors
shall report any "Individual pre-approval" decisions to the Board of Corporate Auditors meeting to
be held immediately after such pre-approval.
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None of the services provided by the auditor in fiscal 2004 and 2005 were waived from the
pre-approval requirement pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
Item 16D. Exemptions from the Listing Standards for Audit Committees
Not applicable
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The following table sets forth the information with respect to any purchase made by Pioneer of its
common stock during fiscal 2005 ended March 31, 2005.
(c) Total Number
(d) Maximum Number
of Shares Purchased
of Shares that
(a) Total
(b) Average
as Part of Publicly
May Yet Be
Number of
Price Paid
Announced
Purchased Under the
Period
Shares Purchased
per Share
Plans or Programs
Plans or Programs
April 1 to April 30, 2004
649
¥
3,158.43
—
—
May 1 to May 31, 2004
302
¥
2,824.09
—
—
June 1 to June 30, 2004
162
¥
2,761.36
—
—
July 1 to July 31, 2004
598
¥
2,660.23
—
—
August 1 to August 31, 2004
315
¥
2,369.78
—
—
September 1 to September 30, 2004
544
¥
2,373.78
—
—
October 1 to October 31, 2004
683
¥
2,252.31
—
—
November 1 to November 30, 2004
741
¥
1,953.67
—
—
December 1 to December 31, 2004
1,533
¥
1,958.55
—
—
January 1 to January 31, 2005
509
¥
1,999.15
—
—
February 1 to February 28, 2005
479
¥
1,880.48
—
—
March 1 to March 31, 2005
1,000,580
¥
1,963.14
1,000,000
0
Total
1,007,095
¥
1,965.22
1,000,000
Notes:
1.
A holder of shares constituting less than one unit may require Pioneer to purchase
such shares at their market value in accordance with the provision of the Share Handling
Regulations of Pioneer, under the Commercial Code of Japan. All shares other than purchases
publicly announced were made by such requests.
2.
On March 11, 2005, share repurchase approved by the Board of Directors pursuant to the
Articles of Incorporation of Pioneer was announced publicly.
Total number of shares approved to be purchased was up to 1,000,000 shares of common
stock.
Period during which shares may be purchased was from March 14, 2005 to May 11, 2005.
Pioneer finished the purchase on March 23, 2005 prior to expiration.
91
Table of Contents
PART III
Item 17. Financial Statements
See Consolidated Financial Statements. Reference is made to Item 19 for a list of all
financial statements filed as part of this annual report.
Item 18. Financial Statements
We have responded to Item 17 in lieu of responding to this Item.
Item 19. Exhibits
Page
Consolidated financial statements
Index to Consolidated Financial Statements
F-1
Report of Independent Registered Public Accounting Firm
F-2
Consolidated Balance Sheets as of March 31, 2004 and 2005
F-3
Consolidated
Statements of Operations
for the years ended March 31, 2003, 2004 and 2005
F-5
Consolidated Statements of Shareholders' Equity
for the years ended March 31, 2003, 2004 and 2005
F-6
Consolidated Statements of Cash Flows
for the years ended March 31, 2003, 2004 and 2005
F-7
Notes to Consolidated Financial Statements
F-8
Exhibits
1.01
Regulations of the Board of Directors, as amended and currently in effect (English
translation)
1.02
Regulations of the Board of Corporate Auditors, as amended and currently in effect (English
translation)
2.01
Share Handling Regulations, as amended and currently in effect (English translation)
12.01
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
12.02
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
13.01
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
92
Table of Contents
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and
that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
PIONEER CORPORATION
(Registrant)
Date: September 8, 2005
By
/s/ Tamihiko Sudo
Tamihiko Sudo
Chief Financial Officer
93
Table of Contents
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Consolidated financial statements
Report of Independent Registered Public Accounting Firm
F-2
Consolidated Balance Sheets as of March 31, 2004 and 2005
F-3
Consolidated
Statements of Operations
for the years ended March 31, 2003, 2004 and 2005
F-5
Consolidated Statements of Shareholders' Equity
for the years ended March 31, 2003, 2004 and 2005
F-6
Consolidated Statements of Cash Flows
for the years ended March 31, 2003, 2004 and 2005
F-7
Notes to Consolidated Financial Statements
F-8
F-1
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Pioneer Corporation:
We have audited the accompanying consolidated balance sheets of Pioneer Corporation and
subsidiaries as of March 31, 2004 and 2005, and the related consolidated statements of operations,
shareholders' equity, and cash flows for each of the three years in the period ended March 31, 2005
(all expressed in Japanese yen). These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
The accompanying consolidated financial statements do not present segment information concerning
the Company's operations which, in our opinion, is required for a complete presentation of the
Company's consolidated financial statements in accordance with accounting principles generally
accepted in the United States of America.
In our opinion, except for the omission of segment information disclosures, such consolidated
financial statements present fairly, in all material respects, the financial position of Pioneer
Corporation and subsidiaries as of March 31, 2004 and 2005, and the results of their operations and
their cash flows for each of the three years in the period ended March 31, 2005, in conformity with
accounting principles generally accepted in the United States of America.
Our audits also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and,
in our opinion, such translation has been made in conformity with the basis stated in Note 1. Such
U.S. dollar amounts are presented solely for the convenience of readers outside Japan.
/s/ Deloitte Touche Tohmatsu
Deloitte
Touche Tohmatsu
Tokyo, Japan
May 6, 2005
F-2
Table of Contents
Consolidated Balance Sheets
Pioneer Corporation and Subsidiaries
March 31
Thousands of
U.S. Dollars
Millions of Yen
(Note 1)
Assets
2004
2005
2005
Current assets:
Cash and cash equivalents—
Cash, including time deposits of ¥52,275 million—$488,551 thousand (¥88,425 million in 2004)
¥
192,419
¥
116,681
$
1,090,477
Trade receivables—
Notes
2,988
2,516
23,514
Accounts
112,411
132,110
1,234,673
Allowance for doubtful notes and accounts (Note 20)
(3,344
)
(2,450
)
(22,897
)
Inventories (Note 6)
107,806
109,015
1,018,831
Deferred income taxes (Note 11)
28,886
25,519
238,495
Prepaid expenses and other current assets
38,622
43,505
406,589
Total current assets
479,788
426,896
3,989,682
Investments and long-term receivables:
Available-for-sale securities (Note 5)
24,516
22,268
208,112
Investments in and advances to affiliated companies (Note 7)
5,573
2,987
27,916
Sundry investments (Notes 5 and 18)
3,383
3,388
31,664
Long-term receivables, less allowance for doubtful accounts of
¥160 million—$1,495 thousand (¥190 million in 2004) (Note 20)
253
185
1,729
Total investments and long-term receivables
33,725
28,828
269,421
Property, plant and equipment
(Note 9)
:
Land
25,050
32,965
308,084
Buildings
113,863
136,372
1,274,505
Machinery and equipment
239,081
293,359
2,741,673
Construction in progress
7,568
1,056
9,869
Total
385,562
463,752
4,334,131
Accumulated depreciation
(229,361
)
(253,607
)
(2,370,159
)
Net property, plant and equipment
156,201
210,145
1,963,972
Other assets:
Intangible assets (Note 8)
18,966
24,052
224,785
Deferred income taxes (Note 11)
24,276
25,420
237,570
Other
9,586
9,826
91,832
Total other assets
52,828
59,298
554,187
Total assets
¥
722,542
¥
725,167
$
6,777,262
See notes to consolidated financial statements.
F-3
Table of Contents
Thousands of
U.S. Dollars
Millions of Yen
(Note 1)
Liabilities and Shareholders' Equity
2004
2005
2005
Current liabilities:
Short-term borrowings (Note 9)
¥
23,327
¥
33,152
$
309,832
Current portion of long-term debt (Note 9)
4,510
19,276
180,150
Trade payables
79,439
96,335
900,327
Accrued liabilities—
Taxes on income
9,341
4,938
46,150
Payroll
17,604
17,203
160,776
Royalty
18,688
14,811
138,420
Other
35,626
36,843
344,327
Warranty reserve (Note 20)
5,419
5,722
53,477
Dividends payable
2,193
2,180
20,374
Other current liabilities
27,151
20,710
193,551
Total current liabilities
223,298
251,170
2,347,384
Long-term liabilities:
Long-term debt (Note 9)
89,691
81,219
759,056
Accrued pension and severance cost (Note 10)
57,143
40,022
374,037
Deferred income taxes (Note 11)
1,327
1,630
15,234
Other long-term liabilities
301
719
6,720
Total long-term liabilities
148,462
123,590
1,155,047
Commitments and contingent liabilities
(Note 21)
Minority interests
17,844
18,168
169,794
Shareholders' equity
(Note 12)
:
Common stock, no par value
Authorized— 400,000,000 shares
Issued—180,063,836 shares—2004 and 2005
49,049
49,049
458,402
Capital surplus
82,464
82,735
773,224
Retained earnings
273,718
260,556
2,435,103
Accumulated other comprehensive loss (Note 14)
(61,829
)
(47,669
)
(445,505
)
Treasury stock, at cost 4,632,962 shares—2004
and 5,635,190 shares—2005
(10,464
)
(12,432
)
(116,187
)
Total shareholders' equity
332,938
332,239
3,105,037
Total liabilities and shareholders' equity
¥
722,542
¥
725,167
$
6,777,262
See notes
to consolidated financial statements.
F-4
Table of Contents
Consolidated Statements of Operations
Pioneer Corporation and Subsidiaries
Year ended March 31
Thousands of
U.S. Dollars
Millions of Yen
(Note 1)
2003
2004
2005
2005
Revenues:
Operating revenue:
Net sales
¥
664,675
¥
689,064
¥
723,411
$
6,760,850
Royalty revenue
12,584
11,821
10,237
95,673
Total operating revenue
677,259
700,885
733,648
6,856,523
Interest income
2,153
1,420
1,930
18,037
Gain on sale of subsidiaries' stock
768
—
—
—
Other income (Note 15)
641
504
3,415
31,916
Total revenues
680,821
702,809
738,993
6,906,476
Cost and expenses:
Cost of sales
473,239
487,297
584,060
5,458,504
Selling, general and administrative expenses
168,736
166,415
195,693
1,828,906
Subsidy from the government (Note 10)
—
—
(48,697
)
(455,112
)
Interest expense
2,814
2,154
1,746
16,318
Loss on sale and disposal of fixed assets
4,519
3,454
40
374
Other deductions (Note 15)
3,434
1,641
6,338
59,234
Total cost and expenses
652,742
660,961
739,180
6,908,224
Income (loss) from continuing operations before
income taxes
28,079
41,848
(187
)
(1,748
)
Income taxes
(Note 11)
:
Current
14,477
17,829
7,688
71,850
Deferred
(5,445
)
758
(2,846
)
(26,598
)
Total income taxes
9,032
18,587
4,842
45,252
Income (loss) from continuing operations before
minority interest
and equity in losses
19,047
23,261
(5,029
)
(47,000
)
Minority interest in losses (earnings) of
subsidiaries
21
(654
)
(692
)
(6,467
)
Equity in losses of affiliated companies
(Note 7)
(3,126
)
(2,244
)
(3,068
)
(28,673
)
Income (loss) from continuing operations
15,942
20,363
(8,789
)
(82,140
)
Income from discontinued operations, net of tax
(Note 4)
136
4,475
—
—
Net income (loss)
¥
16,078
¥
24,838
¥
(8,789
)
$
(82,140
)
Yen
U.S. Dollars
2003
2004
2005
2005
Per share of common stock and per American Depositary
Share
(Note 19)
:
Basic:
Continuing operations
¥
89.48
¥
116.07
¥
(50.11
)
$
(0.47
)
Discontinued operations
0.76
25.51
—
—
Net income (loss)
¥
90.24
¥
141.58
¥
(50.11
)
$
(0.47
)
Diluted:
Continuing operations
¥
89.48
¥
115.18
¥
(50.11
)
$
(0.47
)
Discontinued operations
0.76
25.34
—
—
Net income (loss)
¥
90.24
¥
140.52
¥
(50.11
)
$
(0.47
)
See notes to consolidated financial statements.
