UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

PIONEER CORPORATION

(Translation of registrant’s name into English)

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F þ Form 40-F o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o No þ

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

				PIONEER CORPORATION
				(Registrant)
Date: October 31, 2006
		By		/s/ Tamihiko Sudo
				Tamihiko Sudo
				President and Representative Director

This report on Form 6-K contains the following:

1.

The announcement released by the Company to the press in Japan dated October 31, 2006, concerning its consolidated second-quarter and semiannual business results, and non-consolidated semiannual business results, for the periods ended September 30, 2006.

2.

The announcement released by the Company to the press in Japan dated October 31, 2006, concerning its decision to sell some land and buildings, comprising all of its Tokorozawa Plant and some of its Omori Plant.

For Immediate Release
October 31, 2006

Pioneer Announces Business Results for 2Q Fiscal 2007

TOKYO — Pioneer Corporation today announced its consolidated second-quarter and semiannual business results, and non-consolidated semiannual business results, for the periods ended September 30, 2006.

Consolidated Financial Highlights

(In millions of yen except per share information)

		Three months												Six months
		ended September 30												ended September 30
										% to												% to
										prior												prior
		2006				2005				year				2006				2005				year
Operating revenue		¥	188,643			¥	179,888				104.9	%		¥	380,319			¥	339,084				112.2	%
Operating income (loss)			4,614				(7,733	)			—				11,691				(16,664	)			—
Income (loss) from continuing operations before income taxes			4,620				(37,481	)			—				12,624				(44,153	)			—
Income (loss) from continuing operations			887				(52,838	)			—				6,433				(58,207	)			—
Income from discontinued operations, net of tax			2,659				137				—				2,775				163				—
Net income (loss)		¥	3,546			¥	(52,701	)			—	%		¥	9,208			¥	(58,044	)			—	%
Basic net income (loss) per share:
Income (loss) from continuing operations		¥	5.09			¥	(302.92	)						¥	36.88			¥	(333.70	)
Income from discontinued operations, net of tax			15.24				0.78								15.91				0.93
Net income (loss)		¥	20.33			¥	(302.14	)						¥	52.79			¥	(332.77	)
Diluted net income (loss) per share:
Income (loss) from continuing operations		¥	4.28			¥	(302.92	)						¥	33.15			¥	(333.70	)
Income from discontinued operations, net of tax			14.04				0.78								14.65				0.93
Net income (loss)		¥	18.32			¥	(302.14	)						¥	47.80			¥	(332.77	)

Note:		In fiscal 2006, the Company sold a subsidiary engaged in the development of cable TV software, and in the second quarter of fiscal 2007, sold subsidiaries involved in the electronic components business. The operating results of these subsidiaries and the gain on the sales are presented as income from discontinued operations in the above table. Previously reported amounts have been reclassified accordingly.

Consolidated Business Results

For the second quarter of fiscal 2007, the three months ended September 30, 2006, consolidated operating revenue increased 4.9% from the second quarter of fiscal 2006 to ¥188,643 million (US$1,598.7 million), mainly due to higher sales of plasma displays and car navigation systems, and the weaker yen, despite lower sales of DVD recorders.

     Operating income was ¥4,614 million (US$39.1 million), compared with an operating loss of ¥7,733 million in the corresponding period a year earlier. This reflected higher sales, as well as an improved gross profit margin and lower selling, general and administrative expenses due to the benefits of business restructuring measures started in the previous fiscal year and the weaker yen. Net income totaled ¥3,546 million (US$30.1 million), compared with a net loss of ¥52,701 million in the same period in fiscal 2006. This was due to the absence of impairment losses on property, plant and equipment, equity in losses of affiliated companies and valuation allowances for deferred tax assets, which we recorded in connection with business restructuring in the corresponding period of the previous year, as well as a gain on sale of subsidiaries involved in the electronic components business in the period under review.

     During the second quarter of fiscal 2007, the average value of the Japanese yen was weaker against the U.S. dollar and the euro by 4.3% and 8.4%, respectively, compared with the second quarter of fiscal 2006.

Home Electronics sales increased 6.8% year on year to ¥87,301 million (US$739.8 million). Plasma display sales rose due to strong performance by our own-brand models in North America and Europe, despite a drop in OEM (original equipment manufacturing) sales. Sales of plasma displays accounted for approximately 46% of total Home Electronics sales. In addition, sales of DVD drives rose, while there was a large drop in sales of DVD recorders from the same period a year ago.

