Les Miroirs 92096 La Défense Cedex www.saint-gobain.comDesigned and produced:alliance design04/03- Photo credits: Saint-Gobain photo library, X.



## SAINT-GOBAINSAINT-GOBAIN2002ANNUAL REPORT



# SAINT-GOBAIN **SAINT-GOBAIN** • Saint Gobain Couv+tranche GB 23/05/03 12:37 Page 1

## Over the course of its development and diversification, Saint-Gobain has consistently been at the forefront of successive industrial revolutions. The Group’s present configuration is the fruit of a sweeping transformation of its business operations and structures which began
in the 1990s.

T

oday, Saint-Gobain operates as a manufacturer and provider of high-technology materials and associated
services. 

# SAINT-GOBAIN GLASS SECTOR

H IGH-PERFORMANCE MATERIALS SECTOR

HOUSING PR ODUCTS SECTOR

SUSTAINABLE DEVELOPMENT

SAINT GOBAIN IN 2002 Sales 

# € 3 0,274 millions
Net income 

# € 1 ,040 millions Number of employees 

# 172,357 MAIN ADDRESSES

FRANCE

SAINT-GOBAIN

Head Office and divisions: Flat Glass, Insulation & Reinforcements, Containers, Ceramics & Plastics, Abrasives, Building Materials Distribution, Building Materials

Les Miroirs 18 Avenue d’Alsace F-92400 Courbevoie

www .saint-gobain.com Mailing Address: Les Miroirs F-92096 La Défense Cedex T el.: +33(0) 1 47 62 30 00
Pipe Division 91 avenue de la Libération F-54076 Nancy T el.: +33(0) 3 83 95 20 00 Fa x: +33(0) 3 83 96 27 57

www .pont-a-mousson.com


### GERMANY AND CENTRAL AND EASTERN EUROPE
General Delegation V iktoria-Allee 3-5 D- 52 066 Aachen T el.: (49) (241) 516 0 Fa x: (49) (241) 516 24 44

www .saint-gobain.de


### BENE L UX
General Delegation Boulevard de la Plaine, 5 B-1050 Brussels T el.: (32) (2) 645 87 11 Fa x: (32) (2) 645 87 95 

### UN ITED KINGDOM AND REPUBLIC OF IRELAND
General Delegation Aldwych House 81 Aldwych UK-London WC2B 4HQ T el.: (44) (0)20 7400 8800 Fa x: (44) (0)20 7400 8899

www .saint-gobain.co.uk


### SPAIN, PORTUGAL AND MOROCCO
General Delegation Edificio Ederra - Centro Azca P aseo de la Castellana n° 77 E-28046 Madrid T el.: (34) (91) 397 20 00 Fax: (34) (91) 397 26 26



### ITALY AND GREECE
General Delegation Vi a E. Romagnoli, 6 I-20146 Milan T el.: (39) (2) 42 43 1 Fa x: (39) (2) 47 47 98



### NORDIC COUNTRIES AND BALTIC STATES
General Delegation Box 501 S-26050 Billesholm T el.: (46) 4 28 40 00 Fa x: (46) 4 28 40 01



### POLAND
General Delegation Atrium Plaza Al Jana Pawla II 29 00-867 Warsaw, Poland T el.: (48) 22 653 79 00 Fa x: (48) 22 653 79 09 

### CO M MONWEALTH OF INDEPENDENT STAT ES(CIS)

Delegation Vo lokolamskoye, Shosse, 1 "Proektny Institut # 2" 1 25 843 Moscow, Russia Te l.: 7 (095) 937 32 23 Fa x: 7 (095) 937 32 24

www .saint-gobain.ru



### EURASIA

Delegation Büyükdere Caddesi Bahçeler Sok. Efe Han N° 20/1 Mecidiyeköy, Istanbul, Turkey T el.: (90) 212 275 67 76 Fa x: (90) 212 275 67 34



### UN ITED STATES AND CANADA
General Delegation 75 0 E Swedesford Road PO Box 860 Va lley Forge, PA 19482-0101 T el.: (1) (610) 341 70 00 Fa x: (1) (610) 341 77 97

www .saint-gobain.com/us



### BRAZIL AND ARGENTINA

General Delegation A

venida Santa Marina, 482 Agua Branca 05036-903 São Paulo SP T el.: (55) (11) 3874 7988 Fax: (55) (11) 3611 1598

www .saint-gobain.com.br 

### M EXICO, COLOMBIA AND VENEZUELA
General Delegation Horacio n°1855-502 Colonia Polanco 115 10 Mexico DF Te l.: 52 (55) 52 79 16 52 Fa x: 52 (55) 52 79 16 99

www .saint-gobain.com.mx


### CHINA Delegation Citic Building 24-5 19 Jian Gao Men Wai Da Jie 1 00004 Beijing T el.: (86-10) 65 01 33 27 Fa x: (86-10) 65 12 98 43

www .saint-gobain.com.cn


### ASIA-PACIFIC
General Delegation Saint-Gobain Bldg 3-7 Kojimachi, Chiyodaku 1 02-0083 Tokyo T el.: (813) 52 75 08 61 Fa x: (813) 52 75 08 69

www .saint-gobain.co.jp


### SOUTH-EAST ASIA
Delegation 15 Beach Road # 04-02 Beach Centre Singapore 189677 T el.: (65) 63 34 26 36 Fa x: (65) 63 34 53 25