F-5
Table of Contents
Consolidated Statements of Shareholders' Equity
Pioneer Corporation and Subsidiaries
Year ended March 31
Millions of Yen
Number of
Accumulated
Shares
Other
Total
Issued
Common
Capital
Retained
Comprehensive
Treasury
Shareholders'
(Thousands)
Stock
Surplus
Earnings
Loss
Stock
Equity
Balance at March 31, 2002
180,064
¥
49,049
¥
82,010
¥
240,692
¥
(24,736
)
¥
(12
)
¥
347,003
Comprehensive income (loss):
Net income
16,078
16,078
Other comprehensive loss
(30,893
)
(30,893
)
Comprehensive loss
(14,815
)
Value ascribed to stock
options (Note 13)
149
149
Purchase of treasury stock (Note 12)
(11,566
)
(11,566
)
Sales of treasury stock
(412
)
1,126
714
Cash dividends (¥17.50 per share)
(3,092
)
(3,092
)
Balance at March 31, 2003
180,064
49,049
82,159
253,266
(55,629
)
(10,452
)
318,393
Comprehensive income (loss):
Net income
24,838
24,838
Other comprehensive loss
(6,200
)
(6,200
)
Comprehensive income
18,638
Value ascribed to stock
options (Note 13)
305
305
Purchase of treasury stock (Note 12)
(14
)
(14
)
Sales of treasury stock
2
2
Cash dividends (¥25.00 per share)
(4,386
)
(4,386
)
Balance at March 31, 2004
180,064
49,049
82,464
273,718
(61,829
)
(10,464
)
332,938
Comprehensive income (loss):
Net loss
(8,789
)
(8,789
)
Other comprehensive income
14,160
14,160
Comprehensive income
5,371
Value ascribed to stock
options (Note 13)
270
270
Purchase of treasury stock (Note 12)
(1,979
)
(1,979
)
Sales of treasury stock
1
11
12
Cash dividends (¥25.00 per share)
(4,373
)
(4,373
)
Balance at March 31, 2005
180,064
¥
49,049
¥
82,735
¥
260,556
¥
(47,669
)
¥
(12,432
)
¥
332,239
Thousands of U.S. Dollars (Note 1)
Accumulated
Other
Total
Common
Capital
Retained
Comprehensive
Treasury
Shareholders'
Stock
Surplus
Earnings
Loss
Stock
Equity
Balance at March 31, 2004
$
458,402
$
770,692
$
2,558,112
$
(577,841
)
$
(97,795
)
$
3,111,570
Comprehensive income (loss):
Net loss
(82,140
)
(82,140
)
Other comprehensive income
132,336
132,336
Comprehensive income
50,196
Value ascribed to stock
options (Note 13)
2,523
2,523
Purchase of treasury stock (Note 12)
(18,495
)
(18,495
)
Sales of treasury stock
9
103
112
Cash dividends ($0.23 per share)
(40,869
)
(40,869
)
Balance at March 31, 2005
$
458,402
$
773,224
$
2,435,103
$
(445,505
)
$
(116,187
)
$
3,105,037
See notes to consolidated financial statements.
F-6
Table of Contents
Consolidated Statements of Cash Flows
Pioneer Corporation and Subsidiaries
Year ended March 31
Thousands of
U.S. Dollars
Millions of Yen
(Note 1)
2003
2004
2005
2005
Operating activities:
Net income (loss)
¥
16,078
¥
24,838
¥
(8,789
)
$
(82,140
)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Income from discontinued operations, net of tax
(136
)
(4,475
)
—
—
Depreciation and amortization
36,238
40,911
46,990
439,159
Minority interest in (losses) earnings of subsidiaries
(21
)
654
692
6,467
Equity in losses of affiliated companies, less dividends
3,184
2,248
3,072
28,710
Deferred income taxes
(5,445
)
758
(2,846
)
(26,598
)
Provision for pension and severance cost, less payments
3,812
3,579
2,463
23,019
Loss on sale and disposal of fixed assets
4,519
3,454
40
374
Impairment of long-lived assets
—
—
4,460
41,682
Write-down of available-for-sale securities and sundry
investments
1,369
245
51
477
(Gains) losses on sale of available-for-sale securities and
sundry investments
20
(37
)
(2,309
)
(21,579
)
Gain on sale of subsidiaries' stock
(768
)
—
—
—
Stock-based compensation expenses
149
305
270
2,523
Decrease (increase) in trade notes and accounts receivable
8,481
(10,186
)
(12,322
)
(115,159
)
Decrease (increase) in inventories
838
(20,707
)
6,317
59,037
Increase in prepaid expenses and other current assets
(1,122
)
(12,413
)
(5,051
)
(47,206
)
Increase in trade payables
13,221
18,989
4,405
41,168
Increase (decrease) in accrued taxes on income
5,450
3,782
(4,473
)
(41,804
)
Increase (decrease) in other accrued liabilities
8,172
7,654
(5,898
)
(55,121
)
Other
(2,530
)
779
(7,126
)
(66,598
)
Net cash provided by operating activities
91,509
60,378
19,946
186,411
Investing activities:
Payment for purchase of fixed assets
(40,493
)
(57,978
)
(63,866
)
(596,879
)
Payment for purchase of investment securities
(1,543
)
(595
)
(510
)
(4,766
)
Payment for purchase of available-for-sale securities
(10
)
(53
)
—
—
Payment for purchase of a subsidiary, net of cash acquired
—
—
(34,015
)
(317,897
)
Payment for other assets
(568
)
(953
)
(1,252
)
(11,701
)
Proceeds from sale of fixed assets
2,982
1,458
2,184
20,411
Proceeds from sale of discontinued operations
—
4,897
—
—
Proceeds from sale of investment securities
103
53
12
112
Proceeds from sale of available-for-sale securities
3,493
156
3,091
28,888
Other
808
261
840
7,851
Net cash used in investing activities
(35,228
)
(52,754
)
(93,516
)
(873,981
)
Financing activities:
Proceeds from issuance of convertible bonds
(net of issuance cost ¥1,586 million)
—
60,514
—
—
Payment of long-term debt
(4,914
)
(934
)
(6,246
)
(58,374
)
Increase (decrease) in short-term borrowings
(16,214
)
(3,509
)
9,025
84,346
Purchase of treasury stock (Note 12)
(11,566
)
(14
)
(1,979
)
(18,495
)
Proceeds from sale of treasury stock
714
2
12
112
Dividends paid
(2,688
)
(3,947
)
(4,386
)
(40,991
)
Dividends paid to minority interests
(12
)
(285
)
(445
)
(4,159
)
Net cash provided by (used in) financing activities
(34,680
)
51,827
(4,019
)
(37,561
)
Effect of exchange rate changes on cash and cash equivalents
(6,234
)
(9,512
)
1,851
17,299
Net increase (decrease) in cash and cash equivalents
15,367
49,939
(75,738
)
(707,832
)
Cash and cash equivalents, beginning of year
127,113
142,480
192,419
1,798,309
Cash and cash equivalents, end of year
¥
142,480
¥
192,419
¥
116,681
$
1,090,477
See notes to consolidated financial statements.
F-7
Table of Contents
Notes to Consolidated Financial Statements
Pioneer Corporation and Subsidiaries
1. Basis of presentation and significant accounting policies:
1) Basis of Presentation
Basis of Financial Statements—
The accompanying consolidated financial statements are stated in
Japanese yen, the currency of the country in which Pioneer
Corporation (Pioneer Kabushiki Kaisha) (the "parent company") is
incorporated. The translation of Japanese yen amounts into U.S.
dollar amounts for the year ended March 31, 2005 is included
solely for the convenience of readers outside Japan and has been
made at the rate of ¥107 to U.S.$1.00, the approximate rate of
exchange prevailing at the Tokyo Foreign Exchange Market at March
31, 2005. Such translation should not be construed as a
representation that Japanese yen amounts could be converted into
U.S. dollars at the above or any other rate.
The accompanying consolidated financial statements have been
prepared on the basis of accounting principles generally accepted
in the United States of America ("U.S. GAAP") except for the
omission of segment information concerning the operations of the
parent company and its majority-owned subsidiaries (together, the
"Company"), as required by Statement of Financial Accounting
Standards ("SFAS") No. 131.
The accompanying consolidated financial statements reflect
the adjustments which management believes are necessary to
conform them with U.S. GAAP. Effect has been given in the
consolidated financial statements to adjustments which, because
of either customary accounting practices in Japan or income tax
law requirements, have not been entered in the Company's general
books of account.
Nature of Operations—
The Company is engaged in the development, manufacture and sale
of electronics products. The Company is one of the leading
manufacturers of consumer- and commercial-use electronics such as
audio, video and car electronics on a global scale.
The principal production activities of the Company are
carried out in Asia including Japan. The Company's products are
generally sold under its own brand names, principally "Pioneer."
The principal markets for the Company are Japan, the United
States of America, European countries and Asia. The Company sells
its products to customers in consumer and commercial markets
through its sales offices in Japan, and its sales subsidiaries
and independent distributors overseas. On an
original-equipment-manufacturer basis, the Company markets
certain products, such as car electronics products, to other
companies.
Use of Estimates—
The preparation of the consolidated financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the dates of these
statements and the reported amounts of revenues and expenses
during the reporting period.
Due to the inherent uncertainty involved in making
estimates, actual results could differ from those estimates.
2) Summary of Significant Accounting Policies
Consolidation and Investments in Affiliated Companies—The
consolidated financial statements include the accounts of the
parent company and its majority-owned subsidiaries. Investments
in 20% to 50% owned companies are accounted for by the equity
method of accounting. All significant intercompany transactions have been eliminated.
Gains and losses resulting from the issuance of
subsidiaries' stock are recognized in consolidated earnings.
For the year ended March 31, 2005, the Company adopted the
Financial Accounting Standards Board ("FASB") Interpretation No.
46 (revised December 2003), "Consolidation of Variable Interest
Entities" ("FIN46R") which requires certain variable interest
entities to be consolidated by the primary beneficiary of the
entity if the equity investors in the entity do not have the
characteristics of a controlling financial interest or do not
have sufficient equity at risk for the entity to finance its
activities without additional subordinated financial support from
other parties. The adoption of FIN46R had no impact on its
financial position and results of operations.
Foreign Currency Translation—
For all significant foreign operations, the functional currency
is the local currency. Generally, all asset and liability
accounts of foreign operations are translated into Japanese yen
at year-end rates and all revenue and expense accounts are
translated at rates prevailing at the time of the transactions.
The resulting translation adjustments are accumulated and
reported as a component of accumulated other comprehensive income
(loss).
Foreign currency receivables and payables are translated at
year-end exchange rates and resulting exchange gains and losses
are recognized in earnings currently.
F-8
Table of Contents
Revenue Recognition—
Sales are generally recorded when merchandise is shipped or
delivered to customers. Recognition of sales occurs when the
title and risks and rewards of ownership are transferred to
customers based on sales contracts. In circumstances where sales
are recorded when merchandise is shipped to customers, the
shipment date is equivalent to the delivery date because of a
short delivery time. In certain cases, terms of the contract
require the product to pass customer inspection after delivery
and the Company records the sale upon satisfactory customer
acceptance. Royalty revenue, which is based on actual amounts
produced or sold by the licensee, is recognized when either a
royalty report or payment is received from the licensee,
whichever is earlier. Until such time, this revenue is not
considered to have met the recognition criterion of being fixed
or determinable, nor is collectibility reasonably assured. The
Company normally does not accept returns except for warranty
issues, non-compliance with purchase order specifications and
returns from end-users to certain dealers. The financial impact
of the future returns are estimated and reserved based on
historical experience.
Costs incurred by the Company in connection with sales
incentives related to the purchase or promotion of the Company's
products are classified as a reduction of revenues in accordance
with Emerging Issues Task Force ("EITF") Issue No. 01-9,
"Accounting for Consideration Given by a Vendor to a Customer."
Such costs include the estimated cost of promotional discounts,
dealer price protection, dealer rebates, consumer rebates, cash
discounts, and support for dealers' promotion of the Company's
products. Sales incentives that are dependent on future customer
performance are estimated and recorded at the later of when the
original sale is recorded and when the incentive is offered.
Cash and Cash Equivalents—
Cash and cash equivalents include cash on hand and deposits in
bank including time deposits. The Company considers all time
deposits with an original maturity of one year or less to be cash
equivalents. Such time deposits can be withdrawn at any time
without diminution of the principal amount.
Available-for-Sale Securities—
Under SFAS No. 115, "Accounting for Certain Investments in Debt
and Equity Securities," all debt securities and marketable equity
securities held by the Company are classified as
available-for-sale securities, and are carried at their fair
values with unrealized gains and losses reported in other
comprehensive income (loss). The cost of securities is determined
using the average-cost method.