     In terms of geographic sales, sales in Japan declined 15.1% to ¥16,152 million (US$136.9 million), while overseas sales climbed 13.4% to ¥71,149 million (US$603.0 million).

     The operating loss in this segment was ¥3,848 million (US$32.6 million), showing an improvement compared with an operating loss of ¥13,140 million in the corresponding period of the previous fiscal year. In addition to growth in sales, this improvement principally reflected an increased gross profit margin mainly in the plasma display field, largely due to the benefits of business restructuring measures and efforts to strictly control costs and improve manufacturing efficiency.

Car Electronics sales increased 7.0% to ¥83,634 million (US$708.8 million), mainly due to increased sales of car navigation systems, despite slightly lower sales of car audio products. In car navigation systems, consumer-market sales increased in Japan and elsewhere, while OEM sales rose in North America. In car audio products, consumer-market sales rose in Central and South America, but fell in Japan and North America. Total OEM sales in this segment accounted for approximately 35% of Car Electronics sales.

     In terms of geographic sales, sales in Japan increased 8.9% to ¥28,564 million (US$242.1 million), and overseas sales rose 6.1% to ¥55,070 million (US$466.7 million).

     Operating income in this segment increased 92.9% year on year to ¥5,586 million (US$47.3 million) due to sales growth and cost reductions achieved by reorganizing our production sites.

In Patent Licensing, royalty revenue decreased 88.0% to ¥500 million (US$4.2 million). This decrease was mainly attributable to the impact of the expiration of some patents licensed to the optical disc industry.

     Operating income in this segment declined 94.8% to ¥187 million (US$1.6 million) compared with the same period of the previous fiscal year.

In the Others segment, sales rose 8.7% to ¥17,208 million (US$145.8 million), mainly reflecting higher sales of factory automation systems and organic light-emitting diode (OLED) displays in Japan.

     In terms of geographic sales, sales in Japan increased 33.2% to ¥11,262 million (US$95.4 million), while overseas sales declined 19.4% to ¥5,946 million (US$50.4 million).

     Operating income in this segment was ¥2,566 million (US$21.7 million) compared with an operating loss of ¥780 million in the corresponding period of the previous fiscal year. This mainly reflected improved profitability in OLED displays due to the benefits of business restructuring measures.

For the first half of fiscal 2007, the six months ended September 30, 2006, consolidated operating revenue rose 12.2% from the first half of fiscal 2006 to ¥380,319 million (US$3,223.0 million). Operating income was ¥11,691 million (US$99.1 million), compared with an operating loss of ¥16,664 million in the corresponding period a year earlier. Net income was ¥9,208 million (US$78.0 million), compared with a net loss of ¥58,044 million in the same period of fiscal 2006.

Note:		Operating income (loss) in each business segment represents operating income (loss) before elimination of intersegment transactions.

Cash Flows

During the first half of fiscal 2007, operating activities used net cash of ¥9,855 million (US$83.5 million). This was mainly due to an increase in trade receivables and inventories of ¥42,652 million (US$361.5 million), as well as a decrease in accrued liabilities of ¥7,866 million (US$66.7 million), which were partially offset by net income of ¥9,208 million (US$78.0 million) and depreciation and amortization of ¥18,500 million (US$156.8 million) for this period. Meanwhile, investing activities used net cash of ¥7,758 million (US$65.7 million). Although the sale of subsidiaries provided net cash of ¥10,862 million (US$92.1 million), we used ¥20,477 million (US$173.5 million) for capital expenditures related mainly to car electronics products and plasma displays. Financing activities provided net cash of ¥5,035 million (US$42.7 million), mainly from

an increase in short-term borrowings.

     Consequently, cash and cash equivalents at September 30, 2006 were ¥109,822 million (US$930.7 million), ¥11,858 million lower than at March 31, 2006.

Dividend Policy

Pioneer positions its dividend policy as one of its highest management priorities. On the basis of maintaining stable dividends, the Company sets dividend payments appropriately in light of its financial position, consolidated business results, and other factors. Retained earnings are effectively used primarily to develop businesses, as well as reinforce competitiveness and our management base.

     Based on this dividend policy, Pioneer has decided to pay an interim dividend for fiscal 2007 of ¥5.0 (US$0.04) per share of common stock.

