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Annual Report 2002
For the year ended March 31, 2002

Table of contents

  • Page 1
    Annual Report 2002 For the year ended March 31, 2002

  • Page 2
    ... 21 Components and Devices 24 Coexistence with the Global Environment 26 Corporate Citizenship Activities 27 Financial Section 64 Directors and Corporate Auditors 64 Principal Operating Divisions and Subsidiaries 65 Investor Information Pictures shown on the screens of products illustrated in this...

  • Page 3
    ...net income (loss) per share amounts. 2. U.S. dollar amounts are translated from yen at the rate of ¥133=U.S.$1, the approximate rate on the Tokyo Foreign Exchange Market on March 29, 2002. 3. Beginning in fiscal 2001, the Company adopted SFAS No. 115, "Accounting for Certain Investments in Debt and...

  • Page 4
    ... beginning of the fiscal year ended March 31, 2002 (fiscal 2002), Matsushita Electric Industrial Co., Ltd. launched its mid-term plan,Value Creation 21, which put into effect a wide range of structural reforms based on the theme of "deconstructing" existing management structures and "creating" new...

  • Page 5
    ... in fiscal 2002 and by shifting its management focus from "deconstruction" to "creation." The key to attaining this is the continuous launching of what we have termed V-products, or products that will contribute to sales and earnings by achieving the top share in high-volume markets. The Company is...

  • Page 6
    ...Special Life Assistance Program, along with various other employment restructuring initiatives, and conducted manufacturing reforms, such as introducing cell-style production, while reducing inventory and parts and materials costs, all aimed at strengthening the Company's management structure.We are...

  • Page 7
    ... digital networking age, where product functions are increasingly converging, Matsushita is shifting its management focus from its current structure, in which various business divisions and internal divisional companies are responsible for specific product groups, to a new management structure where...

  • Page 8
    ... the car navigation systems business, car AV equipment and other systems unit businesses and sales of related devices. Regarding the systems business, Panasonic System Solutions Company will be established by integrating the relevant divisions of Matsushita, AVC Company and Matsushita Communication...

  • Page 9
    ... service, lease/credit, logistics, etc. Matsushita Kotobuki Electronics Industries, Ltd. Victor Company of Japan, Ltd. AVC Networks Fixed-Line Communications Mobile Communications Automotive Electronics Systems Home Appliances/ Environmental Systems Home Appliances, Household Equipment and Health...

  • Page 10
    ... will be decided after consultation with Group companies and upon careful review of legal, tax and accounting issues. 8 Matsushita Electric Industrial 2002 > Aiming for top share in high-volume markets through lowered total costs > Sales target for 88 V-products of ¥1 trillion in fiscal 2003 To...

  • Page 11
    ... take advantage of the Company's proprietary digital and networking technologies, including interactive eP services, centered on digital TVs, as well as mobile multimedia services that focus on third-generation cellular phones and living environment-related services. Targets > Fiscal billion 2003...

  • Page 12
    ... Products Growth through Digital Technology Panasonic products at the core of Matsushita's digital networking technology will lead the way in high-volume markets. At the center of this lineup are Broadcast Satellite (BS) digital TVs, which boast top share in the domestic market; PDP TVs, sales...

  • Page 13
    ... and marketing strength of its National brand. The Company will distinguish itself not only by expanding its product lineup in high-volume markets, but also by developing products that contribute to energy conservation and environmental preservation. Matsushita Electric Industrial 2002 11

  • Page 14
    ... 120 strategic products in the components and devices category that is key in the Company's quest to become a Super Manufacturing Company. In the industrial equipment category, Matsushita will create added value for its customers by providing total solutions. 12 Matsushita Electric Industrial 2002

  • Page 15
    ... Products Washing machines, clothes dryers, vacuum cleaners, electric irons, microwave ovens, cooking appliances, dishwashers, refrigerators, room air conditioners, electric fans, air purifiers, heating equipment, kitchen fixture systems, electric, gas and kerosene hot water supply equipment, bath...

  • Page 16
    ... cellular phones, hard disk drives (HDDs) and facsimile machines. For the future, Matsushita aims to expand growth and profitability by increasing its share in high-volume markets through advancing sales of V-products. New 42-inch PDP TV with built-in BS digital tuner Digital TV Systems and Related...

  • Page 17
    ...shopping season of 2001. Regarding the ultracompact storage device, the Secure Digital (SD) Memory Card-supported by over 400 SD Card Association member companies-Matsushita expanded its SD Memory Card-compatible product lineup, ranging from mobile and wearable audio equipment, digital video cameras...

  • Page 18
    ... and CD-R/RW combination drive to date, and also placed a greater emphasis on marketing its DVD-RAM drives. Portable and Car Mobile Networking DVD-RAM/R combination drive New slim and ultraslim (front) Internetcompatible folding cellular phones with exceptional picture quality Matsushita's sales...