### INDIA
General Delegation Army and Navy Building 1 48 Mahatma Gandhi Road 400001 Mumbai T el.: (91) 22 287 52 90 Fa x: (91) 22 202 37 11

www .saint-gobain.co.in • Saint Gobain Couv+tranche GB 23/05/03 12:38 Page 2

# CHAIRMAN’S STA TEMENT

SAINT-GOBAIN HOLD S UP WELL AGAINST TH E BACKDROP OF A DISMAL GLOBAL ECONOMY
In 2002 we improved operating results and strengthened our balance sheet structure. This performance was achieved despite lackluster business conditions in Europe and the United States, whichwere exacerbated by unfavorable exchange rates for the U.S. dollar and Brazilian real. Solid operating results Despite the contraction in markets tied to capital expenditure, sales climbed 1.2% on a comparable basis. The increase was fueled by firm prices in the Housing Products Sector and sustained growth in sales volumes recorded by the Glass Sector.
Operating margin of the industrial divisions stood at a steady 10 .6%, buoyed by cost-containment measures rolled out by the Group’s manufacturing companies in response to the economic slowdown. A significant contributor was the ongoing restructuring drive carried out in the High-Performance Materials Sector. Meanwhile, the Building Materials Distribution Division increased its profit margin from 4.5% to 4.9%, further to the 2001 transfer of the Pipe Distribution business.
Saint-Gobain’s resilience proves the robustness of our business model, which is structured around a balanced mix between historic businesses generating strong recurring revenue and the fast-growth businesses of Distribution and High-Performance Materials. Increased financial strength Free cash flow totaled € 1.24 billion, reflecting the combination ofthe Group’s solid (4.7% of sales) operating margin and tight control exercised over capital expenditure. This, allied with the significant reduction in working capital requirements – trimmed to 59 days from 68 days – led to net debt being scaled back to € 7 billion at December 31, 2002 from € 7. 8 billion a year earlier. Financial investments continued in tandem with strengthening the balance-sheet structure. We made further bolt-on acquisitions in the Building Materials Distribution and Ceramics & Plastics sectors,and broadened the geographic presence of our historic businesses. Another highlight in the investment sphere was Saint-Gobain’s buyout of minority interests in the Lapeyre Group at the beginning of the year.

Fo llowing an increase in new asbestos-related claims filed in the US in 2001, the Group decided to a record a € 1 00 million pretax charge in 2002. The number of new claims filed was not significantly higher in 2002 and in 2003, several amendments tofederal and state laws may have a positive impact on asbestosrelated litigation.
Net income excluding capital gains came in at € 1,051 million, boosted by a solid performance in manufacturing operations and a reduction in interest expense. This figure was in line with our target, despite the charge recorded for asbestos-related litigation.
Saint-Gobain’s strong and consistent results were achieved due to the ongoing drive and commitment shown by each and every teammember, combined with the trust we have earned from our customers. The year 2003 has started off on an uncertain footing, butwe are well positioned to further demonstrate our resilience, drawing on the strengths of our diverse markets and global reach.

Jean-Louis BEFFA Chairman and Chief Executive Officer • STGOBAIN RA02-CH1/GB 13/06/03 10:35 Page 1**2**



## KEY FIGURES
SALES BY SECTOR AND DI VIS ION

**Pipe** 

## 4 **% Building Materials**  

## 10 **% Building Materials Distribution**  

## 35.5 **%**

**Ceramics & Plastics and Abrasives** 

## 12 **% Flat Glass**  

## 14.5 **%**

**Insulation and Reinforcements** 

## 11 **%**

**Containers** 

## 13 **%** The Glass Sector posted the strongest like-for-like growth within the Group in 2002, driven by high sales volumes across the board.
Conversely, sales in the High Performance Materials Sector

–which slowed considerably during the first half – continued to contract in the second half of the year, albeit less significantly. The Housing Products Sector slightly outstripped the Group's average growth rate, with the Building Materials Division reaping the benefits of the buoyant construction market in the United States and the Building Materials Distribution Division expanding through organic growth and bolt-on acquisitions.

(in € millions) 

### 2002 2001 2 000 1999 1998 Net sales 30,274 30,390 28,815 22,952 17,821 Operating income 2,582 2,681 2,693 2,314 1,776 Net income before minority interests 1,074 1,174 1,6 42 1,38 9 1 ,182 Net income 1, 040 1,134 1,517 1,226 1,097 Earnings per share (in € )* 3.05 3.33 4.45 3.51 3.04 Net income excluding profit on sales of non-current assets 1,051 1,057 1. 026 88 3 790 Earnings per share excluding profit on sales of non-current assets (in € )* 3.08 3.10 3.01 2.53 2.19
Net dividend (in € )* 1.13 1.125 1.075 0.90 0.80 Highest share price (in € )* 49.05 45.00 48.93 47.48 45.62 Lowest share price (in € )* 18.57 32.05 29.13 25.78 24.93
(*) After the June 27, 2002 four-for-one stock split. • STGOBAIN RA02-CH1/GB 13/06/03 10:35 Page 2**3** SAINT-GOBAIN **2 002 ANNUAL REPORT**  

# 2 002 ANNUAL REPORT

I - SAINT-GOBA IN IN 2002 4 Saint-Gobain today 4 Saint-Gobain’s businesses 7 Review by Sector and by Division 8 Research 21
II - SUSTAINAB LE DEVELOPMENT 23

III - 2002 MANAGEMENT REPORT 47 Economic and market conditions 47 Firm results in 2002, in line with targets 49 Outlook for 2003 51 Glass 52 High-Performance Materials 57 Housing Products 60
IV - STOCK EXC HANGE INFORMATION 65
V - SHAREHOLDERS, BOARD OF D IRECTORS, OFFICERS 69

VI - RISK FACTORS 83
VII - CONSOLIDATED FINANCIAL STATEMENTS 88
VIII - PARENT COMPANY FINANCIAL STATEMENTS 130

IX - INFORMATION ON SUBSIDIARIES 153 X - PERSONS TAKING RESPONSIBILITY FOR THE “DOCUMENT DE RÉFÉRENCE”
AND STATUTORY AUDITORS 169 This “Document de Référence” was filed with the Commission des Opérations de Bourse on April 1, 2003, in accordance with Regul ation 98-01. It may be used as a supporting document for a financial operation, but only alongside an information memorandum approved by the Commission des Opérations de Bourse. This English-language version of this annual report is a free translation of the original French text. It is not a binding docu ment. In the event of a conflict in interpretation, reference should be made to the French version which is the authentic text. The auditors’ report applies to the French version of the Management Report and the financial statements.