Business Forecasts for Fiscal 2007

We revised our consolidated business forecasts for fiscal 2007, ending March 31, 2007, which were announced on July 31, 2006, as follows:

		(In millions of yen)
		Revised				Previous
		projections				projections
		for fiscal 2007				for fiscal 2007				Changes				Results
		(A)				(B)				(A – B)				for fiscal 2006
Operating revenue		¥	820,000			¥	845,000			¥	(25,000	)		¥	754,964
Operating income (loss)			18,000				18,000				0				(16,409	)
Income (loss) before income taxes			19,000				19,000				0				(71,165	)
Net income (loss)		¥	10,000			¥	7,500			¥	2,500			¥	(84,986	)

Our previous operating revenue forecast has been lowered because second-half sales of plasma displays, DVD recorders and car electronics products are projected to fall below initial forecasts due to intensifying competition, falling market prices and other factors.

     We have not revised our forecasts for operating income and income before income taxes mainly in consideration of the impact of the weaker yen and cost reduction benefits, despite lower operating revenue than forecast previously. Net income is expected to surpass the previous forecast because we posted a gain on sale of subsidiaries involved in the electronic components business in the second quarter of fiscal 2007.

     We are assuming average yen-U.S. dollar and yen-euro exchange rates of ¥115 and ¥145, respectively, for the revised projections.

Cautionary Statement with Respect to Forward-Looking Statements

Statements made in this release 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. These statements are based on 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 discussed in the forward-looking statements, and therefore you should not place

undue reliance on them. It is not 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 our markets, 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 for 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 successfully implement our business strategies; (v) our ability to compete, as well as 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 expenditures; (vii) our ability to continuously enhance our brand image; (viii) the success of our joint ventures and alliances; (ix) the success of our business restructuring plans; and (x) the outcome of contingencies.

Risk Factors

Business risks that may have an adverse effect on our business results, financial position and share price include, but are not limited to, the following:

•

Fluctuations in foreign exchange rates, especially the appreciation of the yen

•

Intensified competition with other companies

•

Larger-than-anticipated declines in prices for our core products

•

Failure of the plasma display market, a main area of focus for us, to grow as anticipated

•

Failure of Blu-ray Disc, a next-generation optical disc format we have adopted, with the view to gaining broader market acceptance

•

Decline in profitability due to a large drop in royalty revenue as a result of the expiration of many of our existing patents relating to laser optical disc technologies

•

Greater-than-expected contraction of consumer markets for car electronics products due to growth in OEM markets

•

Impact of the growing portable car navigation systems market on growth in the in-dash car navigation systems market, a main area of focus for us

•

Substantial dependence of our OEM business on customer business performance and other customer-related factors

•

Product recalls or successful product liability claims brought against us, which could result in a significant cost or a negative impact on our reputation

•

Significant reduction in our production capacity which may be caused by damage to our production facilities due to natural disasters or other events, as production of certain products is concentrated at specific facilities

Basic Management Policies and Medium-term Business Plan

Pioneer positions customer satisfaction at the core of management. We seek to offer innovative, high-quality, and value-added electronics products that create new value for customers, aiming to share the Pioneer Group’s philosophy, “Move the Heart and Touch the Soul,” with more people around the world.

Based on this group philosophy, in April 2006 Pioneer formulated a new group vision to guide management over the medium term: “To become a company that encourages all its members to work as a team, with everyone customer-focused, integrating each one’s

professionalism in pursuing innovations one after another.” Through this vision, we believe that we can set a process in motion where employees fulfill their duties from the customer’s perspective, and come up with ideas that resonate with other employees around them to give rise to major innovations. This innovation will realize new lifestyle proposals and revolutionary products that change consumers’ ways of life.

Pioneer has also established new numerical targets for the fiscal year ending March 31, 2009, aiming for operating revenue and operating income of at least ¥950 billion and ¥30 billion, respectively, on a consolidated basis. More specifically, we aim to raise the operating margin to at least 7% in the Car Electronics business, and to improve operating profitability in the Home Electronics business, which is still weak, to at least the break-even level.

To attain these targets, we will allocate more resources to the Car Electronics business to maintain a leading position in consumer markets, while aiming to drive overall earnings growth across the entire business by further expanding OEM operations. Meanwhile, production capacity will be ramped up in Thailand and China to prepare for overall business expansion in this segment.

     In the Home Electronics business, we will provide new forms of value for customers, mainly through plasma displays, in terms of picture quality, product design, user-friendliness, product quality, and sound. Pioneer aims to improve the image of its brands, while improving earnings by carefully screening products based on their profitability.

     We remain committed to enhancing our business results by growing earnings in the Car Electronics business and improving profitability in the Home Electronics business as quickly as possible.