The Company reviews the fair value of its available-for-sale
securities on a regular basis to determine if the fair value of
any individual security has declined below its cost and if such
decline is other than temporary. If the decline in value is
judged to be other than temporary, the cost basis of the security
is written down to fair value and the resulting realized loss is
included in the consolidated statements of operations. For such
marketable debt and equity securities, we assume the decline is
other than temporary when market value is less than cost for a
period of six months, or sooner depending on severity of decline
or other factors.
Sundry Investments—
Sundry investments are stated at cost. The Company reviews the
investments for impairment when the events or changes in
circumstances that may have significant adverse effect on the
value of those investments are identified. The investments are
written down if the value of investments is estimated to have
declined and such decline is other than temporary.
Inventories—
Inventories are valued at the lower of cost, which is determined
principally by the average-cost method, or market, which is net
realizable value. Cost of finished goods and work in process
inventories include the cost of materials, labor and applied
factory overhead. Applied factory overhead includes depreciation
on production related assets, utilities of the production area,
and production tools and equipment that are not capitalized.
Inventories are reviewed periodically and items considered to be
slow moving or obsolete are written down to market, net
realizable value.
F-9
Table of Contents
Property, Plant and Equipment and Depreciation—
Property, plant and equipment are stated at cost. Depreciation is
computed principally using the declining-balance method for
assets located in Japan and under the straight-line method for
assets located outside Japan, using rates based on the estimated
useful lives of the assets.
The principal ranges of estimated useful lives are as follows:
Buildings
15-65 years
Machinery and equipment
2-10 years
Goodwill and Other Intangible Assets—
Under SFAS No. 142, "Goodwill and Other Intangible Assets,"
acquired goodwill and other intangible assets that are determined
to have an indefinite life are no longer amortized. Instead, the
carrying value of these assets are reviewed for impairment at
least annually, or more frequently if events or changes in
circumstances indicate that the asset might be impaired.
Intangible assets that are determined to have a definite life are
amortized over their estimated useful lives. At March 31, 2005,
the Company had no goodwill. Amortization of intangible assets
with definite lives is computed using the straight-line method
with no residual value. The cost of patents is amortized over
seven to nineteen years and software is amortized principally
over two to five years.
Long-Lived Assets—
On April 1, 2002, the Company adopted SFAS No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets" which
applied to all long-lived assets.
The Company reviews its long-lived assets and certain
identifiable intangibles for impairment whenever events or
changes in circumstances indicate that the carrying amount of an
asset group may not be recoverable. For the purpose of assessment
of an impairment loss, the Company groups long-lived assets with
other assets and liabilities at the lowest level for which
identifiable cash flows are largely independent of the cash flows
of other assets and liabilities. When the sum of expected future
cash flows is less than the carrying amount of the asset group,
an impairment loss is recognized. Such impairment loss is
measured as the amount by which the carrying amount of the asset
group exceeds the fair value of the asset group.
In fiscal 2003, the Company sold its subsidiaries' stock and
recorded gains of ¥768 million. The subsidiaries' main operation
was karaoke business.
Warranty Reserve—
The Company engages in extensive product quality programs and
processes including actively monitoring and evaluating the
quality of component suppliers. The Company's warranty obligation
is affected by product failure rates and service costs incurred
in correcting product failure. The Company provides for the
estimated cost of product warranties at the time revenue is
recognized. These estimates are established using historical
information.
Long-term Debt—
Premiums and issuance costs of long-term debt are amortized over
the term of long-term debt using the interest method.
Income Taxes—
Income taxes are provided based on the asset and liability method
of accounting. Deferred income taxes are recorded to reflect the
tax consequences in future years of differences between the tax
basis of assets and liabilities and their financial reporting
amounts at year-end. These deferred taxes are measured by
applying currently enacted tax laws. A valuation allowance is
established to reduce deferred tax assets if it is more likely
than not that all, or some portion, of such deferred tax assets
will not be realized.
Research and Development Costs and Advertising Cost—
Research and development costs and advertising cost are expensed as incurred.
Shipping and Handling Charges—
Shipping and handling costs totaled ¥10,373 million, ¥11,282
million and ¥12,830 million ($119,907 thousand) for the years
ended March 31, 2003, 2004 and 2005, respectively, and are
included in selling, general and administrative expenses in the
consolidated statements of operations.
Accounting for Stock-Based Compensation—
The Company accounts for its stock-based compensation agreements
using the fair value based method in accordance with SFAS No.
123, "Accounting for Stock-Based Compensation."
F-10
Table of Contents
Earnings (loss) per Share—
Basic net income (loss) per share has been computed by dividing
net income (loss) available to holders of common stock by the
weighted-average number of shares of common stock outstanding
during each year. Diluted net income per share reflects the
potential dilution and has been computed on the basis that all
dilutive potential common stocks were exercised.
Derivatives—
Derivative financial instruments utilized by the Company are
comprised principally of forward exchange contracts and currency
swaps. Forward exchange contracts, the majority of which mature
within six months, and currency swaps, which mature from 2005 to
2006, are utilized to hedge exposures to foreign exchange risk
and interest risk. The Company does not hold or issue derivative
financial instruments for trading purposes.
The Company adopted SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended by SFAS No. 138,
"Accounting for Certain Derivative Instruments and Certain
Hedging Activities—an amendment of FASB Statement No. 133," and
by SFAS No. 149, "Amendment of SFAS No. 133 on Derivative
Instruments and Hedging Activities." Under SFAS No. 133, all
derivative instruments are recognized in the balance sheet at
their fair values and changes in fair value are recognized
immediately in earnings, unless the derivatives qualify as hedges
of future cash flows. For derivatives qualifying as hedges of
future cash flows, the effective portion of changes in fair value
is recorded in other comprehensive income, then recognized in
earnings along with the related effects of the hedged items. Any
ineffective portion of hedges is reported in earnings as it
occurs.
Forward exchange contracts and currency swaps are utilized
to hedge certain foreign currency and interest rate exposures.
However, none of these derivatives were designated as hedging
instruments under SFAS No. 133 at March 31, 2003, 2004 and 2005.
Unrealized gains and losses on such instruments are recognized
currently in earnings.
Reclassifications—
Certain reclassifications and format changes have been made to
prior year amounts to conform to the current year presentation.
New Accounting Standards—
In November 2004, the FASB issued SFAS No. 151, "Inventory Costs
— an amendment of ARB No. 43, Chapter 4." SFAS No. 151 clarifies
the language used in Accounting Research Bulletin No. 43 with
respect to accounting for abnormal amounts of idle facility
expenses, freight, handling costs and spoilage. SFAS No. 151 is
effective for fiscal years beginning after June 15, 2005, and is
required to be adopted by the Company effective April 1, 2006.
The adoption of this standard is not expected to have any
material impact on the Company's consolidated statements of
operations or financial position.
In December 2004, the FASB issued SFAS No. 153, "Exchanges
of Nonmonetary Assets — an amendment of APB Opinion No. 29,"
which will become effective for nonmonetary asset exchanges
occurring in fiscal periods beginning after June 15, 2005.
Accounting Principles Board ("APB") Opinion No. 29 generally
requires that exchanges of nonmonetary assets be measured based
on fair value of the assets exchanged but provided an exception
for nonmonetary exchanges of similar productive assets, which did
not result in a change in carrying value for the new asset
acquired even if the cash flows resulting from the exchange would
change significantly. SFAS No. 153 eliminates the exception for
nonmonetary exchanges of similar productive assets and replaces
it with a general exception for exchanges of nonmonetary assets
that do not have commercial substance. Nonmonetary exchanges lack
commercial substance if the cash flows to the entity will not
change significantly as a result of the exchange. The adoption of
this standard is not expected to have any material impact on the
Company's consolidated statements of operations or financial
position.
In December 2004, the FASB issued SFAS No. 123 (revised
2004), "Share-Based Payment." The revised SFAS No. 123 supersedes
APB Opinion No. 25, which requires recognition of an expense when goods or services are provided, and eliminates
the ability to account for these instruments under the intrinsic
value method prescribed by APB Opinion No. 25, and allowed under
the original provisions of SFAS No. 123. The adoption of this
standard is not expected to have any material impact on the
Company's consolidated statements of operations or financial
position because the Company accounts for its stock-based
compensation agreements using the fair value based method, not
the intrinsic value method prescribed by APB Opinion No. 25.
In March 2004, the EITF confirmed as a consensus EITF Issue
No. 03-1, "The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments"
F-11
Table of Contents
("EITF 03-1"). The objective of this issue is to provide guidance
on determining when an investment is considered impaired, whether
that impairment is other-than-temporary, and the measurement of
an impairment loss. The guidance also includes accounting
considerations subsequent to the recognition of an
other-than-temporary impairment and requires certain disclosures
about unrealized losses that have not been recognized as
other-than-temporary impairments. In September 2004, the FASB
issued FASB Staff Position EITF 03-1-1 that delays the effective
date for the measurement and recognition guidance included in
EITF 03-1. The disclosures required by EITF 03-1 have not been
deferred and are effective for the annual periods ending after
June 15, 2004.
In March 2005, the FASB issued FIN No. 47, "Accounting for
Conditional Asset Retirement Obligations—an interpretation of
FASB Statement No. 143" FIN No. 47 clarifies that the term
"conditional asset retirement obligation" as used in SFAS No.
143, "Accounting for Asset Retirement Obligations," refers to a
legal obligation to perform an asset retirement activity in which
the timing and (or) method of settlement are conditional on a
future event that may or may not be within the control of the
entity. The obligation to perform the asset retirement activity
is unconditional even though uncertainty exists about the timing
and (or) method of settlement. SFAS No. 143 acknowledges that in some cases, sufficient information may not
be available to reasonably estimate the fair value of an asset
retirement obligation. FIN No. 47 also clarifies when an entity
would have sufficient information to reasonably estimate the fair
value of an asset retirement obligation. FIN No. 47 is effective
no later than the end of fiscal years ending after December 15,
2005. The Company has not completed the study of what effect FIN
No. 47 will have on its financial position and results of
operations.
In May 2005, the FASB issued SFAS No. 154, "Accounting
Changes and Error Corrections—a replacement of APB Opinion No. 20
and FASB Statement No. 3." SFAS No. 154 replaces APB No. 20,
"Accounting Changes," and SFAS No. 3, "Reporting Accounting
Changes in Interim Financial Statements," and changes the
requirements for the accounting for and reporting of a change in
accounting principle. SFAS No. 154 applies to all voluntary
changes in accounting principle. SFAS No. 154 also applies to
changes required by an accounting pronouncement in the unusual
instance that the pronouncement does not include specific
transition provisions. SFAS No. 154 is effective for accounting
changes and corrections of errors made in fiscal years beginning
after December 15, 2005, with earlier adoption permitted.
Accordingly, the Company can not reasonably estimate the ultimate
impact of SFAS No. 154.
2. Supplemental cash flow information:
Selected cash payments and noncash activities for the years ended March 31, 2003, 2004 and 2005 were as follows:
Thousands of
Millions of Yen
U.S. Dollars
2003
2004
2005
2005
Cash payment for interest
¥
2,654
¥
2,458
¥
2,038
$
19,047
Cash payment for income taxes
9,047
14,260
17,195
160,701
Noncash investing activities:
Acquisition of a subsidiary:
Fair value of assets, net of cash acquired
—
—
60,736
567,626
Liability assumed including capital lease obligation of
¥12,882 million ($120,393 thousand)
—
—
(26,721
)
(249,729
)
Payment for acquisition of a subsidiary, net of cash acquired
—
—
34,015
317,897
Sales of discontinued operations:
Transferred assets
—
14,932
—
—
Transferred liabilities
—
(11,823
)
—
—
Foreign currency translation adjustments
—
(37
)
—
—
Gain on sales
—
1,825
—
—
Cash received—net
—
4,897
—
—
F-12
Table of Contents
3. Acquisition:
On September 30, 2004, the Company acquired 100% of the
issued common stock of NEC Plasma Display Corporation ("NPD"), a
subsidiary of NEC Corporation, and the intellectual property
rights of NPD for cash in an aggregate amount of ¥35,097 million.
NPD changed its name to Pioneer Plasma Display Corporation
("PPD") on September 30, 2004. This acquisition was to meet a
fast-growing global demand of plasma displays and to ensure its
leading role in this market.
The consolidated financial statements for the year ended
March 31, 2005 include the operating results of PPD from the date
of acquisition.