## CONTENTS • STGOBAIN RA02-CH1/GB 13/06/03 10:35 Page 3* Source: Saint-Gobain **4** 

# I - SAINT-GOBA IN IN 2002

A RETOOLED GROUP
Apart from the disposal of its Paper-Wood business in 1994, the other principal landmarks in the Group’s restructuring have been: • Acquisition of Norton (1990); • Acquisition of the Poliet Group (1996);

• Refocusing of core businesses on downstream activities and services, alongside expansion into rapidly growing markets.

T ogether, these developments have opened up new avenues for the Group’s long-term growth. The acquisition of Norton marked a new departure by giving Saint-Gobain a foothold in businesses with a higher technological content. Similarly, its purchase of Poliet heralded a new approach to marketing and services. At the same time, Saint-Gobain began focusing on moving its semi-finished goods businesses “downstream”, i.e. closer to end-customers, while also enhancing the added value of its products and services. Objectives pursued under this strategy have focused on unlocking the Group’s potential to sustain high-margin, high-volume growth while expanding operating margins and free cash flow, and ensuring greater regularity in earnings. The results of this transformation can be seen in the respective leadership positions of the Group’s businesses in its Glass, High-Performance Materials and Housing Products sectors. In each sector, the Group has combined historic businesses with strong recurring revenue streams alongside high-growth businesses with significant development potential. Historic businesses, which include Flat Glass, Containers, Insulation, Pipe and Building Materials, go to market with key strengths. These include worldwide or European leadership, unrivaled technological expertise, ability to generate substantial free cash flow and extensive development potential in rapidly developing countries, the bulk of which are emerging economies.
Businesses with high intrinsic growth, which include Building Materials Distribution, Ceramics and Composites, Abrasives and Reinforcements, share common strengths such as low levels of capital intensity and higher average organic growth. They operate in fragmented markets offering extensive growth potential and opportunities to establish leadership positions. In the last six years, they have played a major role in the Group’s restructuring program. Since 1996, three-quarters of the acquisitions completed within the Group have concerned high-growth businesses. In 2002, these businesses accounted for 52% of the Group’s consolidated sales, versus 25% five years earlier. Over the same period, Saint-Gobain has doubled its revenue footprint in each of its activities. Thus, for example, in the Building Materials Distribution Division, majoracquisitions such as UK-based Jewson and Graham and Germanybased Raab Karcher have driven a 30% increase in sales. In HighPe rf ormance Plastics and glass reinforcement fabrics, the same figures are 50% and 20% respectively.
At the same time, Saint-Gobain has pressed ahead with international expansion. To build upon its already diversified presence in Europe and Latin America, the Group has concentrated on making inroads into North American, Central European and Asian markets. Substantial ground has been made in the latter region.

Th is geographical development has involved all divisions and businesses: Flat Glass in Asia and Central Europe, Insulation in Central Europe, Reinforcements in Asia and Central Europe, Containers in North and South America, Ceramics and Abrasives (all continents), Pipe (Europe, China, South Africa), Building Materials (South America). Building Materials Distribution, which was initially restricted to France, is now a leading European player* and has gained a strong foothold in South America.
Between 1995 and 2001, the Group’s historic businesses doubled their sales in emerging countries.
Having retooled the Group’s structure and reach, Saint-Gobain can comfortably confront the economic challenges that lie ahead. 

## SAINT- GOBAIN TODAY
The origins of the Saint-Gobain Group go back to the founding in France of the Manufacture Royale des Glaces de Miroirs (Royal Mirror Glass Works) in 1665. Over the course of its development and diversification in intervening years, the Group has consistently been at the forefront of successive industrial revolutions. Saint-Gobain’s present configuration is the fruit of a sweeping transformation of its business operations and structures which began in the 1990s and went on to fundamentally reshape the Group’s strategic focus. T oday, Saint-Gobain operates as a manufacturer and provider of high-technology materials and associated services. Its mission is to produce and distribute the most advanced materials and to deliver sustained growth by leveraging its strong leadership positions. • STGOBAIN RA02-CH1/GB 13/06/03 10:35 Page 4**5** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

Leveraging its balanced mix of activities revolving around consistent centers of expertise, the Group has in recent years implemented a strategy to achieve sustainable profitable growth based on three objectives: developing genuine leadership in all of its businesses, bolstering its technological and sales capabilities, and sharply reducing its exposure to cyclical changes and market fluctuations. Saint-Gobain has built its business model on these foundations, achieving extremely satisfactory results in 2002.

Th is strategy also applies to the three pillars of the Group’s operations: the historic businesses, Ceramics and Composites and Building Materials Distribution. In the historic businesses the Group is focusing its major investment programs in emerging economies while at the same time modernizing its existing manufacturing base in Western Europe and the United States. These businesses are also aiming to achieve full production capacity as well as sustained productivity and technological improvements. The pursuit of these objectives will also require tight control of capital expenditure and increased free cash flow which is characteristically high in these businesses. This policy has been borne out by the facts as between 1995 and 2002 the historic businesses achieved average sales growth of 10% per year in emerging countries, which accounted for 9% of total consolidated sales in 2002. 18% of the Group’s capital expenditure was given over to the implementation of this policy.
Despite the market downturn suffered in Ceramics and Composites in 2001 and 2002, the sector’s strategic model is still effective as prices tend to resist well in these highly specialized businesses, even in the most challenging of economic conditions. The Group’s positioning in these specialty markets is therefore key to growth and to the extent possible, it is anticipating customers’ needs by investing in cutting edge research and development. There are still opportunities to seize for consolidation in these extremely fragmented markets provided the locations of the Group’s various manufacturing facilities are optimized. At the same time, if these sectors are to rapidly adapt to market slowdowns they will have to pursue efforts to tightly control production costs and capital expenditure, while targeting capacity choices on countries where growth has remained strong, such as China. Against this backdrop, the Group has been able to maintain its principal objectives for these businesses: strong medium-term organic growth in the region of 5% per year, combined with a sustained high level of return on capital employed.