  • Page 19
    ... CD/MP3 model with vacuum tube that reproduces deeper, richer sound. In car navigation systems, adding to Matsushita's popular DVD models, the Company began sales of an advanced model with built-in HDD, capable of processing large volumes of data in an instant. In car mobile networking, Matsushita...

  • Page 20
    ... with products such as a centrifugal force washer/dryer, featuring reduced drying time made possible through the world's first dual air- and water-cooling technology, and a vacuum cleaner with separate modes for high-power and low-exhaust operation. In terms of manufacturing, Matsushita initiated...

  • Page 21
    ... have since been supplied to community centers in Okayama, western Japan. In the living environment-related business, Matsushita launched its Eco Cuteâ„¢ water heating system in April 2002 in the Japanese market. This household water heater employs a natural refrigerant (CO2) heat pump. The eco...

  • Page 22
    ...April 2002, Matsushita established Panasonic Engineering Co., Ltd. The new company will create added value by not only providing equipment but also total FA solutions, including engineering services and related support. Regarding product strategies, in addition to expanding cost-competitive products...

  • Page 23
    ... sales due to the setbacks in IT-related industries, the Company augmented its range of specialty polymer aluminum electrolytic capacitors. Matsushita also developed cutting-edge ultracompact, high-capacitance products in the field of multilayer ceramic chip capacitors and film capacitors. In car...

  • Page 24
    ... color monitor tube production, and implemented joint global supply and purchase of color TV picture tubes with Thomson multimedia. In the future, Matsushita will mainly focus its efforts on increasing competitiveness in large flat-screen CRTs.␣ In LCDs,Toshiba Matsushita Display Technology Co...

  • Page 25
    ... motors Award-winning polygon mirror scanner motors for laser printers Air conditioner compressor sales increased thanks to an extensive lineup Batteries In primary batteries, the Company continued to lead the industry with technological advancements in high-performance alkaline batteries...

  • Page 26
    ... fuel cell cogeneration system. In December in Freiburg, Germany-renowned as the environmental capital of the world-Matsushita organized the European Environmental Forum 2001 to explore the theme of "seeking quality life through sustainable development." Thanks to active support from the local...

  • Page 27
    ... Japan allows for completely CFC-free refrigeration. Recycling End-of-Life Products: Matsushita Eco Technology Center Matsushita remains committed to the development of energy-efficient products. As an example, in components and devices the Company developed a semiconductor, called the Intelligent...

  • Page 28
    ... students in the United States and Canada with Panasonic video equipment for participating in Kid Witness News, a program where students create their own video news program; sponsorship of the European Union Baroque Orchestra (EUBO), which provides young musicians in Europe with cultural exchange...

  • Page 29
    ... Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Stockholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Independent Auditors' Report Matsushita Electric Industrial 2002 27

  • Page 30
    ... number of shares at the end of the applicable period has been used. 2. U.S. dollar amounts are translated from yen at the rate of ¥133=U.S.$1, the approximate rate on the Tokyo Foreign Exchange Market on March 29, 2002. 3. Beginning in fiscal 2001, the Company adopted SFAS No. 115, "Accounting for...

  • Page 31
    ...future. Regarding DVD-related equipment, Matsushita augmented sales in both domestic and overseas markets, thanks in part to the launch in Japan of new models, including a competitively priced DVD video recorder. 8,000 6,000 4,000 2,000 0 1998 1999 2000 2001 2002 Domestic Sales Overseas Sales...

  • Page 32
    ...-digit growth in products such Sales by Product Category Millions of yen Thousands of U.S. dollars 2002 2001 2000 1999 1998 2002 AVC Networks Video and audio equipment . Information and communications equipment. Total ...Home Appliances ...Industrial Equipment ...Components and Devices...

  • Page 33
    as vacuum cleaners, electric irons, microwave ovens and refrigerators. In household equipment, sales were generally sluggish owing to slow housing starts. However, sales were firm for products such as a space-saving dishwasher/ dryer and IH cooking equipment. Sales of air conditioners, however, were...

  • Page 34
    .... Among the major product categories, sales of video and audio equipment rose throughout the region, as did sales of Components and Devices in China. Sales of Industrial Equipment, however, slipped from the previous year. Earnings Operating Profit (Loss)* Operations for fiscal 2002 generated a loss...

  • Page 35
    ...charges in fiscal 2002 associated with its mid-term Value Creation 21 plan, including ¥164.1 billion ($1,234 million) related to employment restructuring programs, such as additional retirement allowances for early retirement programs, ¥86.0 billion ($647 million) related to business restructuring...

  • Page 36
    ... income (loss), including minimum pension liability adjustments, despite the positive effect of the yen's year-end exchange rate on cumulative Capital Investment and Depreciation The Company's capital investment (excluding intangibles) during fiscal 2002 totaled ¥309.1 billion ($2,324 million...