In connection with this acquisition, ¥6,937 million was
assigned to intangible asset of patents subject to amortization
with an amortization period of 7 years which is based on legal
provisions that may limit the useful life.
The following table summarizes the estimated fair values of
the assets acquired and liabilities assumed at the date of
acquisition:
Millions of Yen
Current assets
¥
15,390
Property, plant and equipment
37,426
Acquired intangible asset of patent
6,937
Other assets
2,065
Current liabilities
(17,420
)
Long-term liabilities
(9,301
)
Net assets acquired
¥
35,097
The following unaudited pro forma information shows the
results of the Company's consolidated operations for the years
ended March 31, 2004 and 2005 as if the acquisition had been
completed at the beginning of each fiscal year presented.
Unaudited
Millions of Yen
2004
2005
Revenues
¥
752,858
¥
754,161
Net income (loss)
17,332
(19,002
)
Yen
2004
2005
Net income (loss) per share:
Basic
¥
98.80
¥
(108.34
)
Diluted
98.02
(108.34
)
F-13
Table of Contents
4. Discontinued operations:
For the year ended March 31, 2004 in accordance
with SFAS No. 144, the Company presented the results of
discontinued operations as a separate line item in the
consolidated statements of operations under "Income
from discontinued operations, net of tax."
In order to improve management efficiency by concentrating
resources in strategic business, the Company reached
an agreement to sell 100% of its shares in two of its
wholly-owned subsidiaries, Pioneer LDC, Inc. and
Pioneer Entertainment (USA) Inc., to Dentsu Inc.,
Japan's largest comprehensive advertising agency.
These subsidiaries were engaged in the audio/video
software businesses in Tokyo, Japan and in California,
the United States of America, respectively. The
transfer of 100% of the shares of Pioneer LDC, Inc.
and 90% of the shares of Pioneer Entertainment (USA)
Inc. owned by the Company were each completed in the
year ended March 31, 2004. The remaining shares of
Pioneer Entertainment (USA) Inc. are expected to be
transferred to Dentsu Inc. by September 30, 2006.
In March 2004, Q-Tec, Inc., which had been a
99.26% owned subsidiary of the Company, became an
independent company through a management buyout after
acquiring all of the shares owned by the Company, with
a business alliance of Vision Capital Corporation and
Memory-Tech Corporation.
Summarized selected financial
information for the years ended March 31, 2003 and
2004 for the discontinued operations reclassified
during the year ended March 31, 2004 was as follows:
Millions of Yen
2003
2004
Revenues
¥
35,051
¥
16,664
Cost and expenses
¥
34,500
¥
16,324
Income before income taxes
¥
551
¥
340
Gain on sales of discontinued operations
—
1,825
Income taxes (benefit)
415
(2,310
)
Income from discontinued operations
¥
136
¥
4,475
F-14
Table of Contents
5.
Available-for-sale securities and sundry investments:
Cost, gross unrealized holding gains, gross unrealized holding losses and the aggregate fair
value of available-for-sale securities at March 31, 2004 and 2005 were as follows:
Millions of Yen
2004
2005
Gross
Gross
Gross
Gross
Unrealized
Unrealized
Unrealized
Unrealized
Holding
Holding
Aggregate
Holding
Holding
Aggregate
Cost
Gains
Losses
Fair Value
Cost
Gains
Losses
Fair Value
Marketable equity securities:
Non-current
¥
6,520
¥
17,890
¥
1
¥
24,409
¥
5,734
¥
16,438
¥
2
¥
22,170
Marketable debt securities:
Non-current
106
1
—
107
94
4
—
98
Total
¥
6,626
¥
17,891
¥
1
¥
24,516
¥
5,828
¥
16,442
¥
2
¥
22,268
Thousands of U.S. Dollars
2005
Gross
Gross
Unrealized
Unrealized
Holding
Holding
Aggregate
Cost
Gains
Losses
Fair Value
Marketable equity securities:
Non-current
$
53,589
$
153,626
$
19
$
207,196
Marketable debt securities:
Non-current
878
38
—
916
Total
$
54,467
$
153,664
$
19
$
208,112
The following table presents fair value and unrealized losses of available-for-sale marketable
equity securities, aggregated by length of time that the individual securities have been in a
continuous unrealized loss position at March 31, 2005.
Millions of Yen
Thousands of U.S. Dollars
Less than 12 Months
Less than 12 Months
Fair
Unrealized
Fair
Unrealized
Value
Losses
Value
Losses
Marketable equity securities
¥
16
¥
2
$
150
$
19
F-15
Table of Contents
At March 31, 2005, the fair values of marketable debt
securities by contractual maturities for securities classified as
available-for-sale due in one year through five years were ¥98
million ($916 thousand).
Gross realized gain on available-for-sale securities for the
years ended March 31, 2004 and 2005 were ¥43 million and ¥2,300
million ($21,495 thousand), respectively. Gross realized losses
for the years ended March 31, 2003, 2004 and 2005 were ¥16
million, ¥6 million and ¥1 million ($9 thousand), respectively.
There was no gross realized gain on available-for-sale securities
recorded for the year ended March 31, 2003.
The Company holds marketable equity securities of customers
and financial institutions for the purpose of maintaining
long-term relationships, whose share prices are highly volatile.
The Company has one investment in Japan which was in an
unrealized loss position due to the share price's poor
performance at March 31, 2005. The duration of the impairment was
less than six months. The Company evaluated the near-term
prospects of the issuer in relation to the severity and duration
of the impairment. Based on that evaluation and the Company's ability and intent to
hold this investment for a reasonable period of time sufficient
for a forecasted recovery of fair value, the Company does not
consider this investment to be other-than-temporarily impaired at
March 31, 2005. For the years ended March 31, 2003, 2004 and
2005, losses on other than temporary impairment of marketable
equity securities were ¥1,346 million, ¥27 million and ¥3 million
($28 thousand), respectively. For the year ended March 31, 2005,
a loss on other-than-temporary impairment of marketable debt
securities was ¥3 million ($28 thousand).
Sundry investments consist of non-marketable equity
securities and memberships. The aggregate cost of the Company's
non-marketable equity securities totaled ¥2,977 million ($27,823
thousand) at March 31, 2005. Investments with an aggregate cost
of ¥2,970 million ($27,757 thousand) were not evaluated for
impairment because (a) those investments were not practicable to
estimate the fair value and (b) the Company did not identify any
events or changes in circumstances that may have had significant
adverse effect on the fair value of those investments.
6.
Inventories:
Inventories at March 31, 2004 and 2005 comprise the following:
Thousands of
Millions of Yen
U.S. Dollars
2004
2005
2005
Finished products
¥
51,360
¥
52,807
$
493,523
Work in process
27,956
26,330
246,075
Materials and supplies
28,490
29,878
279,233
Total
¥
107,806
¥
109,015
$
1,018,831
7.
Investments in and advances to affiliated companies:
Investments in and advances to affiliated companies
principally represent the Company's equity in the underlying
assets of 20% to 50% owned companies. Dividends received from
companies accounted for on an equity basis were ¥58 million, ¥4
million and ¥4 million ($37 thousand), respectively, for the
years ended March 31, 2003, 2004 and 2005.
Retained earnings include the parent company's and its
consolidated subsidiaries' equity in undistributed earnings of
20% to 50% owned companies accounted for on an equity basis in
the amount of ¥310 million and ¥329 million ($3,075 thousand) at
March 31, 2004 and 2005, respectively.
Summarized financial information of companies owned 20% to
50%, including ELDis, Inc., 47.5% owned by Tohoku Pioneer
Corporation, a 67% owned subsidiary, accounted for by the equity
method of accounting is as follows:
F-16
Table of Contents
Thousands of
Millions of Yen
U.S. Dollars
2004
2005
2005
Current assets
¥
10,619
¥
8,427
$
78,757
Property, plant and equipment
28,978
25,326
236,692
Other assets
393
403
3,766
Total assets
¥
39,990
¥
34,156
$
319,215
Current liabilities
¥
2,822
¥
5,116
$
47,813
Long-term liabilities
27,110
24,736
231,178
Shareholders' equity
10,058
4,304
40,224
Total liabilities and shareholders' equity
¥
39,990
¥
34,156
$
319,215
Thousands of
Millions of Yen
U.S. Dollars
Year ended March 31
2003
2004
2005
2005
Net sales
¥
7,845
¥
8,408
¥
9,229
$
86,252
Gross profit (loss)
808
1,004
(1,932
)
(18,056
)
Net loss
6,802
5,023
5,801
54,215
8.
Intangible assets:
Intangible assets subject to amortization acquired during the
year ended March 31, 2005 totaled ¥12,189 million ($113,916
thousand) and primarily consist of software of ¥4,853 million
($45,355 thousand) and patents of ¥6,937 million ($64,832
thousand) (see Note 3). The weighted-average amortization
periods for software, patents and total acquired during the
year ended March 31, 2005 are 3.5 years, 7.0 years and 5.9
years, respectively.
Intangible assets subject to amortization are comprised of the following:
Thousands of
Millions of Yen
U.S. Dollars
2004
2005
2005
Gross
Gross
Gross
Carrying
Accumulated
Carrying
Accumulated
Carrying
Accumulated
Amount
Amortization
Amount
Amortization
Amount
Amortization
Software
¥
31,161
¥
(15,412
)
¥
34,281
¥
(19,595
)
$
320,383
$
(183,131
)
Patents
22,798
(21,426
)
28,107
(20,538
)
262,682
(191,944
)
Other
2,693
(848
)
2,737
(940
)
25,580
(8,785
)
Total
¥
56,652
¥
(37,686
)
¥
65,125
¥
(41,073
)
$
608,645
$
(383,860
)
The aggregate amortization expense for intangible
assets for the years ended March 31, 2003, 2004 and 2005
was ¥7,949 million, ¥6,109 million and ¥7,229 million
($67,561 thousand), respectively. The estimated aggregate
amortization expense for intangible assets for the next five
years is as follows:
Thousands of
Year ending March 31
Millions of Yen
U.S. Dollars
2006
¥
6,811
$
63,654
2007
5,929
55,411
2008
4,192
39,178
2009
3,059
28,589
2010
2,346
21,925
F-17
Table of Contents
9.
Short-term borrowings and long-term debt:
Short-term borrowings at March 31, 2004 and 2005 comprise the following:
Thousands of
Millions of Yen
U.S. Dollars
2004
2005
2005
Bank loans:
Weighted-average interest rate 1.74% at March 31, 2004
and 1.25% at March 31, 2005:
Uncollateralized
¥
23,327
¥
33,152
$
309,832
Long-term debt at March 31, 2004 and 2005 comprises the following:
Thousands of
Millions of Yen
U.S. Dollars
2004
2005
2005
Loans, principally from banks, maturing serially through 2013
interest ranging from 3.06% to 3.90% at March 31, 2004 and from 2.90%
to 3.06% at March 31, 2005:
Collateralized
¥
2,804
¥
1,960
$
18,318
Uncollateralized
3,680
50
467
2.35% Uncollateralized bonds due 2005
15,000
15,000
140,187
2.80% Uncollateralized bonds due 2008
10,000
10,000
93,458
Zero coupon convertible bonds due 2011, including unamortized issue premium,
¥1,779 million ($16,626 thousand) (effective annual rate 0.5%)
62,079
61,779
577,374
Long-term capital lease obligations, 1.25% to 3.26% at March 31, 2005,
due principally to 2012
—
11,129
104,009
Industrial development U.S. dollar revenue bonds due 2005 with fluctuating
interest rates (1.29% at March 31, 2004 and 1.70% at March 31, 2005),
subject to maximum rate of 15% in 2004 and 2005 and other
638
577
5,393
Total
94,201
100,495
939,206
Less—Portion due within one year
4,510
19,276
180,150
Total
¥
89,691
¥
81,219
$
759,056
F-18
Table of Contents
The outstanding bond indentures generally require the parent
company to provide collateral for the outstanding bonds if the
parent company provides collateral to new bonds issued in Japan.
On March 5, 2004, the parent company issued ¥60,000 million
zero coupon convertible bonds due 2011 (bonds with stock
acquisition rights) ("Bonds") at 103.5% of their principal
amount. The Bonds do not bear interest. The stock acquisition
rights are not transferable separately from the Bonds. The Bonds
are traded on the London Stock Exchange's market for listed
securities. The Bonds were issued in the denomination of ¥5
million each and each bondholder is entitled to exercise the
stock acquisition right from April 1, 2006 until February 18,
2011 (unless previously redeemed) into common shares at an
initial conversion price, subject to adjustment in certain
events, of ¥4,022. Market price of common stock at the date of
issuance of the Bonds was ¥3,220.