T he business model for Building Materials Distribution has three key focuses: marketing and service innovations, increasing geographic reach and seizing market consolidation opportunities through bolt-on acquisitions. Innovation efforts have led to new store concepts, such as La Plateforme, new supplier partnerships and an own brands policy. The geographic growth strategy also includes opportunities for bolt-on acquisitions, which are not limited to France. T here are possibilities available for Jewson in the United Kingdom, Raab Karcher in Germany as well as in emerging countries where demand for new formats is strong. The La Plateforme concept is also contributing to the Group’s drive for international expansion and has already been rolled out to seven countries. A launch is currently under way in Mexico, which may be followed by Brazil where Te lhanorte is already well positioned. Within this sector, it therefore falls to Building Materials Distribution to provide sustained high organic growth, building on a system which is less capitally intensive than the Group’s other activities. This strong development capacity was illustrated by a further 12.7% increase in operating income for 2002.

Th is strategy has brought with it a proper balance of risks and opportunities for all of the Group’s activities over recent years. Since 1 994, the manufacturing companies have maintained operating margin levels of over 10% while GDP in the OECD nations fluctuated significantly during the period, with a substantial fall in 2001 and 2002. 

## A STRATEGY FOR TODAY’S ENVIRONMENT • STGOBAIN RA02-CH1/GB 13/06/03 10:35 Page 5**6**

Th anks to increases in sales prices combined with costs reductions, Saint-Gobain was able to turn in a good performance in 2002 against a backdrop of challenging economic conditions. The Group confirmedits capacity to generate strong organic growth reporting a 1.2% likefor-like increase, despite the slowdown in markets tied to capital expenditure and industrial equipment.
Saint-Gobain has also strengthened its balance sheet structure recently by stepping up the pace of debt reduction. In 2002, Saint-Gobain’s business model once again proved its resistance to market cycles. Faced with uncertain market conditions and new difficulties relating to asbestos-related lawsuits which are described below, the Group maintained its manufacturing strategy focusing on organic growth combined with more targeted acquisitions. Going forward, the total number of acquisitions will be reduced and the Group’s balance sheet structure will be further strengthened with the aim of achieving an additional decrease in the gearing ratio by 2005.

TEN-YEAR CONSOLIDATED FINANCIAL HIGHLIGHTS

(*) Before or (**) after the four-for-one stock split carried out on June 27, 2002. (1) Capital expenditure on plant and equipment plus investments in securities, excluding

Saint-Gobain shares bought back. (In € millions) 2002 2001 2 000 1999 1998 1997 1996 1995 1994 1993 Net sales 30.274 30.390 28.815 22.952 17.821 16.324 13.931 10.719 11.357 10.906 Gross margin 7. 604 7.698 8.146 6. 851 4.573 4.118 3.374 2.664 2.697 2.322 Operating income 2.582 2.681 2.693 2.314 1.776 1. 593 1. 434 1.187 1.112 759 Income before tax and before profit on sales of non-current assets 1. 848 1.988 1.947 1.821 1.393 1.220 1.124 1.070 808 261 Net income before minority interests 1.074 1.174 1.642 1.389 1.182 970 767 716 724 196 Net income 1. 040 1.134 1.517 1.226 1.097 858 659 642 553 200 Earnings per share (€ ) 12. 20 * 3.05 ** 13.30 17.80 14.05 12.15 9.62 7.61 7.69 6.81 2.76 Net income excluding profit on sales of non-current assets 1.051 1.057 1.026 883 790 656 636 613 413 104 Net earnings per share excluding profit on sale 12.32 * of non-current assets (in € ) 3.08 ** 12.40 12.04 10.1 2 8.75 7 .35 7.34 7.34 5.09 1.43 C ash flow from operations 2.673 2.733 2.643 2.360 1.912 1.693 1.628 1.404 1.237 971 C apital expenditure 1.431 1.430 1.722 1.712 1.288 1.353 1.169 852 576 643 To tal investment outlay (1) 2.061 2.246 4.694 3.479 3.019 2.447 3.034 1.448 997 1.042 Net equity 11.542 12.348 11.724 11.151 9.924 9.959 9.082 7.017 6.422 5.417 Net debt 7.012 7.792 8.217 6.306 3.885 2.668 2.249 600 383 2.295 Non-current assets 18. 840 19.678 19.530 16.909 14.033 13 .139 12.103 8. 463 7.6 61 8. 245 Work ing capital 3.951 3.075 3.222 2.612 1.838 2.262 1.757 2.499 2.990 2.103 Employees (as of Dec. 31) 172.357 1 73. 329 1 71.125 164.698 117.287 107.968 111.701 89.852 80.909 92.348 • STGOBAIN RA02-CH1/GB 13/06/03 10:35 Page 6**7** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

As a result of the redeployment of operations, three core Sectors have gradually emerged, each of which includes several operating divisions. Saint-Gobain is a global or European leader in all three sectors. Each sector has built up an array of fast-growth businesses and has the necessary resources to grasp opportunities for development.

The Glass Sector includes Flat Glass, Insulation and Reinforcements, and Containers. By harnessing the extensive synergies between these market-leading businesses, Saint-Gobain has become the number one glass manufacturer worldwide. Th is leading position is unrivaled as none of the Group’s competitors operate across the full spectrum of the glassmaking market. The Sector draws upon a powerful presence in Europe, North America and Latin America, as well as new positions in Asia. The end-user markets for the Sector’s products are construction and renovation, the automotive industry, industrial machinery and household appliance manufacturers, as well as packaging. It is developing into new segments where Saint-Gobain’s specific technology allows it to design innovative products with high added value, and is pursuing growth opportunities in emerging countries.

T he High-Performance Materials Sector comprises two divisions: High-Performance Ceramics & Plastics, and Abrasives. The Sector is the world leader in Abrasives and in thermal and mechanical applications of Ceramics. Since the acquisition of Furon in 1999, the Sector has also captured the number one position in HighPe rf ormance Plastics. Operations are evenly spread between Europe, America and Asia. They are highly innovation-oriented, are often in niche markets, and enjoy strong growth momentum.