  • Page 37
    ... effect of exchange rate changes, resulted in a net increase of ¥50.9 billion ($383 million) in cash and cash equivalents during fiscal 2002. Cash and cash equivalents at the end of fiscal 2002 totaled ¥899.8 billion ($6,765 million), compared with ¥848.9 billion a year ago. Matsushita Electric...

  • Page 38
    ... 2) Assets Current assets: 2002 2001 2002 Cash and cash equivalents (Note 8) ...¥ 0,899,769 ¥0,848,878 Time deposits (Note 8) ...521,333 527,145 Short-term investments (Notes 5 and 17) ...11,849 11,421 Trade receivables (Notes 4 and 8): Notes ...72,159 106,447 Accounts ...1,055,076 1,332,161...

  • Page 39
    ...of available-for-sale securities ...Unrealized gains of derivative instruments ...Minimum pension liability adjustments ...Total accumulated other comprehensive income (loss) ...Treasury stock, at cost (Note 11): 54,793,408 shares (295,000 shares in 2001) ...Total stockholders' equity ...Commitments...

  • Page 40
    ...ended March 31, 2002, 2001 and 2000 Millions of yen Thousands of U.S. dollars (Note 2) 2002 Revenues: 2001 2000 2002 Net sales (Note 4) ...¥6,876,688 ¥7,681,561 ¥7,299,387 Interest income ...33,556 43,712 42,949 Dividends received... of associated companies ... 30,... share of common stock ...

  • Page 41
    ..., 2002, 2001 and 2000 Millions of yen Thousands of U.S. dollars (Note 2) 2002 Common stock (Notes 2001 2000 2002 11 and 14): Balance at beginning of year ...¥0,210,994 ¥0,209,708 ¥0,209,444 Conversion of bonds ...47,743 470 264 Stock issued under exchange offering ...- 816 - Balance at end...

  • Page 42
    ...) in retirement and severance benefits ...(86,345) 26,789 34,625 (649,211) Other ...12,022 17,032 (84) 90,391 Net cash provided by operating activities ...76,864 392,452 476,136 577,925 Cash flows from investing activities (Note 14): Proceeds from sale of short-term investments ...21,103 145,870...

  • Page 43
    ...technology. Most of the Company's products are marketed under several trade names, including "Panasonic," "National," "Technics," "Quasar," "Victor" and "JVC." Sales in fiscal 2002 were categorized as follows: AVC Networks-59%, Home Appliances-17%, Industrial Equipment-4%, and Components and Devices...

  • Page 44
    ... structures. Under SFAS No. 128, basic net income (loss) per share is computed based on the weighted average number of common shares outstanding during each period, and diluted net income (loss) per share assumes the dilution that could occur if securities or other contracts to issue common stock...

  • Page 45
    ... Issues Task Force Issue (EITF) 01-9 "Accounting for Consideration Given by a Vender to a Customer or Reseller of the Vendor's Products" in the fiscal year beginning April 1, 2002. The Company is currently in the process of assessing the impact of the adoption of EITF 01-9. In June 2001, FASB issued...

  • Page 46
    ... dollars 2002 2001 2000 2002 Purchases from ...¥152,234 Sales to ...115,603 ¥177,865 171,756 ¥235,599 168,774 $1,144,617 869,195 Investments in associated companies include equity securities which have quoted market values at March 31, 2002 and 2001 compared with related carrying amounts...

  • Page 47
    ..., and gross unrealized holding losses of available-for-sale Millions of yen Gross unrealized Fair holding value gains securities included in short-term investments and investments and advances at March 31, 2002 and 2001 are as follows: 2002 Gross unrealized holding losses Thousands of U.S. dollars...

  • Page 48
    ...end of the lease term. Rental expense for operating leases, including the above-mentioned sale-leaseback transactions was ¥4,415 million ($33,195 thousand) for the year ended March 31, 2002. Rental expense for operating leases for the years ended March 31, 2001 and 2000 were not significant. Future...

  • Page 49
    ... Company leases machinery and equipment. Leases of such assets are principally accounted for as direct financing leases. Investments in financing leases at March 31, 2002 and 2001 are as follows: Millions of yen Thousands of U.S. dollars 2002 2001 2002 Total minimum lease payments to be received...

  • Page 50
    ...,000 shares of common stock at ¥1,620 ($12.18) per share. The convertible bonds maturing through 2005 issued by subsidiaries are redeemable at the option of the subsidiaries at prices ranging from 103% of principal to 100% of principal near maturity. The Company set up a shelf registration in Japan...

  • Page 51
    ... pension plans, each participant has an account which is credited yearly based on the current rate of pay and market-related interest rate. Net periodic benefit cost for the contributory, funded benefit pension plans and the unfunded lump-sum payment plans of the Company for the three years ended...