Parent company may redeem all, but not some of the Bonds,
with advance irrevocable notice to bondholders in each case (1)
if the closing price of common stock for each of the 30
consecutive trading days is at least 120% of the conversion price
on or after March 4, 2007 and prior to maturity, or (2) if the
laws or regulations of Japan having power to tax is changed, or
(3) if a resolution is passed at the general meeting of
shareholders of the parent company to become a wholly-owned
subsidiary of another company.
The stock acquisition right is also exercisable on or after
March 19, 2004 if the parent company issues an irrevocable notice
to bondholders for (2) or (3) above, or if a resolution passes at
a general meeting of shareholders of parent company (a) for any
consolidation or amalgamation of parent company with any company,
or (b) for any split of parent company's business, or (c) for the
parent company to become a wholly-owned subsidiary of another
company.
The parent company will redeem the outstanding Bonds at 100%
of their principal amount on March 4, 2011.
Unused lines of credit for short-term financing at March 31,
2005 approximated ¥230,109 million ($2,150,551 thousand) of which
¥30,000 million ($280,374 thousand) relates to commercial paper
programs. Unused commitments for long-term financing arrangements
at March 31, 2005 amounted to ¥5,000 million ($46,729 thousand).
There were no commitment fees.
Land and buildings with a book value of ¥5,999 million
($56,065 thousand) were pledged as collateral for certain
long-term loans of the Company at March 31, 2005.
The aggregate annual maturities of long-term debt during the
five years ending March 31, 2010 and thereafter are as follows:
Thousands of
Year ending March 31
Millions of Yen
U.S. Dollars
2006
¥
19,276
$
180,150
2007
3,338
31,196
2008
2,649
24,757
2009
10,740
100,374
2010
716
6,692
2011 and thereafter
63,776
596,037
Total
¥
100,495
$
939,206
Substantially all short-term and long-term loans from banks
are made under agreements which, as is customary in Japan,
provide that the bank may, under certain conditions, require the
borrower to provide collateral (or additional collateral) or
guarantors with respect to the loans, and that the bank may treat
any collateral, whether furnished as security for short-term or
long-term loans or otherwise, as collateral for all indebtedness
to such bank. The Company has no compensating balance
arrangements with any lending bank.
F-19
Table of Contents
10.
Pension plans and accrued severance cost:
The parent company and major domestic subsidiaries have
trusteed non-contributory defined benefit pension plans which
cover substantially all of their employees. The benefits are in
the form of annuity payments and/or lump-sum payments and are
based on points and length of service and conditions under which
termination occurs. The Company's policy is to fund amounts
required to maintain sufficient plan assets to provide for
accrued benefits, subject to the limitation on deductibility
imposed by the Japanese income tax laws.
The Company also sponsors a domestic contributory
defined-benefit welfare pension plan (the "welfare pension plan")
covering substantially all of its Japanese employees. The
benefits of the welfare pension plan are primarily based on years
of service and on the average compensation during years of
service and subject to governmental regulations. The welfare
pension plan consists of a substitutional portion, which has been
specified by the Japanese government's welfare pension
regulations, and a corporate portion established by the Company.
Management considers that a portion of the welfare pension plan,
which is administered by a board of trustees composed of
management and labor representatives, represents a welfare
pension plan carried on behalf of the Japanese government.
The Company received approval from the government for an
exemption from the obligation to pay benefits for future employee
service related to the substitutional portion on October 29, 2003
and an exemption from the obligation to pay benefits for past
employee service related to the substitutional portion on
November 1, 2004. On March 11, 2005, the benefit obligation of
the substitutional portion and the related government-specified
portion of plan assets of the welfare pension plan were
transferred to the government. In accordance with EITF Issue No.
03-2, "Accounting for the
Transfer to the Japanese Government of the Substitutional Portion
of Employee Pension Fund Liabilities," the Company recorded the
transaction upon completion of transfer to the government of the
substitutional portion of the benefit obligation and related plan
assets. The transfer resulted in the Company recording a subsidy
from the government of ¥48,697 million ($455,112 thousand)
representing the difference between the accumulated benefit
obligation of the substitutional portion and the related plan
assets. Additionally, the Company recorded a reduction in net
periodic benefit cost related to the derecognition of previously
accrued salary progression of ¥2,402 million ($22,448 thousand)
and a settlement loss of ¥51,893 million ($484,981 thousand). The
total amount of derecognition of previously accrued salary
progression and settlement loss is allocated to cost of sales of
¥25,339 million ($236,813 thousand) and selling, general and
administrative expenses of ¥24,152 million ($225,720 thousand).
In the year ended March 31, 2005, the Company amended the
corporate portion of the contributory plan. A major change was a
change in the benefits calculation factor and the period of
benefit payments. The amendment generated an unrecognized prior
service gain of ¥9,602 million ($89,738 thousand).
The plan assets and pension obligation for the
non-contributory plans and the contributory plan of the parent
company and certain subsidiaries are measured at March 31 in each
fiscal year.
Net periodic benefit costs for the non-contributory plans
and the contributory plan of the parent company and certain
domestic subsidiaries for the years ended March 31, 2003, 2004
and 2005 consisted of the following:
F-20
Table of Contents
Thousands of
Millions of Yen
U.S. Dollars
2003
2004
2005
2005
Non-
Non-
Non-
Non-
contributory
Contributory
contributory
Contributory
contributory
Contributory
contributory
Contributory
Plans
Plan
Plans
Plan
Plans
Plan
Plans
Plan
Service cost
¥
2,884
¥
2,400
¥
2,892
¥
2,860
¥
2,795
¥
1,745
$
26,121
$
16,308
Interest cost
1,695
3,195
1,518
3,301
1,712
3,512
16,000
32,823
Expected return on assets
(1,606
)
(1,941
)
(1,386
)
(1,741
)
(1,692
)
(2,037
)
(15,813
)
(19,037
)
Amortization of unrecognized
net actuarial loss
1,021
1,853
1,632
2,428
1,185
2,040
11,075
19,065
Amortization of unrecognized
net assets at date of application
(163
)
(344
)
(160
)
(344
)
(160
)
(344
)
(1,495
)
(3,215
)
Amortization of unrecognized
prior service gain
(535
)
(364
)
(535
)
(364
)
(535
)
(364
)
(5,000
)
(3,402
)
Settlement loss
—
—
—
—
—
51,893
—
484,981
Derecognition of previously
accrued salary progression
—
—
—
—
—
(2,402
)
—
(22,448
)
Net periodic benefit cost
¥
3,296
¥
4,799
¥
3,961
¥
6,140
¥
3,305
¥
54,043
$
30,888
$
505,075
Actuarial assumptions used to
determine net periodic
pension cost:
Discount rate
2.7
%
4.3
%
2.2
%
4.1
%
2.5
%
4.1
%
Rate of salary increase
—
*
2.7
%
—
*
2.6
%
—
*
2.6
%
Long-term rate of return on plan assets
3.9
%
3.9
%
3.9
%
3.9
%
3.9
%
3.9
%
*
Non-contributory plans are not pay-related.
F-21
Table of Contents
Reconciliations of beginning and ending balances of benefit obligations and the fair value of the
plan assets are as follows:
Thousands of
Millions of Yen
U.S. Dollars
2004
2005
2005
Non-
Non-
Non-
contributory
Contributory
contributory
Contributory
contributory
Contributory
Plans
Plan
Plans
Plan
Plans
Plan
Change in benefit obligation:
Benefit obligation at beginning of year
¥
69,446
¥
80,512
¥
68,465
¥
85,660
$
639,860
$
800,561
Service cost
2,892
2,860
2,795
1,745
26,121
16,308
Interest cost
1,518
3,301
1,712
3,512
16,000
32,823
Plan participants' contribution
—
659
—
39
—
364
Actuarial loss (gain)
(3,004
)
(543
)
(922
)
37,013
(8,617
)
345,916
Lump-sum cash payments
(1,429
)
—
(1,878
)
—
(17,551
)
—
Benefits paid
(507
)
(1,129
)
(623
)
(1,287
)
(5,822
)
(12,028
)
Transfer of substitutional portion
—
—
—
(92,219
)
—
(861,860
)
Plan amendment
—
—
—
(9,602
)
—
(89,738
)
Decrease due to sales of discontinued
operations
(451
)
—
—
—
—
—
Benefit obligation at end of year
¥
68,465
¥
85,660
¥
69,549
¥
24,861
$
649,991
$
232,346
Change in plan assets:
Fair value of plan assets at beginning of
year
¥
35,923
¥
44,639
¥
43,375
¥
52,220
$
405,374
$
488,037
Actual return on plan assets
5,739
5,670
2,016
688
18,841
6,430
Employer contribution
4,040
2,381
4,074
1,821
38,074
17,019
Plan participants' contribution
—
659
—
39
—
364
Lump-sum cash payments
(1,429
)
—
(1,878
)
—
(17,551
)
—
Benefits paid
(507
)
(1,129
)
(623
)
(1,287
)
(5,822
)
(12,028
)
Transfer of substitutional portion
—
—
—
(41,120
)
—
(384,299
)
Decrease due to sales of discontinued
operations
(391
)
—
—
—
—
—
Fair value of plan assets at end of year
¥
43,375
¥
52,220
¥
46,964
¥
12,361
$
438,916
$
115,523
Funded status
¥
(25,090
)
¥
(33,440
)
¥
(22,585
)
¥
(12,500
)
$
(211,075
)
$
(116,823
)
Unrecognized actuarial loss
27,476
35,483
25,045
19,912
234,066
186,094
Unrecognized net assets at the date of
application
(486
)
(953
)
(326
)
(609
)
(3,047
)
(5,691
)
Unrecognized prior service gain
(7,700
)
(4,209
)
(7,165
)
(13,447
)
(66,963
)
(125,673
)
Net amount recognized
¥
(5,800
)
¥
(3,119
)
¥
(5,031
)
¥
(6,644
)
$
(47,019
)
$
(62,093
)
Amounts recognized in the statement of financial
position consist of:
Accrued benefit liabilities
¥
(23,017
)
¥
(27,302
)
¥
(20,589
)
¥
(12,170
)
$
(192,421
)
$
(113,738
)
Accumulated other comprehensive income
17,217
24,183
15,558
5,526
145,402
51,645
Net amount recognized
¥
(5,800
)
¥
(3,119
)
¥
(5,031
)
¥
(6,644
)
$
(47,019
)
$
(62,093
)
Accumulated benefit obligation at end of year
¥
66,392
¥
79,522
¥
67,543
¥
24,531
$
631,243
$
229,261
Actuarial assumptions used to determine benefit
obligations:
Discount rate
2.5
%
4.1
%
2.5
%
2.5
%
Rate of salary increase
—
*
2.6
%
—
*
—
**
*
Non-contributory plans are not pay-related.
**
Corporate portion of contributory plan are not pay-related.
F-22
Table of Contents
Substantially all of the employees of U.S. and European
subsidiaries are covered by defined benefit pension plans.
The plan assets and pension obligations for the defined
benefit pension plans of U.S. and European subsidiaries are
measured at March 31 in each fiscal year.