Issues to Be Addressed

The economic outlook is for stable growth overall, supported by favorable corporate earnings and consumer spending, despite some concerns over surging materials prices and slower U.S. economic growth. However, Pioneer faces extremely challenging business conditions such as price-based competition in its core products.

In the plasma display business, Pioneer will continue to reduce costs, and review options for increasing production capacity in response to the higher forecast demand for plasma displays. In this regard, we are considering all options, including renovating existing plants through a “Scrap & Build” approach and joint investments with other companies.

     Demand for high-resolution panels is projected to increase in step with the launch of high-definition (HD) broadcasting, and uptake of HD content worldwide through media such as Blu-ray Discs. Pioneer will therefore leverage its technological edge in panel technologies, one of its defining strengths, to offer outstanding high-resolution plasma displays.

In the optical disc business, Pioneer is focusing on products based on Blu-ray Disc, a next-generation optical disc format, as well as DVD products. The market for DVD products is growing, but prices are rapidly falling. In response, Pioneer will reduce costs through production in China and collaborations with other companies, and raise the return on product development investments through external sales of key components. Furthermore, Pioneer is shifting the main thrust of product development to Blu-ray Disc products, as part of efforts to improve profitability by offering new value-added proposals.

Turning to the entire Home Electronics business, Pioneer is constructing a new office in Kawasaki City, Kanagawa Prefecture with the aim of consolidating planning, development and design departments to generate synergies between plasma displays and other audio-visual products. Plans call for construction to be completed in spring 2007.

In the Car Electronics business, specifically in car audio products for consumer markets, Pioneer is focusing on fast-growing markets such as Central and South America and Russia in order to retain its position of leadership in these products. The Company will also offer products that stand apart from those of other companies by delivering new value and functions. In car navigation systems for consumer markets, Pioneer will actively press ahead with business expansion in Europe and North America, as well as in Japan, where Pioneer’s car navigation systems have enjoyed a strong reputation. Aiming to reduce increasing software development costs accompanying product advancements, Pioneer is reforming product development processes and pursuing sharing and standardization in this area.

     In the OEM car audio products business, Pioneer aims to make the most of its strengths in consumer markets to drive further business expansion. In the OEM car navigation system business, Pioneer is reinforcing efforts in the growing market for car navigation systems offered as dealer options in Japan. In parallel, the Company aims to capture new orders by offering new proposals to OEM customers that leverage our own product planning capabilities, which have been proven in consumer markets, and the advantages of conducting map-related content production within its group.

Pioneer Corporation is a leading global manufacturer of consumer- and business-use electronics products such as audio, video and car electronics. Its shares are traded on the Tokyo Stock Exchange.

# # # # # #

The U.S. dollar amounts in this release represent translation of Japanese yen, for convenience only, at the rate of ¥118=US$1.00, the approximate rate prevailing on September 30, 2006.

Attachments:

	I.		Consolidated financial statements for the three months and the six months ended September 30, 2006
	II.		Non-consolidated financial statements for the six months ended September 30, 2006

For further information, please contact:
Investor Relations Department, Corporate Branding and Communications Division
Pioneer Corporation, Tokyo
Phone: +81-3-3495-6773 / Fax: +81-3-3495-4301
E-mail: pioneer_ir@post.pioneer.co.jp
IR Website: http://pioneer.jp/ir-e/

     Pioneer Corporation and Subsidiaries

I. CONSOLIDATED FINANCIAL STATEMENTS

    FOR THE THREE MONTHS AND THE SIX MONTHS ENDED SEPTEMBER 30, 2006

(1) OPERATING REVENUE BY SEGMENT

														(In millions of yen)
		Three months ended September 30
		2006								2005								% to
		Amount				% to total				Amount				% to total				prior year
Domestic		¥	16,152				8.6	%		¥	19,028				10.6	%			84.9	%
Overseas			71,149				37.7				62,725				34.8				113.4
Home Electronics			87,301				46.3				81,753				45.4				106.8
Domestic			28,564				15.1				26,236				14.6				108.9
Overseas			55,070				29.2				51,904				28.8				106.1
Car Electronics			83,634				44.3				78,140				43.4				107.0
Domestic			—				—				—				—				—
Overseas			500				0.3				4,162				2.3				12.0
Patent Licensing			500				0.3				4,162				2.3				12.0
Domestic			11,262				6.0				8,455				4.7				133.2
Overseas			5,946				3.1				7,378				4.2				80.6
Others			17,208				9.1				15,833				8.9				108.7
Domestic			55,978				29.7				53,719				29.9				104.2
Overseas			132,665				70.3				126,169				70.1				105.1
Total		¥	188,643				100.0	%		¥	179,888				100.0	%			104.9	%