T he Housing Products Sector includes the Building Materials, Building Materials Distribution and Pipe divisions. The Pipe Division is the number one supplier worldwide of ductile cast iron pipes used for water distribution. The Building Materials Division is joint world leader for roofing products and indoor and outdoor wall facings, and is the European leader for industrial mortars. The Building Materials Distribution Division is number one in Europe in its field since the acquisition of Meyer International in the United Kingdom and Raab Karcher in Germany. With manufacturing operations in Europe, Latin America, Asia and South Africa and significant sales volumes in distant export markets, the Pipe Division also has considerable international reach.
Saint-Gobain’s structure has therefore been optimized to enable a worldwide strategy to be rolled out across all businesses. Its development towards downstream activities, the most recent chapter in its refocusing, has brought the dual benefit of reduced exposure to cyclical downturns and closer knowledge of buying trends among end-user consumers. 

## SA INT-GOBAIN’S BUSINESSES

REVIEW BY SECTOR AND BY DIVISION

Pro forma accounts have been prepared for 2001 and 2000, following the transfer, as from January 1, 2002, of the Pipe Division’s distribution operations to the Building Materials Distribution Division. Net sales 2002 2001 20 01 2 000 2000 (In € millions) pro forma pro forma Flat Glass 4,423 4,478 4,478 4,167 4,167 Insulation and Reinforcements 3,329 3,274 3,274 3,254 3,254 Containers 4,076 4,070 4, 070 3,906 3,906 (Internal sales) (10) (9) (9) (10) (10) Glass 11,818 11,813 11,813 11,317 11,317 Ceramics & Plastics and Abrasives 3,637 4,018 4,018 4,095 4,095 Essilor -

- - 978 978 (Internal sales) - - - - - High-Performance Materials 3,637 4,018 4,018 5,073 5,073 Building Materials 3,074 3,184 3,184 3,067 3,067 Building Materials Distribution 10,953 10,521 10,0 61 8, 383 7,929 Pipe 1,344 1,397 1,782 1,392 1,778 (Internal sales) (269) (278) (203) (246) (178) Housing Products 15,102 14,824 14 ,824 12,596 12,596 (Internal sales) (283) (265) (265) (171) (171) TOTAL 30,274 30,390 30,390 28,815 28,815 • STGOBAIN RA02-CH1/GB 13/06/03 10:35 Page 7**8**

The Glass Sector federates some of the Saint-Gobain Group’s long-standing capabilities, such as Flat Glass, Insulation and Reinforcements, and Containers.

T ogether, these divisions represent 38.5% of Group sales. Each has a strong leadership position, either in Europe or in the international arena as a whole. Saint-Gobain is the world’s top player in this sector, buoyed by its being the only glass manufacturer that provides a comprehensive glass offering.

Th e Sector serves broad end-user markets, such as construction and renovation, the automotive and transport industries, industrial machinery and household appliance manufacturers, as well as packaging. Although the Glass Sector is, by definition, capital-intensive, the glass manufacturing businesses are a major contributor to the Group’s free cash flow. Capital expenditure has been scaled back over the past two years following the completion of major investment programs in emerging economies, particularly for Flat Glass and Reinforcements. These countries are still priority investment areas, however.
Growth opportunities for the Sector’s various businesses lie in leveraging the Group’s specific technology and in actively developing new products. 

# GLASS SECTOR

Flat glass Insulation and reinforcements Containers • STGOBAIN RA02-CH1/GB 13/06/03 10:36 Page 8**9** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

> Basic Flat glass products

> Processing and

distribution Building industry

> Automotive glass

> Specialty glass > Clear and colored glass, layered glass

> Construction, building industry,

interior design, furniture

> Clear and safety products

for the automotive industry, glass for replacement parts Aeronautics and mass transit

> Fireproof glass, nuclear safety,

aeronautics and mass transit, industrial optics, home appliances, industrial refrigeration > Pilkington (United Kingdom) > Asahi (J apan)

> Guardian (United States) > P.P.G (U nited States)

> Schott (Germany) > European leader and one of the world’s top three suppliers to the building and automotive industries Businesses and products Key uses Key competitors Competitive ranking* 

### FLAT GLASS

> Glass wool > Rock wool > Soundproof ceilings > Insulating foam

> Glass threads (TD,TPA,Tx, etc.)

> Processing (glass, carbon,

polyester and Kevlar ® glass grids and reinforcing fabrics) > Thermic and acoustic insulation of buildings, technical facilities (glass and rock wool, foams) Hydroponic cultivation (rock wool)

> Automotive, mass transit, construction,

industrial and consumer machines, electrical and electronics industries

> Building industry, industrial materials,

technical composites > Ow ens Corning (United States) > Johns-Manville (United States) > Rockwool (Denmark) > Pfleiderer (Germany) > Knauf (United States, Europe) > Armstrong (United States)

> Ow ens Corning (United States) > P.P.G (U nited States) > Johns-Manville (United States) > Nippon Electric Glass (Japan)

> Nitto-Boseki (Japan) > Insulation: world leader

> Reinforcements: world leader

> Leader in external insulation grids

for buildings Businesses and products Key uses Key competitors Competitive ranking* 

### INSULATION AND REINFORCEMENTS

> Bottles and jars

> Flasks

> Plastic pumps > Food packaging (food products, wine, beer, soft drinks, oils, sauces)

> Fragrances, pharmaceutical

and medical products.

> Cleaning products, health and beauty

care products > Fragrances and pharmaceuticals > Ow ens Illinois (United States) > Vitro (Mexico) > Consumers (United States/Canada) > P. L.M (Sweden)

> B.S.N Glass Pack (France-Germany) > Poc het (France) > Bormioli (Italy) > Gerresheim (Germany) > Wheaton (United States)

> O I, Indesco, Aptar (United States)

> Aptar (United States),

Rexam (United Kingdom) > Joint world leader > European leader (all businesses

combined)

> Wo rld leader

> Wo rld leader

> Foremo st player Businesses and products Key uses Key competitors Competitive ranking* 