Net periodic benefit costs for the defined benefit pension
plans of U.S. and European subsidiaries for the years ended March
31, 2003, 2004 and 2005 consisted of the following:
Thousands of
Millions of Yen
U.S. Dollars
2003
2004
2005
2005
Service cost
¥
566
¥
542
¥
565
$
5,280
Interest cost
632
639
693
6,477
Expected return on assets
(166
)
(442
)
(580
)
(5,420
)
Amortization of unrecognized net actuarial
loss (gain)
(9
)
11
52
486
Amortization of unrecognized prior service cost
17
16
4
37
Curtailment/settlement loss (gain)
(168
)
(18
)
26
243
Net periodic benefit cost
¥
872
¥
748
¥
760
$
7,103
Actuarial assumptions used to determine net
periodic pension cost:
Discount rate
6.5
%
6.1
%
5.6
%
Rate of salary increase
4.3
%
3.9
%
4.0
%
Long-term rate of return on plan assets
7.5
%
7.6
%
7.0
%
F-23
Table of Contents
Reconciliations of beginning and ending balances of benefit obligations and the fair value of the
plan assets are as follows:
Thousands of
Millions of Yen
U.S. Dollars
2004
2005
2005
Change in benefit obligation:
Benefit obligation at beginning of year
¥
10,732
¥
12,574
$
117,514
Service cost
542
565
5,280
Interest cost
639
693
6,477
Plan participants' contribution
103
110
1,028
Actuarial loss
1,496
781
7,299
Benefits paid
(235
)
(228
)
(2,131
)
Curtailment
(80
)
(1,412
)
(13,196
)
Translation adjustments
(623
)
512
4,785
Benefit obligation at end of year
¥
12,574
¥
13,595
$
127,056
Change in plan assets:
Fair value of plan assets at beginning of year
¥
6,248
¥
7,656
$
71,551
Actual return on plan assets
1,249
499
4,664
Employer contribution
703
990
9,252
Plan participants' contribution
103
110
1,028
Benefits paid
(232
)
(228
)
(2,131
)
Translation adjustments
(415
)
303
2,832
Fair value of plan assets at end of year
¥
7,656
¥
9,330
$
87,196
Funded status
¥
(4,918
)
¥
(4,265
)
$
(39,860
)
Unrecognized actuarial loss
2,317
1,814
16,954
Unrecognized prior service cost
62
58
542
Net amount recognized
¥
(2,539
)
¥
(2,393
)
$
(22,364
)
Amounts recognized in the statement of financial position
consists of:
Accrued benefit liabilities
¥
(3,096
)
¥
(3,263
)
$
(30,495
)
Accumulated other comprehensive income
557
870
8,131
Net amount recognized
¥
(2,539
)
¥
(2,393
)
$
(22,364
)
Accumulated benefit obligation at end of year
¥
10,556
¥
12,344
$
115,364
Actuarial assumptions used to determine benefit obligations:
Discount rate
5.6%
5.4%
Rate of salary increase
4.0%
4.0%
The accumulated benefit obligations and the fair value of plan assets for the pension plans
with accumulated benefit obligations in excess of plan assets are as follows:
Thousands of
Millions of Yen
U.S. Dollars
2004
2005
2005
Accumulated benefit obligations
¥
10,430
¥
11,474
$
107,234
Fair value of plan assets
7,483
8,369
78,215
F-24
Table of Contents
The unrecognized prior service gain/cost, the unrecognized
actuarial loss and the unrecognized net assets at the date of
initial application are being amortized over the average
remaining service period of employees.
The Company determines the expected long-term rate of return
on pension plan assets based on weighted average of expected
long-term returns on various categories of plan assets,
reflecting the current and target allocations of pension plan
asset. Expected long-term return by asset category is derived
from historical studies by investment advisors.
The pension plan weighted-average asset allocations at March
31, 2004 and 2005, by asset category are as follows:
Asset Category
2004
2005
Equity securities
46
%
53
%
Debt securities
30
34
Real estate and other
24
13
Total
100
%
100
%
The Company's investment policy is to maintain a diversified
portfolio of asset classes with the primary goal of producing an
adequate return that, when combined with the Company's
contribution, will maintain the fund's ability to meet future
cash requirements for pension benefit payments. For primary
domestic pension plans, the target asset allocation is
established based on long-term pension plan asset/liability
studies, and the current weighted-average
target asset allocation for these plans is; equity securities
56%, debt securities 41%, other 3%. All the assets are externally
managed and investment managers have discretion to carry out
investment operations within their respective mandates specified
by the Company.
With respect to directors, provision is made for lump-sum
severance indemnities on a basis considered adequate for such
future payments as may be approved by the shareholders.
In June 2002, Tohoku Pioneer Corporation, a 67% owned
subsidiary, implemented a voluntary early retirement plan. In
relation to this plan, the Company recorded special termination
benefits of ¥1,424 million. These special termination benefits
were included in the selling, general and administrative
expenses.
The Company expects to contribute ¥6,522 million ($60,953
thousand) to its defined benefit plans in the year ending March
31, 2006.
The following benefit payments, which reflect expected
future service, as appropriate, are expected to be paid:
Thousands of
Year ending March 31
Millions of Yen
U.S. Dollars
2006
¥
2,314
$
21,626
2007
2,905
27,150
2008
3,567
33,336
2009
4,028
37,645
2010
4,499
42,047
Years 2011–2015
26,888
251,290
11.
Income taxes:
The Company is subject to a number of different income taxes
which, in the aggregate, indicate a normal statutory tax rate of
approximately 42% for the years ended March 31, 2003 and 2004 and
41% for the year ended March 31, 2005 in Japan. A change in the
tax rate was enacted in Japan in March 2003 and the normal
effective statutory tax rate effective for the year beginning
April 1, 2004 was changed from 42% to 41%.
Income tax expense for the year ended March 31, 2004
included ¥682 million charges resulting from the settlement of a
proposed assessment from the U.S. Internal Revenue Service
relating to an adjustment to transfer prices between affiliated
companies for the years ended March 31, 1997 through 1999.
The Company's provision for income taxes differed from the
provision for income taxes at the normal statutory tax rates in
Japan as follows:
F-25
Table of Contents
Thousands of
Millions of Yen
U.S. Dollars
2003
2004
2005
2005
Computed tax expense at normal statutory tax rate
¥
11,793
¥
17,576
¥
(77
)
$
(720
)
Increase (decrease) resulting from:
Loss operations
992
1,294
6,137
57,355
Realization of tax benefit of operating loss carryforwards
(1,056
)
(395
)
(671
)
(6,271
)
Expenses not deductible for tax purpose:
Domestic
269
280
251
2,346
Foreign
439
149
325
3,037
Difference in foreign and Japanese tax rates
(1,595
)
(1,608
)
(1,848
)
(17,271
)
Effect of tax rate change on deferred taxes
835
447
—
—
Tax benefit for discontinued operations
—
3,025
—
—
Tax credit for research and development expenses
(530
)
(898
)
(232
)
(2,168
)
Other
(2,115
)
(1,283
)
957
8,944
Provision for income taxes
¥
9,032
¥
18,587
¥
4,842
$
45,252
Total income taxes provided for the years ended March 31, 2003, 2004 and 2005 are as follows:
Thousands of
Millions of Yen
U.S. Dollars
2003
2004
2005
2005
Provision for income taxes on income from continuing operations
¥
9,032
¥
18,587
¥
4,842
$
45,252
Provision for income taxes (benefit) on income from discontinued
operations
415
(2,310
)
—
—
Shareholders' equity—directly charged (credited):
Minimum pension liability adjustments
(8,927
)
6,953
8,225
76,869
Net unrealized gains on securities
(899
)
4,009
(593
)
(5,542
)
Total
¥
(379
)
¥
27,239
¥
12,474
$
116,579
Income from continuing operations before income taxes and income tax expense comprised the following components:
Thousands of
Millions of Yen
U.S. Dollars
2003
2004
2005
2005
Income (loss)
from continuing
operations before
income taxes:
Domestic
¥
10,137
¥
18,481
¥
(8,656
)
$
(80,897
)
Foreign
17,942
23,367
8,469
79,149
Total
¥
28,079
¥
41,848
¥
(187
)
$
(1,748
)
Income taxes—Current:
Domestic
¥
6,643
¥
10,799
¥
4,091
$
38,233
Foreign
7,834
7,030
3,597
33,617
Total
¥
14,477
¥
17,829
¥
7,688
$
71,850
Income taxes—Deferred:
Domestic
¥
(3,296
)
¥
(385
)
¥
(1,576
)
$
(14,729
)
Foreign
(2,149
)
1,143
(1,270
)
(11,869
)
Total
¥
(5,445
)
¥
758
¥
(2,846
)
$
(26,598
)
F-26
Table of Contents
The significant components of the deferred tax assets and liabilities at March 31, 2004 and 2005
are as follows:
Thousands of
Millions of Yen
U.S. Dollars
2004
2005
2005
Deferred
Deferred
Deferred
Deferred
Deferred
Deferred
Tax
Tax
Tax
Tax
Tax
Tax
Assets
Liabilities
Assets
Liabilities
Assets
Liabilities
Inventories
¥
6,911
—
¥
5,590
—
$
52,243
—
Marketable equity securities
2,971
¥
5,017
2,040
¥
4,445
19,066
$
41,542
Allowance for notes and accounts receivable
1,040
—
824
—
7,701
—
Accrued expenses
11,893
—
16,316
—
152,486
—
Warranty reserve
2,784
—
1,863
—
17,411
—
Tax loss carryforwards
9,297
—
21,232
—
198,430
—
Pension and severance cost
22,268
—
15,116
—
141,271
—
Property
1,840
—
4,230
—
39,533
—
Depreciation
1,907
302
3,029
490
28,308
4,580
Royalty receivable
974
—
539
—
5,037
—
Other
10,268
3,408
6,539
2,469
61,112
23,075
Total
72,153
8,727
77,318
7,404
722,598
69,197
Valuation allowance
(11,591
)
—
(20,605
)
—
(192,570
)
—
Total
¥
60,562
¥
8,727
¥
56,713
¥
7,404
$
530,028
$
69,197
The changes in the valuation allowance for the years ended March 31, 2003, 2004 and 2005 are as follows:
Millions of Yen
Balance at
Balance at
Beginning
Translation
End
Valuation Allowance
of Period
Addition*
Deduction
Adjustments
of Period
2003
¥
18,299
¥
5,741
¥
(8,912
)
¥
164
¥
15,292
2004
15,292
1,956
(5,469
)
(188
)
11,591
2005
11,591
12,851
(3,963
)
126
20,605
Thousands of U.S. Dollars
Balance at
Balance at
Beginning
Translation
End
Valuation Allowance
of Period
Addition*
Deduction
Adjustments
of Period
2005
$
108,327
$
120,103
$
(37,037
)
$
1,177
$
192,570
*
"Addition" includes valuation allowance of ¥7,953 million ($74,327 thousand) recognized by PPD at the time of acquisition at September 30, 2004.
The valuation allowance principally relates to deferred
tax assets for loss carryforwards of subsidiaries.
Decrease in valuation allowance for the year ended March 31,
2003 was mainly due to the reversal of valuation allowance which
had been provided for a tax benefit, the realization of which had
been determined to be not more likely than not, as profitability
of subsidiaries improved. Decrease in valuation allowance for the year ended March 31, 2004
was mainly due to the reversal of valuation allowance for
discontinued operations. Increase in valuation allowance for the
year ended March 31, 2005 was mainly due to losses incurred for
which the realization of the related deferred tax assets was
determined to be not more likely than not.
F-27
Table of Contents
At March 31, 2005, the Company has tax loss carry-forwards
which are available to reduce taxable income in subsequent
periods. If not utilized, such loss carryforwards expire as
follows:
Thousands of
Year ending March 31
Millions of Yen
U.S. Dollars
2006
¥
203
$
1,897
2007
536
5,009
2008
593
5,542
2009
155
1,449
2010
6,630
61,963
Thereafter
47,973
448,346
Total
¥
56,090
$
524,206
No provision for income taxes is recognized on undistributed
earnings of foreign subsidiaries that are not expected to be
remitted in the foreseeable future. Undistributed earnings of
foreign subsidiaries (including related foreign currency
translation adjustments) at March 31, 2004 and 2005 amounted to
approximately ¥116,689 million and ¥115,606 million ($1,080,430
thousand), respectively. It is not practical to estimate the
amount of taxes that might be payable on the eventual remittance
of such earnings.
The domestic undistributed earnings would not, under the
present Japanese tax laws, be subject to additional taxation.
12.
Shareholders' equity:
Common Stock and Capital Surplus—
As permitted by the Commercial Code of Japan (the "Code") prior
to April 1, 1991, the parent company had made free share
distributions which were accounted for by a transfer from capital
surplus to common stock or without any transfers in the capital
accounts.
Companies in the United States issuing shares in similar
transactions would be required to account for them as stock
dividends. Had the distributions been accounted for in the manner
adopted by the United States companies, ¥179,076 million
($1,673,607 thousand) would have been transferred from retained
earnings to appropriate capital accounts as of March 31, 2005.
The Code requires that all shares of common stock are
recorded with no par value and at least 50% of the issue price of
new shares is required to be recorded as common stock and the
remaining net proceeds as capital surplus.
Retained Earnings—
Retained earnings consist of legal reserve and unappropriated
retained earnings.