														(In millions of yen)
		Six months ended September 30
		2006								2005								% to
		Amount				% to total				Amount				% to total				prior year
Domestic		¥	32,602				8.6	%		¥	36,068				10.6	%			90.4	%
Overseas			138,150				36.3				108,890				32.1				126.9
Home Electronics			170,752				44.9				144,958				42.7				117.8
Domestic			62,882				16.5				56,177				16.6				111.9
Overseas			112,088				29.5				104,176				30.7				107.6
Car Electronics			174,970				46.0				160,353				47.3				109.1
Domestic			—				—				—				—				—
Overseas			1,761				0.5				5,285				1.6				33.3
Patent Licensing			1,761				0.5				5,285				1.6				33.3
Domestic			21,293				5.6				15,016				4.4				141.8
Overseas			11,543				3.0				13,472				4.0				85.7
Others			32,836				8.6				28,488				8.4				115.3
Domestic			116,777				30.7				107,261				31.6				108.9
Overseas			263,542				69.3				231,823				68.4				113.7
Total		¥	380,319				100.0	%		¥	339,084				100.0	%			112.2	%

Pioneer Corporation and Subsidiaries

(2) CONSOLIDATED STATEMENTS OF OPERATIONS

						(In millions of yen)
		Three months ended September 30
										% to
		2006				2005				prior year
Operating revenue:
Net sales		¥	188,143			¥	175,726				107.1	%
Royalty revenue			500				4,162				12.0
Total operating revenue			188,643				179,888				104.9
Operating costs and expenses:
Cost of sales			142,817				143,257				99.7
Selling, general and administrative expenses			41,212				44,364				92.9
Total operating costs and expenses			184,029				187,621				98.1
Operating income (loss)			4,614				(7,733	)			—
Other income (expenses):
Interest income			1,136				624				182.1
Foreign exchange loss			(986	)			(320	)			308.1
Interest expense			(217	)			(325	)			66.8
Other—net			73				(29,727	)			—
Total other income (expenses)			6				(29,748	)			—
Income (loss) from continuing operations before income taxes			4,620				(37,481	)			—
Income taxes			3,470				(5,347	)			—
Minority interest in losses (earnings) of subsidiaries			(245	)			3,601				—
Equity in losses of affiliated companies			(18	)			(24,305	)			0.1
Income (loss) from continuing operations			887				(52,838	)			—
Income from discontinued operations, net of tax			2,659				137				—
Net income (loss)		¥	3,546			¥	(52,701	)			—	%

						(In millions of yen)
		Six months ended September 30
										% to
		2006				2005				prior year
Operating revenue:
Net sales		¥	378,558			¥	333,799				113.4	%
Royalty revenue			1,761				5,285				33.3
Total operating revenue			380,319				339,084				112.2
Operating costs and expenses:
Cost of sales			283,384				269,201				105.3
Selling, general and administrative expenses			85,244				86,547				98.5
Total operating costs and expenses			368,628				355,748				103.6
Operating income (loss)			11,691				(16,664	)			—
Other income (expenses):
Interest income			2,085				1,251				166.7
Foreign exchange loss			(385	)			(1,062	)			36.3
Interest expense			(616	)			(720	)			85.6
Other—net			(151	)			(26,958	)			0.6
Total other income (expenses)			933				(27,489	)			—
Income (loss) from continuing operations before income taxes			12,624				(44,153	)			—
Income taxes			6,214				(6,935	)			—
Minority interest in losses of subsidiaries			1				4,169				0.0
Equity in earnings (losses) of affiliated companies			22				(25,158	)			—
Income (loss) from continuing operations			6,433				(58,207	)			—
Income from discontinued operations, net of tax			2,775				163				—
Net income (loss)		¥	9,208			¥	(58,044	)			—	%