  • Page 52
    ... Company and its subsidiaries are subject to a number of taxes based on earnings which, in aggregate, resulted in an average normal tax provision (benefit) rate of approximately (41.9)% for the year ended March 31, 2002 and 41.9% for the years ended March 31, 2001 and 2000. 50 Matsushita Electric...

  • Page 53
    ... unrealized holding gains of available-for-sale securities ...(48,850) Other ...(29,512) Total gross deferred tax liabilities ...(83,039) Net deferred tax assets ...¥0,729,568 The net change in total valuation allowance for the years ended March 31, 2002 and 2001 were increases of ¥141,161 million...

  • Page 54
    ... be credited to the common stock account.The Company issued 58,941,866 shares, 580,241 shares and 326,535 shares in connection with the conversion of bonds for the years ended March 31, 2002, 2001 and 2000, respectively. On April 1, 2000, the Company issued 16,321,187 shares under exchange offering...

  • Page 55
    ... Company applies Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations in accounting for its stock option plans described above. Accordingly, as the option price at the date of grant exceeded the fair market value of common shares...

  • Page 56
    ...ended March 31, 2002 Translation adjustments ...$(0,742,406 $ - $(0,742,406 Unrealized holding gains of available-for-sale securities... Minimum pension lilability ...share computation for the three years ended March 31, 2002 is as follows: Millions of yen Thousands of U.S. dollars 2002 2001 2000 2002...

  • Page 57
    ...yen Thousands of U.S. dollars 2002 2001 2000 2002 a) Cash paid: Interest ...Â¥49,180 Income taxes ...62,414 b) Noncash investing and financing activities: Conversion of bonds ...Capital transactions by consolidated and associated companies ...Stock issued under exchange offering ...95,486 2,830...

  • Page 58
    ... do not hold or issue financial instruments for trading purposes. The Company and its subsidiaries are exposed to credit risk in the event of nonperformance by counterparties to foreign exchange contracts, but such risk is considered minor because of the high credit rating of the counterparties. The...

  • Page 59
    ... and advances The fair value of investments and advances is estimated based on quoted market prices or the present value of future cash flows using appropriate current discount rates. Long-term debt The fair value of long-term debt is estimated based on quoted market prices or the present value of...

  • Page 60
    .... "Components and Devices" includes electronic components, semiconductors, electric motors and batteries. Information by segment for the three years ended March 31, 2002 is shown in the tables below: Thousands of U.S. dollars 2002 2001 2000 2002 Sales: AVC Networks: Customers ...Â¥4,051...

  • Page 61
    ... yen Thousands of U.S. dollars 2002 2001 2000 2002 Identifiable assets: AVC Networks ...Â¥2,513,877 Home Appliances ...1,137,909 Industrial Equipment ...221,195 Components and Devices ...1,706,920 Corporate and eliminations ...2,047,258 Consolidated total ...Â¥7,627,159 Depreciation (including...

  • Page 62
    By Geographical Area: Sales attributed to countries based upon the customer's location and long-lived assets are as follows: Millions of yen Thousands of U.S. dollars 2002 2001 2000 2002 Sales: Japan ...Â¥3,348,353 North and South America ...1,358,689 Europe ...774,820 Asia and Others ...1,394,...

  • Page 63
    ... No. 131, the Company discloses this information as supplemental information in light of the disclosure requirements of the Japanese Securities and Exchange Law, which a Japanese public company is subject to: Millions of yen Thousands of U.S. dollars 2002 2001 2000 2002 Sales: Japan: Customers...

  • Page 64
    ...and Matsushita Graphic Communication Systems, Inc. common stock, respectively.The share exchange agreements are subject to approval at the June 27, 2002, annual shareholders' meetings of the Company and each of the five subsidiaries. 21. Quarterly Financial Data (Unaudited) Quarterly net sales, net...

  • Page 65
    ...of March 31, 2002 and 2001 and the related consolidated statements of operations, stockholders' equity and cash flows for each of the years in the three-year period ended March 31, 2002. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is...

  • Page 66
    ... Matsushita Senior Managing Directors AVC Company Home Appliance & Housing Electronics Company Air-Conditioner Company Packaged Air-Conditioner Company Motor Company Semiconductor Company Display Devices Company Lighting Company Factory Automation Company Principal Domestic Subsidiaries Managing...

  • Page 67
    ... Information Corporate Headquarters Investor Relations Office Japanese Stock Exchange Listings Matsushita Electric Industrial Co., Ltd. Investor Relations Office 1006, Oaza Kadoma, Kadoma-shi, Osaka 571-8501, Japan Phone: +81-6-6908-1121 English: www.panasonic.co. jp/global Japanese: www.matsushita...

  • Page 68
    www.panasonic.co.jp/global This entire report is printed with soy ink on paper which is 50% recycled. Printed in Japan