### CONTAINERS

* Source: Saint-Gobain • STGOBAIN RA02-CH1/GB 13/06/03 10:36 Page 9**10**



## FLAT GLASS Flat Glass manufactures, processes and markets glass and glazing products for two major markets, the building and automotive industries. Its four main business lines are flat glass manufacturing; processing and distribution for the building industry; production of automotive glass; and specialty glass, which includes products for home appliances, fireproof glass, nuclear safety glass and glass for electronics.
Glass is manufactured in large industrial units known as float-glass lines. These lines produce different types of flat glass, ranging from basic grades in clear and colored varieties, through to more sophisticated glass grades incorporating specific coatings or metallic oxides which are used in many different applications, for example for thermal insulation or sun control. The Division operates in 33 countries and has 29 flat glass floats, of which 11 are jointly owned.
Before being sold, two-thirds of the glass produced by Saint-Gobain’s Flat Glass plants is further processed, notably for the building industry. This market is served by a network of downstream processing and distribution businesses which supply an entire range of applications, from structural glazing and wall facings for major construction projects and urban amenities through to glazing products for industrial carpentry, furniture, bathroom fixtures and interior decoration. All of these applications have led to majorinnovations, such as low-emission, electrochrome or electricallycontrolled glass, as well as shatterproof glass.

T he Division is also a manufacturer of automobile parts. It delivers front and back windshields, side windows, glass sun-roofs and other ready-to-assemble modules to major European and global car manufacturers. Whether laminated, colored, treated or specially coated for high-performance applications, the different types of flat glass are sophisticated high-technology products. The pace of change is extremely rapid in this field, to keep up with consumer expectations of ever greater safety and comfort through increased visibility, insulation and acoustic protection. In addition to automotive markets, the aeronautics and mass-transit industries are another significant end-use market for the Division’s product expertise.
Lastly, the Division includes under the heading of Specialty Glass a number of companies offering specific capabilities in markets suchas home appliances (Euroveder, Eurokera), fireproof glass (SaintGobain Vetrotech International), industrial optics, and industrial refrigeration. Another specialist subsidiary, Saint-Gobain Display Glass, produces flat glass products for electronic displays.

To meet the needs of its various markets, the Division has adopted a customer-focused organization, with: - Saint-Gobain Glass for basic products; - Vitrages de Saint-Gobain for processing and distributing flat glass

for the building industry;

- Saint-Gobain Sekurit International for the automotive and mass

transit markets; - Specialty Glass.
International expansion is a constant priority for the Flat Glass Division. Adding to its long-standing presence in all of the major glazing markets in Western Europe, the Division has made inroads into Brazil, Argentina and Chile as well as in Eastern Europe, Mexico and Korea. More recently, it has made significant investments in China and India. In addition, sales offices have been established in a number of countries, including Japan and the United States, in order to develop sales of flat glass products in these markets. 

## INSULATION AND REINFORCEMENTS
T he operations of the Insulation Division, born of the development of glass technology but specialized in insulation materials since 19 36 , include glass wool (TEL process), rock wool, and distribution of soundproof ceilings and insulation foams, which are developed in partnership with major chemical companies.
Insulation products are marketed as rolls, panels or molded insulation. They are mainly designed for the new construction and renovation markets, for fitting on roofs, walls and flooring, to reduce heating costs or noise with a view to providing maximum comfort. T hermal and acoustic insulation standards in the building industry have been introduced in a large number of countries, providing a solid basis of growth for the Insulation Division. Edificio las Flores in Mexico City: over 13,000 sq.m. of screen printed glass. • STGOBAIN RA02-CH1/GB 13/06/03 10:36 Page 10**11** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

In addition to these uses in the building industry, a portion of sales derives from technical insulation for some of the most complex industrial facilities, or niche markets such as soil-less (hydroponic) cultivation.

In Europe, one house out of three is insulated with the Division’s products, and the proportion in the United States is one in every five. The Division is present across the globe, either as a direct producer or via its licensees, and specializes in providing sophisticated and increasingly high-performing systems, drawing on its recognized expertise in acoustic comfort. Thanks to its manufacturing clout and numerous licenses, the Division is a worldwide leader* in mineral fiber insulation products which are sold under a global brand name, Isover.

T he development of soundproof ceilings has proven fruitful, manufactured under the Ecophon, Eurocoustic and APS brands.

T he Division is structured on a regional basis, aimed at fostering manufacturing and marketing synergies between countries, enabling it to respond promptly to market needs. The aim is to achieve a steady growth rate across all segments.
In industrial countries where it enjoys a long-standing leadership position, the Division constantly seeks to develop new systems with high added value. Isover has gained a strong foothold in emerging economies, successfully tapping the growth opportunities generated by the climate itself and a growing demand for comfort. The new facility in Russia is a prime example of this.

T he overall strategy adopted by the Division is underpinned by a twofold goal: bolster its leading position in thermal, acoustic and fireproof insulation solutions and step up expansion in its core market of glass wool. Through its global Isover brand, it provides a range of specific technical, logistic and commercial services with high added value, capitalizing on profitable resources offered by new technologies.

The Reinforcements Division has manufacturing operations in nineteen countries. The current strategy of this Division is to extend its low-cost production platforms beyond Europe, grouping its two core activities – threads and textile processing. Glass thread production is the Reinforcements Division’s historic business. It was expanded in 1998 to include processing. This downstream activity has strong growth potential, with current sales representing half of total sales generated by the upstream business of reinforcements.

T he glass threads activity is marketed under the Saint-Gobain Vetrotex trade name, which groups a Reinforcements division organized by geographical area (Reinforcements Europe & North America, Reinforcements South America, and Reinforcements Asia Pacific) and a division specialized in textile threads. Saint-Gobain Vetrotex enjoys global reach, supplying downstream processors with glass fiber to be used in the manufacture of composite materials. The key markets served are the automotive and mass transit industries for vehicle bodywork, interior or motor parts, as well as the building industry, leisure equipment (sports goods, boats etc.), the electrical and electronic industries, and the civil and military aeronautics industries.