The Code also provides that an amount at least equal to 10%
of the aggregate amount of cash dividends and certain other cash
payments which are made as an appropriation of retained earnings
applicable to each fiscal period shall be appropriated and set
aside as a legal reserve until such reserve and capital surplus
equals 25% of common stock. The amount of total capital surplus
and legal reserve which exceeds 25% of the common stock is
available for appropriations by resolution of the shareholders.
In addition, the Code permits the transfer of a portion of
capital surplus and legal reserve to the common stock by
resolution of the Board of Directors.
The Code allows companies to repurchase treasury stock and
dispose of such treasury stock by resolution of the Board of
Directors. The repurchased amount of treasury stock cannot exceed
the amount available for future dividend plus amount of common
stock, capital surplus or legal reserve to be reduced in the case
where such reduction was resolved at the general shareholders
meeting.
F-28
Table of Contents
The amount available for dividends under the Code was
¥128,882 million ($1,204,505 thousand) as of March 31, 2005, that
is based on the amount recorded in the parent company's general
books and records maintained in accordance with accepted Japanese
accounting practices. The adjustments are included in the
accompanying consolidated financial statements to conform with
U.S. GAAP, but are not recorded in the books, and have no effect
on the determination of retained earnings available for dividends
under the Code. In addition to the provision that requires an
appropriation for a legal reserve in connection with the cash
payment as described above, the Code imposes certain limitations
on the amount of retained earnings available for dividends.
At the general shareholders meeting held on June 27, 2002,
the shareholders of the parent company authorized the purchase of
up to 10,000,000 shares of the parent company's common stock. In August 2002, November 2002 and
February 2003, the parent company purchased 1,610,000 shares,
2,000,000 shares and 1,500,000 shares of their common stock,
respectively, in the market for the aggregate cost of ¥11,492
million as a publicly announced plan to improve capital
efficiency pursuant to a revision in the Code. In March 2005, the
parent company purchased 1,000,000 shares of its common stock in
the market for the cost of ¥1,963 million as a publicly announced
plan.
The appropriations of retained earnings for the year ended
March 31, 2005, which have been incorporated in the accompanying
consolidated financial statements, will be proposed for approval
at the general shareholders' meeting to be held on June 29, 2005,
and will be recorded in the parent company's general books of
account after shareholders' approval.
13. Stock-based compensation plans:
The Company has a stock option plan as an incentive plan for
directors and selected employees.
In accordance with approval at shareholders' meetings on
June 29, 2000 and June 28, 2001, the Company granted share
subscription rights to employees. Also, in accordance with
approval at shareholders' meetings on June 27, 2002, June 27,
2003 and June 29, 2004, the Company granted share acquisition
rights to directors and certain employees of the Company. These
options vest over two years and expire in five years from the
date of grant. The Company recorded the fair value of the stock
option as a part of their remuneration.
A summary of information for the Company's stock option
plans is as follows:
Yen
Weighted-Average
Number of
Weighted-Average
Grant Date
Shares
Year
Plan
Exercisable Period
Exercise Price
Share Price
(Thousands)
2001
Stock option
From July 1, 2002 to June 30, 2005
¥
4,400
¥
4,250
191
2002
Stock option
From July 1, 2003 to June 30, 2006
3,791
3,750
191
2003
Stock option
From July 1, 2004 to June 29, 2007
2,477
2,170
564
2004
Stock option
From July 1, 2005 to June 30, 2008
2,951
2,845
313
2005
Stock option
From July 3, 2006 to June 30, 2009
2,944
2,660
316
U.S. Dollars
Weighted-Average
Weighted-Average
Grant Date
Year
Plan
Exercisable Period
Exercise Price
Share Price
2005
Stock option
From July 3, 2006 to June 30, 2009
$
27.51
$
24.86
F-29
Table of Contents
Remuneration cost recognized for stock-based compensation
plans for the years ended March 31, 2003, 2004 and 2005 were ¥149
million, ¥305 million and ¥270 million ($2,523 thousand),
respectively.
The weighted-average fair value per share at the date of
grant for the stock options granted during the years ended March
31, 2003, 2004 and 2005 were ¥704, ¥907 and ¥654 ($6.11),
respectively. The fair value of the stock options granted on the
date of grant, which is amortized to expense over the vesting period, is estimated using the
Black-Scholes option-valuation model with the following
weighted-average assumptions:
2003
2004
2005
Risk-free interest rate
0.24
%
0.34
%
0.50
%
Expected lives
3.48 years
3.48 years
3.48 years
Expected volatility
52.81
%
48.13
%
40.02
%
Expected dividends
0.69
%
0.88
%
0.93
%
A summary of the status of the Company's warrants, which expired up until August 26, 2004, and
options as of March 31, 2003, 2004 and 2005, and changes during the years is as follows:
Weighted-Average
Weighted-Average Exercise
Number of Shares
Remaining Life
Price per Share
(Thousands)
(Years)
Yen
U.S. Dollars
Outstanding at March 31, 2002
1,177
2.5
¥
3,798
Granted
564
2,477
Expired
(98
)
2,188
Outstanding at March 31, 2003
1,643
2.5
¥
3,441
Granted
313
2,951
Expired
(284
)
4,728
Outstanding at March 31, 2004
1,672
2.4
¥
3,131
Granted
316
2,944
$
27.51
Exercised
(4
)
2,477
23.15
Expired
(413
)
3,266
30.52
Outstanding at March 31, 2005
1,571
2.5
¥
3,059
$
28.59
Exercisable at March 31, 2004
795
¥
3,664
Exercisable at March 31, 2005
942
¥
3,133
$
29.28
F-30
Table of Contents
14. Other comprehensive income:
Change in accumulated other comprehensive income (loss) is as follows:
Millions of Yen
Foreign Currency
Total Accumulated
Minimum Pension
Net Unrealized
Translation
Other Comprehensive
Liability Adjustments
Gains on Securities
Adjustments
Income (Loss)
Balance at March 31, 2002
¥
(20,487
)
¥
4,583
¥
(8,832
)
¥
(24,736
)
Adjustments for the year
(12,188
)
(1,235
)
(17,470
)
(30,893
)
Balance at March 31, 2003
(32,675
)
3,348
(26,302
)
(55,629
)
Adjustments for the year
9,745
5,755
(21,700
)
(6,200
)
Balance at March 31, 2004
(22,930
)
9,103
(48,002
)
(61,829
)
Adjustments for the year
11,744
(853
)
3,269
14,160
Balance at March 31, 2005
¥
(11,186
)
¥
8,250
¥
(44,733
)
¥
(47,669
)
Thousands of U.S. Dollars
Foreign Currency
Total Accumulated
Minimum Pension
Net Unrealized
Translation
Other Comprehensive
Liability Adjustments
Gains on Securities
Adjustments
Income (Loss)
Balance at March 31, 2004
$
(214,299
)
$
85,075
$
(448,617
)
$
(577,841
)
Adjustments for the year
109,757
(7,972
)
30,551
132,336
Balance at March 31, 2005
$
(104,542
)
$
77,103
$
(418,066
)
$
(445,505
)
F-31
Table of Contents
Tax effects allocated to each component of other comprehensive income (loss) and reclassification
adjustments are as follows:
Millions of Yen
Before-Tax
Tax (Expense)
Minority
Net-of-Tax
Amount
or Benefit
Interest
Amount
2003:
Minimum pension liability adjustments
¥
(21,255
)
¥
8,927
¥
140
¥
(12,188
)
Net unrealized gains on securities:
Unrealized holding losses arising during year
(3,502
)
1,472
7
(2,023
)
Less—Reclassification adjustment for losses realized in net
income
1,366
(573
)
(5
)
788
Net unrealized losses
(2,136
)
899
2
(1,235
)
Foreign currency translation adjustments
(18,178
)
—
708
(17,470
)
Other comprehensive income (loss)
¥
(41,569
)
¥
9,826
¥
850
¥
(30,893
)
2004:
Minimum pension liability adjustments
¥
16,803
¥
(6,953
)
¥
(105
)
¥
9,745
Net unrealized gains on securities:
Unrealized holding gains arising during year
9,790
(4,013
)
(16
)
5,761
Less—Reclassification adjustment for gains realized in net
income
(10
)
4
—
(6
)
Net unrealized gains
9,780
(4,009
)
(16
)
5,755
Foreign currency translation adjustments:
Foreign currency translation adjustments arising during year
(23,010
)
—
912
(22,098
)
Less—Reclassification adjustment for losses realized in net
income
398
—
—
398
Net foreign currency translation adjustments
(22,612
)
—
912
(21,700
)
Other comprehensive income (loss)
¥
3,971
¥
(10,962
)
¥
791
¥
(6,200
)
2005:
Minimum pension liability adjustments
¥
20,003
¥
(8,225
)
¥
(34
)
¥
11,744
Net unrealized gains on securities:
Unrealized holding gains arising during year
843
(347
)
4
500
Less—Reclassification adjustment for gains realized in net
income
(2,293
)
940
—
(1,353
)
Net unrealized losses
(1,450
)
593
4
(853
)
Foreign currency translation adjustments
3,292
—
(23
)
3,269
Other comprehensive income (loss)
¥
21,845
¥
(7,632
)
¥
(53
)
¥
14,160
Thousands of U.S. Dollars
Before-Tax
Tax (Expense)
Minority
Net-of-Tax
Amount
or Benefit
Interest
Amount
2005:
Minimum pension liability adjustments
$
186,944
$
(76,869
)
$
(318
)
$
109,757
Net unrealized gains on securities:
Unrealized holding gains arising during year
7,879
(3,243
)
37
4,673
Less—Reclassification adjustment for gains realized in net
income
(21,430
)
8,785
—
(12,645
)
Net unrealized losses
(13,551
)
5,542
37
(7,972
)
Foreign currency translation adjustments
30,766
—
(215
)
30,551
Other comprehensive income (loss)
$
204,159
$
(71,327
)
$
(496
)
$
132,336
F-32
Table of Contents
15. Supplemental information:
Supplemental information for the years ended March 31, 2003, 2004 and 2005 is as follows:
Thousands of
Millions of Yen
U.S. Dollars
2003
2004
2005
2005
Research and development expenses charged
to cost and expenses
¥
45,388
¥
51,483
¥
55,897
$
522,402
Advertising costs charged to expense as incurred
11,089
12,813
11,599
108,402
Other income of revenues for the years ended March 31, 2003, 2004 and 2005 consisted of the following:
Thousands of
Millions of Yen
U.S. Dollars
2003
2004
2005
2005
Gain on sale of available-for-sale
securities and sundry investments
—
¥
37
¥
2,309
$
21,579
Foreign exchange gain, net
—
—
462
4,318
Dividend income
¥
283
326
385
3,598
Other
358
141
259
2,421
Total other income
¥
641
¥
504
¥
3,415
$
31,916
Other deductions of cost and expenses for the years ended March 31, 2003, 2004 and 2005 consisted
of the following:
Thousands of
Millions of Yen
U.S. Dollars
2003
2004
2005
2005
Impairment losses of long-lived assets
—
—
¥
4,460
$
41,682
Write-down of available-for-sale
securities and sundry investments
¥
1,369
¥
245
51
477
Foreign exchange loss, net
2,045
1,244
—
—
Other
20
152
1,827
17,075
Total other deductions
¥
3,434
¥
1,641
¥
6,338
$
59,234
The Company recognized impairment losses of long-lived
assets of ¥4,460 million ($41,682 thousand) for the year ended
March 31, 2005 in accordance with the provisions of SFAS No. 144.
The Company reviewed PPD's production facilities for
impairment because of the unfavorable post-acquisition changes in
market conditions for plasma displays. For the impairment review
purpose, PPD's production facilities were grouped with other
assets and liabilities at the lowest level for which identifiable
cash flows are largely independent of the cash flows of other
assets and liabilities, and as a result, an impairment loss of
¥3,396 million ($31,738 thousand) was recognized as the excess of
the carrying value of the asset group over the estimated fair
value of the asset group. Fair value was determined using an
expected present value technique.
In addition, a foreign subsidiary recognized an impairment
loss of ¥477 million ($4,458 thousand) for the year ended March 31, 2005 related to the property and equipment of the
plant to be closed.
During the year ended March 31, 2005, the Company decided to
no longer sell set-top boxes for cable TV providers in the United
States in order to shift its research and development resources
toward products for the open cable market. The Company continues
to manufacture and sell cable TV set-top boxes in Japan and there was no
separate financial reporting for the distribution of the cable TV
set-top boxes to the U.S. market. As a result of this decision,
the Company recognized an impairment loss of ¥587 million ($5,486
thousand) related to intangible assets of software in Japan for
the manufacture of cable TV set-top boxes to the U.S. market and,
in addition to the impairment loss, charged ¥1,783 million
($16,664 thousand) in "Other" of other deductions of cost and
expenses for asset disposal cost, employee termination benefits
and contract termination costs for the year ended March 31, 2005.