Pioneer Corporation and Subsidiaries

(3) CONSOLIDATED BALANCE SHEETS

														(In millions of yen)
		September 30												March 31
										Increase/								Increase/
		2006				2005				(Decrease)				2006				(Decrease)
ASSETS
Current assets:
Cash and cash equivalents		¥	109,822			¥	107,198			¥	2,624			¥	121,680			¥	(11,858	)
Trade receivables, less allowance			119,106				126,981				(7,875	)			107,563				11,543
Inventories			139,030				126,594				12,436				104,226				34,804
Assets held for sale			—				—				—				25,577				(25,577	)
Others			70,826				73,878				(3,052	)			69,626				1,200
Total current assets			438,784				434,651				4,133				428,672				10,112
Investments and long-term receivables			27,795				25,268				2,527				29,772				(1,977	)
Property, plant and equipment, less depreciation			159,857				171,893				(12,036	)			160,231				(374	)
Intangible assets			19,482				22,723				(3,241	)			20,576				(1,094	)
Other assets			42,232				44,518				(2,286	)			38,795				3,437
Total assets		¥	688,150			¥	699,053			¥	(10,903	)		¥	678,046			¥	10,104
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt		¥	40,270			¥	55,560			¥	(15,290	)		¥	30,370			¥	9,900
Trade payables			120,322				104,831				15,491				102,082				18,240
Liabilities held for sale			—				—				—				17,863				(17,863	)
Others			116,351				122,463				(6,112	)			121,977				(5,626	)
Total current liabilities			276,943				282,854				(5,911	)			272,292				4,651
Long-term debt			89,225				79,512				9,713				92,970				(3,745	)
Other long-term liabilities			25,168				41,225				(16,057	)			25,425				(257	)
Minority interests			14,056				14,202				(146	)			14,109				(53	)
Shareholders’ equity:
Common stock			49,049				49,049				—				49,049				—
Capital surplus			82,959				82,834				125				82,910				49
Retained earnings			182,162				201,204				(19,042	)			173,826				8,336
Accumulated other comprehensive loss			(18,964	)			(39,390	)			20,426				(20,092	)			1,128
Treasury stock			(12,448	)			(12,437	)			(11	)			(12,443	)			(5	)
Total shareholders’ equity			282,758				281,260				1,498				273,250				9,508
Total liabilities and shareholders’ equity		¥	688,150			¥	699,053			¥	(10,903	)		¥	678,046			¥	10,104
Breakdown of accumulated other comprehensive loss:
Minimum pension liability adjustments		¥	(4,650	)		¥	(11,391	)		¥	6,741			¥	(3,680	)		¥	(970	)
Net unrealized holding gain on securities			9,342				7,475				1,867				10,352				(1,010	)
Cumulative foreign currency translation adjustments			(23,656	)			(35,474	)			11,818				(26,764	)			3,108
Total accumulated other comprehensive loss		¥	(18,964	)		¥	(39,390	)		¥	20,426			¥	(20,092	)		¥	1,128

Pioneer Corporation and Subsidiaries

(4) CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

		(In millions of yen)
														Accumulated
														Other								Total
		Common				Capital				Retained				Comprehensive				Treasury				Shareholders’
		Stock				Surplus				Earnings				Loss				Stock				Equity
Balance at March 31, 2005		¥	49,049			¥	82,735			¥	260,556			¥	(47,669	)		¥	(12,432	)		¥	332,239
Net loss											(84,986	)											(84,986	)
Other comprehensive income															27,577								27,577
Value ascribed to stock options							175																175
Cash dividends (¥10 per share)											(1,744	)											(1,744	)
Purchase and sales of treasury stock, net																			(11	)			(11	)
Balance at March 31, 2006		¥	49,049			¥	82,910			¥	173,826			¥	(20,092	)		¥	(12,443	)		¥	273,250
Net Income											9,208												9,208
Other comprehensive income															1,128								1,128
Value ascribed to stock options							49																49
Cash dividends (¥5 per share)											(872	)											(872	)
Purchase and sales of treasury stock, net																			(5	)			(5	)
Balance at September 30, 2006		¥	49,049			¥	82,959			¥	182,162			¥	(18,964	)		¥	(12,448	)		¥	282,758