* Source: Saint-Gobain BTI ® , a multiaxial fabric used to facilitate the delivery and rapid assembly of composite bridges. • STGOBAIN RA02-CH1/GB 13/06/03 10:36 Page 11* Source: Saint-Gobain **12**

Textile-processing operations are grouped into a dedicated SaintGobain Technical Fabrics business unit. It produces glass grids and cloths for three types of markets: the building industry, industrialmaterials and technical composites. This business is less capitalintensive than the glass threads activity, and is more resilient to economic downturns. It has become a second core business for the Division, and is organized around the following companies: Saint-Gobain Technical Fabrics Canada and Saint-Gobain BayForm Canada, Saint-Gobain Technical Fabrics America, Saint-Gobain Bayform America, Saint-Gobain BTI US, Saint-Gobain Technical Fabrics S.A. de C.V. in Mexico, Saint-Gobain Technical Fabrics UK and Saint-Gobain BTI UK, Saint-Gobain Vertex in the Czech Republic, Saint-Gobain Syncoglas in Belgium, Saint-Gobain Tevesa and Saint-Gobain Icasa in Spain, and Saint-Gobain LMC in Italy. The Division also comprises the Glass Mat business unit, dedicated to manufacturing fiberglass units for the building and infrastructure industries. This unit groups facilities located in Europe and the United States.
Overall, the Reinforcements Division currently generates some 49% of sales in Eastern and Western Europe, 41% in North and South America and 10% in Asia.
Against a harsh economic backdrop, the Division has set the following primary goals:

• Continue to broaden the geographic reach, niche markets and

semi-composite activities of downstream operations.

• Develop production platforms that group all of the Division’s

businesses at one site in countries with low labor costs. • Expand distribution networks;

• Continue to enhance capabilities in people management,

innovation and cost control. 

## CONTAI NERS

T he Containers Division is a front-ranking international player in all three of its business lines. These comprise: - Glass bottles and jars for food products and beverages; - Glass flasks for perfume and pharmaceutical products;

- High-performance plastic pump dispensers for beauty, personal

care and cleaning products.

To meet the diverse needs of both global and locally based clients, the Division operates glass bottle and jar manufacturing units in Europe (France, Germany, Italy, Spain and Portugal), the United States, South America (Brazil, Argentina), and China. In the food and beverages sector the Division is present in all market segments. These include still wines, champagnes and sparkling wines, beer, liquor, aperitifs, fruit juices, soft drinks, mineral water, oils, baby food, instant food and drinks, yogurts, deserts, etc.

T he Division’s expertise in creating new product designs, combined with its flexible manufacturing processes and locally based plants have enabled it to capture the top spot in Europe and the number two position in the United States.*

T he Flasks business serves worldwide perfume and pharmaceutical makers from locations in Europe and the Americas. As the world’s largest manufacturer of flasks*, its design flair, wide array of glass finishes, and the excellence of its process controls and quality assurance methods, which are used as benchmarks for all its operations, are widely recognized within the industry.

T he third Containers business line, pump dispensers, manufactures a core catalogue of products for worldwide markets and has production facilities in Europe, the United States, Latin America and China. As in its other core businesses, the Division enjoys a strong reputation for the quality and performance of its products as well as for its process controls and quality assurance standards.
In each of the Division’s packaging businesses, the strategic focus is on ever-enhancing product and service quality to respond swiftly to client needs and expectations. Saint-Gobain’s Calmar’s SDS 40 pump for gardening products. • STGOBAIN RA02-CH1/GB 13/06/03 10:36 Page 12**13** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



# Ceramics & Plastics Abrasives

The High-Performance Materials Sector is composed of HighPe rformance Ceramics & Plastics and Abrasives, acquired in 1 990 as part of the Norton Group and combined with SaintGobain’s existing Ceramics and Refractories operations. This Sector has expanded over the past few years on the strength of various acquisitions in the Plastics segment.

The products’ end uses are highly diverse, and several of the Sector’s businesses enjoy strong growth potential, particularly High-Performance Plastics. Niche markets and specialized product ranges with high added value have also steadily expanded.
All are faced with strong and broad-ranging competitive pressures in their respective segments. However, they are able to overcome these – even when sometimes confronted with severe downward economic cycles – thanks to a balanced international presence, spread between North America, Europe, Latin America and Asia. As operations are somewhat less capital-intensive than those of the other Sectors, they offer potentially high returns on capital employed. 

# H IGH-PERFORMANCE 

# MATERIALS SECTOR • STGOBAIN RA02-CH1/GB 13/06/03 10:36 Page 13**14**

> Industrial Ceramics

> Specialty ceramics (including

crystals)

> High-Performance Plastics > Refractories for glassmaking, ceramics, metallurgy and power generation furnaces. Ceramic pellets and powders for industrial abrasives, refractories, ceramics and other industrial applications. Cata lysts used in the petrochemicals industry.

> Equipment and components

for semiconductor production. Fine and structural ceramics for applications in home appliances, automotive, aeronautics and aerospace components, telecommunications, nuclear power, oil and petrochemicals.

> Fluid systems.

Plummer blocks and seals. Te chnical films and fabrics. Specialty elastomers. > Cookson (United Kingdom) > Morgan Crucible (United Kingdom) > Washington Mills (United States) > RHI (Austria)

> Kyocera (Japan) > To shiba Ceramics (Japan) > Asahi (J apan) > Coorstek (United States) > Ceramtech (Germany) > NGK (J apan)

> Entegris (United States) > Smiths Group (United Kingdom) > DuPont (United States) > 3M (United States) > Wo rld leader for thermal and mechanical applications

> No. 2 worldwide in specialty ceramics

> No. 1 or No. 2 worldwide in all

High-Performance Plastics business lines Businesses and products Key uses Key competitors Competitive ranking* 

### CERAMICS & PLASTICS

> Grinding wheels

> Thin gr inding wheels

> Coated abrasives

> Superabrasives > Roughing, precision grinding, sharpening of tools and materials for the aeronautics, automotive, metals processing, mechanical bearings and iron and steel industries.

> Cutting and trimming, metals

processing, maintenance, energy, iron and steel, construction and home improvement.

> Surface treatments, sanding:

aeronautics, automotive, furniture, portable machines, steel, jewelry, watchmaking, biomedical industries.