F-33
Table of Contents
16. Leased assets:
The Company leases certain land, machinery and equipment,
office space, warehouses, computer equipment and employees'
residential facilities.
An analysis of assets under capital leases was as follows:
Thousands of
Millions of Yen
U.S. Dollars
2005
2005
Machinery and equipment
¥
12,625
$
117,991
Accumulated depreciation
(1,794
)
(16,767
)
Total
¥
10,831
$
101,224
The following is a schedule by year of the future minimum
lease payments under capital leases together with the present
value of the net minimum lease payments as of March 31, 2005:
Thousands of
Year ending March 31
Millions of Yen
U.S. Dollars
2006
¥
3,710
$
34,673
2007
3,261
30,476
2008
2,478
23,159
2009
509
4,757
2010
499
4,663
2011 and thereafter
1,289
12,047
Total minimum lease payments
11,746
109,775
Less—Amount representing interest
617
5,766
Present value of net minimum
lease payment
11,129
104,009
Less—Current obligations
3,441
32,159
Long-term capital lease obligations
¥
7,688
$
71,850
Rental expenses under operating leases for the years ended
March 31, 2003, 2004 and 2005 aggregated ¥6,068 million, ¥6,268
million and ¥8,376 million ($78,280 thousand), respectively. Such
rentals relate principally to cancelable leases which are
renewable upon expiration.
The net minimum rental payments under operating leases that
have initial or remaining noncancelable lease terms in excess of
one year at March 31, 2005 are as follows:
Thousands of
Year ending March 31
Millions of Yen
U.S. Dollars
2006
¥
6,335
$
59,206
2007
4,925
46,028
2008
3,585
33,505
2009
1,249
11,673
2010
1,051
9,822
Thereafter
2,552
23,850
Total minimum future rentals
¥
19,697
$
184,084
F-34
Table of Contents
17. Financial instruments:
Derivatives—
The Company operates internationally, giving rise to exposure to
market risks from changes in foreign exchange rates and interest
rates. Derivative financial instruments are utilized by the
Company to reduce those risks but are not held or issued for
trading purposes.
To hedge certain purchase and sale commitments and
anticipated but not yet committed transactions denominated in
other than functional currencies, the Company enters into forward
exchange contracts.
The notional amounts of forward exchange contracts as of
March 31, 2004 and 2005 were ¥20,505 million and ¥34,950 million
($326,636 thousand), respectively.
To change currency and interest rate features of
intercompany finance transactions, the Company entered into
currency swap contracts with banks. Currency swap contracts
effectively changed, in substance, the U.S. dollars floating
interest rate intercompany borrowings into Japanese yen fixed and
floating interest rate borrowings and euro fixed interest rate
borrowings. The notional amounts of currency swap contracts as of
March 31, 2004 and 2005 were ¥35,106 million and ¥35,489 million
($331,673 thousand), respectively.
Concentration of Credit Risk—
The Company distributes its products to a diverse group of
domestic and foreign customers. Trade receivables arising from
these sales represent credit risk to the Company. However, due to
the large number and diversity of the Company's customer base,
concentration of credit risk with respect to trade receivables is
limited. The Company performs ongoing credit evaluation of its
customers' financial condition and, generally, requires no
collateral from its customers.
Derivative financial instruments that the Company holds or
issues may expose the Company to credit risks if the
counterparties are unable to meet the terms of such contracts.
The Company minimizes credit risk exposure of these
derivatives by limiting the counterparties to major international
banks and financial institutions as well as avoiding
concentration with certain counterparties, and also by making
frequent credit reviews of these counterparties. Management does
not expect to incur any significant losses as the result of
counterparty default.
F-35
Table of Contents
18. Fair value of financial instruments:
The following table presents the carrying amounts and fair values of the Company's financial
instruments at March 31, 2004 and 2005:
Millions of Yen
Thousands of U.S. Dollars
2004
2005
2005
Carrying
Fair
Carrying
Fair
Carrying
Fair
Amounts
Value
Amounts
Value
Amounts
Value
Assets:
Available-for-sale securities
¥
24,516
¥
24,516
¥
22,268
¥
22,268
$
208,112
$
208,112
Sundry investments
528
541
411
452
3,841
4,224
Long-term receivables
253
244
185
179
1,729
1,673
Other financial instruments:
Forward exchange contracts
790
790
50
50
467
467
Currency swap
—
—
190
190
1,776
1,776
Liabilities:
Long-term debt, including
current maturity
(94,201
)
(100,495
)
(939,206
)
Less—Capital lease obligations
—
11,129
104,009
Long-term debt—net
(94,201
)
(89,507
)
(89,366
)
(84,301
)
(835,197
)
(787,860
)
Other financial instruments:
Forward exchange contracts
(95
)
(95
)
(555
)
(555
)
(5,187
)
(5,187
)
Currency swap
(3,179
)
(3,179
)
(3,009
)
(3,009
)
(28,121
)
(28,121
)
Estimation of Fair Values—
The following notes summarize the major methods and assumptions
used in estimating the fair values of financial instruments.
Short-term financial instruments are valued at their
carrying amounts included in the consolidated balance sheets,
which are reasonable estimates of fair value due to the
relatively short period to maturity of the instruments. This
approach is applied to cash and cash equivalents, trade
receivables, short-term borrowings and trade payables.
The carrying amounts and the fair values of
available-for-sale securities are disclosed in Note 5.
Sundry investments included non-marketable equity
securities, amounting to ¥2,855 million and ¥2,977 million
($27,823 thousand) at March 31, 2004 and 2005, respectively, and
memberships amounting to ¥528 million and ¥411 million ($3,841
thousand) at March 31, 2004 and 2005, respectively. The
corresponding fair values of non-marketable equity securities at those dates were not computed
as such estimation is not practicable. The fair values of
memberships were estimated based on the market price.
The fair values of long-term receivables were estimated by
discounting estimated future cash flows using current interest
rates.
The fair values of the Company's long-term debt were
estimated using a discounted cash flow analysis based on
incremental borrowing rates for similar types of borrowing
arrangements.
The fair values of forward exchange contracts were estimated
based on the quoted market rates of similar contracts. The
currency swap and the interest rate swap were valued at
replacement cost.
The fair values of the Company's contingent liabilities for
guarantees of loans are not significant.
F-36
Table of Contents
19. Basic and diluted earnings (loss) per share:
A reconciliation of the numerators and denominators of basic and diluted net income (loss) per
share computation for the years ended March 31, 2003, 2004 and 2005 is as follows:
Thousands of
Millions of Yen
U.S. Dollars
2003
2004
2005
2005
Income (loss) from continuing operations
¥
15,942
¥
20,363
¥
(8,789
)
$
(82,140
)
Effect of dilution—Zero coupon convertible
bonds
—
(21
)
—
—
Income (loss) from continuing
operations—diluted
¥
15,942
¥
20,342
¥
(8,789
)
$
(82,140
)
Income from discontinued operations, net of tax
¥
136
¥
4,475
—
—
Net income (loss)
¥
16,078
¥
24,838
¥
(8,789
)
$
(82,140
)
Effect of dilution—Zero coupon convertible
bonds
—
(21
)
—
—
Net income (loss)—diluted
¥
16,078
¥
24,817
¥
(8,789
)
$
(82,140
)
Number of Shares (Thousands)
Weighted-average common shares outstanding
178,168
175,433
175,389
Effect of dilutive convertible bonds
—
1,115
—
Effect of dilutive warrants
2
—
—
Effect of stock options
1
61
—
Diluted common shares outstanding
178,171
176,609
175,389
Yen
U.S. Dollars
Basic net income per share:
Income (loss) from continuing operations
¥
89.48
¥
116.07
¥
(50.11
)
$
(0.47
)
Income from discontinued operations, net of tax
0.76
25.51
—
—
Net income (loss)
¥
90.24
¥
141.58
¥
(50.11
)
$
(0.47
)
Diluted net income per share:
Income (loss) from continuing operations
¥
89.48
¥
115.18
¥
(50.11
)
$
(0.47
)
Income from discontinued operations, net of tax
0.76
25.34
—
—
Net income (loss)
¥
90.24
¥
140.52
¥
(50.11
)
$
(0.47
)
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Table of Contents
20. Supplemental schedule:
The changes in the allowance for doubtful receivables for the years ended March 31, 2003, 2004
and 2005 are as follows:
Millions of Yen
Balance at
Charged (Credited)
Deductions for
Beginning
to Costs and
Accounts
Translation
Balance at End
Allowance for Doubtful Receivables
of Period
Expenses
Written Off
Adjustments
of Period
2003
¥
5,319
¥
411
¥
(765
)
¥
(334
)
¥
4,631
2004
4,631
(667
)
(13
)
(417
)
3,534
2005
3,534
(515
)
(497
)
88
2,610
Thousands of U.S. Dollars
Balance at
Charged (Credited)
Deductions for
Beginning
to Costs and
Accounts
Translation
Balance at End
Allowance for Doubtful Receivables
of Period
Expenses
Written Off
Adjustments
of Period
2005
$
33,028
$
(4,813
)
$
(4,645
)
$
822
$
24,392
The changes in the warranty reserve for the years ended March 31, 2003, 2004 and 2005 are as follows:
Millions of Yen
Balance at
Beginning
Translation
Balance at End
Warranty Reserve
of Period
Provision
Payments
Adjustments
of Period
2003
¥
6,481
¥
7,642
¥
(7,374
)
¥
(256
)
¥
6,493
2004
6,493
6,050
(6,669
)
(455
)
5,419
2005
5,419
8,030
(7,844
)
117
5,722
Thousands of U.S. Dollars
Balance at
Beginning
Translation
Balance at End
Warranty Reserve
of Period
Provision
Payments
Adjustments
of Period
2005
$
50,645
$
75,047
$
(73,308
)
$
1,093
$
53,477
F-38
Table of Contents
21. Commitments and contingent liabilities:
Commitments outstanding at March 31, 2005 for the purchase
of property, plant and equipment and advertisement payments
approximated ¥3,967 million ($37,075 thousand).
Contingent liabilities at March 31, 2005 principally for
loans guaranteed in the ordinary course of business amounted to
¥25,403 million ($237,411 thousand).
Loans guaranteed at March 31, 2005 are as follows:
Guaranteed Amount
Thousands of
Guarantee for
Guaranteed until
Millions of Yen
U.S. Dollars
Affiliated company
May 31, 2012–October 22, 2012
¥
25,000
$
233,645
Affiliated company
April 1, 2005–March 31, 2006
403
3,766
Total
¥
25,403
$
237,411
The Company entered into these guarantee agreements to sustain the business relationships.
The Company will be required to pay the guaranteed amounts if the affiliated companies are unable to repay.
During the year ended March 31, 2001, the Company received a notice of proposed assessment from the
German tax authorities for approximately EUR 21 million (¥2,916 million translated at the foreign exchange rate
at March 31, 2005) relating to a tax position taken in prior years concerning intercompany purchase prices. The Company
officially challenged the proposed assessment by arbitration procedures. There was no progress during the year ended March
31, 2005. In the opinion of management, it is not possible at this time to determine the ultimate resolution of this matter.
22. Remuneration of directors, executive officers and corporate auditors:
The aggregate remuneration (including bonuses and
stock-based compensation [see Note 13]) charged to income by the
parent company for directors, executive officers and corporate
auditors for the years ended March 31, 2003, 2004 and 2005
totaled ¥965 million, ¥1,238 million and ¥1,136 million ($10,617
thousand), respectively.
23. Subsequent event:
On April 15, 2005, Pioneer Speakers, Inc. ("PSI"), a wholly-owned U.S.
subsidiary of Tohoku Pioneer Corporation received a notice from the United States
Customs and Border Protection proposing additional custom duty and penalty of
approximately $26 million (¥2,792 million translated at the foreign exchange rate at
March 31, 2005) for alleged erroneous claims for preferential treatment of duties on
products imported by PSI for the period of June 23, 1997 through
December 31, 1999. PSI
intends to file a petition for relief from this penalty action. In the opinion of
management, it is not possible at this time to determine the ultimate outcome of this
matter.
F-39