(5) CONSOLIDATED STATEMENTS OF CASH FLOWS

		(In millions of yen)
		Three months								Six months
		ended September 30								ended September 30
		2006				2005				2006				2005
I. Operating activities:
Net income (loss)		¥	3,546			¥	(52,701	)		¥	9,208			¥	(58,044	)
Depreciation and amortization			9,348				11,575				18,500				24,122
(Increase) decrease in trade receivables			1,765				(15,718	)			(9,965	)			7,160
(Increase) decrease in inventories			(15,446	)			1,396				(32,687	)			(14,635	)
Increase in trade payables			9,519				5,607				17,184				8,016
Increase (decrease) in other accrued liabilities			8,921				10,822				(7,866	)			2,737
Other			(3,348	)			41,299				(4,229	)			31,864
Net cash provided by (used in) operating activities			14,305				2,280				(9,855	)			1,220
II. Investing activities:
Payment for purchase of fixed assets			(12,157	)			(10,355	)			(20,477	)			(19,282	)
Proceed from sale of discontinued operations			10,862				—				10,862				—
Other			1,584				3,354				1,857				7,357
Net cash provided by (used in) investing activities			289				(7,001	)			(7,758	)			(11,925	)
III. Financing activities:
Increase (decrease) in short-term borrowings and long-term debt			5,742				(3,183	)			7,198				2,866
Dividends paid			—				—				(436	)			(2,180	)
Other			(907	)			(1,034	)			(1,727	)			(2,073	)
Net cash provided by (used in) financing activities			4,835				(4,217	)			5,035				(1,387	)
Effect of exchange rate changes on cash and cash equivalents			1,575				1,366				720				2,609
Net increase (decrease) in cash and cash equivalents			21,004				(7,572	)			(11,858	)			(9,483	)
Cash and cash equivalents, beginning of period			88,818				114,770				121,680				116,681
Cash and cash equivalents, end of period		¥	109,822			¥	107,198			¥	109,822			¥	107,198
Free cash flow (I + II)		¥	14,594			¥	(4,721	)		¥	(17,613	)		¥	(10,705	)

Pioneer Corporation and Subsidiaries

(6) SEGMENT INFORMATION

The following segment information is prepared pursuant to the regulations under the Securities and Exchange Law of Japan.

<Business Segments>

		(In millions of yen)
		Three months ended September 30
		2006								2005								% to prior year
		Operating				Operating				Operating				Operating				Operating				Operating
		Revenue				Income				Revenue				Income				Revenue				Income
Home Electronics		¥	87,531			¥	(3,848	)		¥	82,264			¥	(13,140	)			106.4	%			29.3	%
Car Electronics			84,124				5,586				78,516				2,896				107.1				192.9
Patent Licensing			500				187				4,201				3,598				11.9				5.2
Others			25,989				2,566				25,099				(780	)			103.5				—
Total			198,144				4,491				190,080				(7,426	)			104.2				—
Corporate and Eliminations			(9,501	)			123				(10,192	)			(307	)			—				—
Consolidated		¥	188,643			¥	4,614			¥	179,888			¥	(7,733	)			104.9	%			—	%

		(In millions of yen)
		Six months ended September 30
		2006								2005								% to prior year
		Operating				Operating				Operating				Operating				Operating				Operating
		Revenue				Income				Revenue				Income				Revenue				Income
Home Electronics		¥	171,191			¥	(4,245	)		¥	145,772			¥	(25,498	)			117.4	%			16.6	%
Car Electronics			175,913				13,118				161,124				8,210				109.2				159.8
Patent Licensing			1,761				974				5,324				3,969				33.1				24.5
Others			50,224				2,804				47,013				(1,666	)			106.8				—
Total			399,089				12,651				359,233				(14,985	)			111.1				—
Corporate and Eliminations			(18,770	)			(960	)			(20,149	)			(1,679	)			—				—
Consolidated		¥	380,319			¥	11,691			¥	339,084			¥	(16,664	)			112.2	%			—	%

<Geographic Segments>

		(In millions of yen)
		Six months ended September 30
		2006								2005								% to prior year
		Operating				Operating				Operating				Operating				Operating				Operating
		Revenue				Income				Revenue				Income				Revenue				Income
Japan		¥	322,597			¥	5,525			¥	283,600			¥	(15,923	)			113.8	%			—	%
North America			99,623				4,271				92,524				(1,740	)			107.7				—
Europe			80,026				1,528				66,311				(1,315	)			120.7				—
Other Regions			175,437				2,862				155,728				3,612				112.7				79.2
Total			677,683				14,186				598,163				(15,366	)			113.3				—
Corporate and Eliminations			(297,364	)			(2,495	)			(259,079	)			(1,298	)			—				—
Consolidated		¥	380,319			¥	11,691			¥	339,084			¥	(16,664	)			112.2	%			—	%

Pioneer Corporation and Subsidiaries

Notes:

	1.		The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America.
	2.		The consolidated financial statements include the accounts of the parent company and 118 subsidiaries and the investments in 3 affiliated companies accounted for on an equity basis.
	3.		In fiscal 2006, the Company sold a subsidiary engaged in the development of cable TV software, and in the second quarter of fiscal 2007, sold subsidiaries involved in the electronic components business. The operating results of these subsidiaries and the gain on the sales are presented as income from discontinued operations in the consolidated statements of operations. Reclassifications have been made to previously reported operating revenue by segment, consolidated statements of operations and segment information to conform to this presentation.
			Summarized financial information of the discontinued operations for the three months and the six months ended September 30, 2005 and 2006 is as follows:

										(In millions of yen)
		Three months								Six months
		ended September 30								ended September 30
		2006				2005				2006				2005
Operating revenue		¥	2,798			¥	5,827			¥	10,442			¥	10,814
Operating income			151				214				425				276
Income before income taxes			142				221				324				283
Gain on sales of discontinued operations			2,488				—				2,488				—
Income taxes			(29	)			84				37				120
Income from discontinued operations		¥	2,659			¥	137			¥	2,775			¥	163

Pioneer Corporation—Parent Company Only

II.		NON-CONSOLIDATED FINANCIAL STATEMENTS
		FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2006

(1) SALES BY SEGMENT

		(In millions of yen)
		Six months ended September 30
		2006								2005								% to
		Amount				% to total				Amount				% to total				prior year
Domestic		¥	28,748				10.6	%		¥	31,923				13.0	%			90.1	%
Export			105,716				39.0				84,303				34.3				125.4
Home Electronics			134,464				49.6				116,226				47.3				115.7
Domestic			62,681				23.2				55,997				22.8				111.9
Export			73,391				27.1				73,053				29.7				100.5
Car Electronics			136,072				50.3				129,051				52.5				105.4
Domestic			338				0.1				494				0.2				68.5
Export			10				0.0				47				0.0				23.0
Others			349				0.1				541				0.2				64.5
Domestic			91,768				33.9				88,416				36.0				103.8
Export			179,118				66.1				157,403				64.0				113.8
Total		¥	270,886				100.0	%		¥	245,819				100.0	%			110.2	%

(2) CONDENSED STATEMENTS OF OPERATIONS

		(In millions of yen)
		Six months ended September 30
		2006								2005
						% to								% to
		Amount				net sales				Amount				net sales
Net sales		¥	270,886				100.0	%		¥	245,819				100.0	%
Cost of sales			234,989				86.7				213,720				86.9
Selling, general and administrative expenses			41,825				15.5				41,592				17.0
Operating income (loss)			(5,928	)			(2.2	)			(9,493	)			(3.9	)
Non-operating income —net			425				0.2				54				0.1
Ordinary income (loss)			(5,503	)			(2.0	)			(9,439	)			(3.8	)
Other income (expenses)—net			4,381				1.6				357				0.1
Income (loss) before income taxes			(1,122	)			(0.4	)			(9,081	)			(3.7	)
Income taxes			(308	)			(0.1	)			5,679				2.3
Net income (loss)		¥	(813	)			(0.3	)%		¥	(14,761	)			(6.0	)%

Pioneer Corporation—Parent Company Only

(3) CONDENSED BALANCE SHEETS

(In millions of yen)

		September 30								March 31
		2006				2005				2006
ASSETS
Current assets:
Cash		¥	43,289			¥	46,162			¥	50,305
Notes and accounts receivable—trade			49,847				46,605				46,034
Inventories			35,298				29,044				30,015
Other current assets			48,937				31,020				40,105
Total current assets			177,373				152,832				166,461
Fixed assets:
Tangible			56,273				52,674				55,537
Intangible			28,366				28,523				28,752
Investments and others			200,814				199,361				201,979
Total fixed assets			285,454				280,559				286,269
Total assets		¥	462,827			¥	433,392			¥	452,730
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Notes and accounts payable—trade		¥	76,040			¥	53,827			¥	56,175
Accrued expenses			53,505				37,471				61,190
Other current liabilities			42,546				15,350				40,512
Total current liabilities			172,091				106,649				157,879
Long-term liabilities			71,860				73,279				73,351
Total liabilities			243,951				179,929				231,230
Shareholders’ equity			—				253,463				221,500
Total liabilities and shareholders’ equity			—			¥	433,392			¥	452,730
Net assets
Shareholders’ equity		¥	212,834				—				—
Difference of appreciation and conversion			6,041				—				—
Total net assets			218,875				—				—
Total liabilities and net assets		¥	462,827				—				—