> Precision work for the aeronautics,

automotive, cutting tools, mechanical bearings, electronics and composite materials industries. Glass products. Construction materials and stone cutting tools. > Milacron (United States) > Ca rbo plc (United Kingdom) > Noritake (Japan) > Ty rolit (Austria)

> SA IT (Italy, United States) > Ty rolit (Austria) > Comet (Slovenia)

> 3M (United States) > Hermes (Germany) > Klingspor (Germany) > SIA (Switzerland)

> Asahi (J apan) > Diamant Boart (Belgium) > Noritake (Japan) > Wendt Boart (Belgium) > Wo rld leader for all business lines Businesses and products Key uses Key competitors Competitive ranking* 

### ABRASIVES

* Source: Saint-Gobain • STGOBAIN RA02-CH1/GB 13/06/03 10:36 Page 14**15** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

Fo llowing a decade of major acquisitions, in 2002 the Division was organized along the same lines as the Abrasives Division within the High-Performing Materials Sector, in a bid to strengthen synergies.

T he Ceramics & Plastics Division currently breaks down into four business lines: Ceramic Pellets and Powders; Ceramic Products; High-performance Plastics; and Crystals and Detectors, which features a specific organization structure to cater to the segment’s growth potential. This overall structure is built around Saint-Gobain’s core businesses of Ceramics and Refractories, as well as around the core businesses of Norton, Furon and Chemfab, Holz and Magic, acquired in 1990, 1999 and 2000 respectively. No major acquisitions were made in 2002.

Th rough these global business lines the Division generates 35% of sales in Europe, 56% in North America, 4% in South America and 5% in the Asia-Pacific region.

Ceramic Pellets and Powders are used for abrasives, refractories, ceramics and products for catalyst carrying in the petrochemicals industry. In 2002, this business line stepped up its plan to sharpen its competitive edge, primarily by setting up operations in countries with low production costs.

Ceramic Products covers the manufacturing of materials and parts which draw upon the thermal and mechanical properties of both traditional and advanced ceramics (resistance to very high temperatures, to abrasion and to corrosion). In 2002, the business line experienced flat demand for refractories and fused-cast ceramics, mainly due to a decrease in orders for repairs of glassmaking ovens following two buoyant years. At the same time, the semiconductor market showed no sign of recovery during the year. The High-Performance Plastics business line processes engineered polymers and elastomers, particularly fluoropolymers, silicons and thermo-setted plastics, that meet stringent requirements of purity, precision forming and resistance to corrosion or high temperatures. It enjoys high growth and profitability, and is structured around four core product families: Advanced Films and Fabrics, which covers films, adhesive tapes and special fabrics for aeronautic, electrical and safety applications; Fluid Systems, including pipes, couplings and tubes for manufacturing, automotive, food processing, pharmaceuticals, chemicals and semiconductors; Precision Bearings and Rings, which manufactures self-lubricating bearings and rings for cars, home appliances, machine tools and airplanes along with composite parts for the aeronautics industry; and Specialty Elastomers, which supplies flexible foams for sealing and vibration-proof foams for cars, manufacturing and the building industry.
Crystals and Detectors are produced for the medical, nuclear, safety, oil and petrochemical markets. The business line’s structure was retooled in 2002 to enable it to meet demand generated by these markets’ strong growth potential.

Fo llowing ten years of acquisitions, the Division is now focused on organic growth. Restructuring and integration processes were rolled out in 2002, with a view to further enhancing the Division’s competitive advantage. The focus for the future will be on strengthening its presence in countries with low production costs, as well as undertaking research and development programs that are tailored to its businesses.
Overall, the Division’s strategy is rooted in growing internally with a view to becoming number one or number two in 80% of its businesses. It also intends to broaden its reach in Asia, primarily through partnering major customers. Lastly, there will be a drive to leverage operating synergies and enhance asset turnover. 

## CERAMICS & PLASTICS

Fused-cast crowns designed for glass furnaces. • STGOBAIN RA02-CH1/GB 13/06/03 10:36 Page 15**16**

Abrasives, which was originally acquired as part of Norton in 1990, has grown steadily through organic and external expansion – both in Europe and the United States – to become the worldwide leader in its industry*.

T he Division’s unparalleled product coverage makes it the only supplier capable of offering customers a comprehensive range of finishing system solutions, from roughing and surface finishing through to polishing, cutting and precision grinding. Its extensive experience enables it to provide solutions for each stage in the process.

T he Division is also the only global manufacturer with capabilities in all types of abrasives made with mineral granules such as aluminum oxide, silicon carbide or diamonds:
- Grinding wheels incorporate natural or synthetic abrasives which have been bonded with a vitrified or organic binder. Their size can vary from the miniature wheels used by lapidaries through to 12- ton wheels for wood pulping in the paper industry. Most of the products in this business segment are made to measure. The Division is the world’s largest manufacturer of grinding wheels and operates in a relatively fragmented market. - Thin grinding wheels are formed from bonded abrasives which have been reinforced with fiberglass mesh. These products are generally standardized and their production is the most heavily automated. End-use markets include building and home improvement and industrial users. The Abrasives Division is the undisputed global leader in this product category.
- Coated abrasives incorporate abrasive granules which are coated with a layer of adhesive and affixed to a paper, cloth, fiber or synthetic backing. They are sold in strips, discs, rolls or sheets and are used for a wide range of applications such as polishing reactor turbine rotor blades or in surface finishing for industry and the home. Coated abrasives range in size from the equivalent of a small coin up to sheets several meters wide, which are used to polish and buff wood panels.
- Superabrasive grinding wheels and tools combine a grinding surface made from diamond or cubic boron nitride with a resin or metal bonding system. They are typically used to grind materials which are either very hard or very brittle and can work at a precision of close to one nanometer for certain electronics applications. Their performance in demanding, high-precision grinding jobs and their long-lasting reliability make them indispensable for a wide array of sectors, such as auto manufacturing and aeronautics, as well as construction.

T he Division operates manufacturing facilities in some thirty countries and has built up an extensive presence in Asia and South America alongside its established operations throughout Europe and the United States. It serves clients that are present in nearly every country. To meet demand in its various markets and satisfy a broad spectrum of customer requirements, it markets custom solutions directly to industrial clients and supplies large-run products to distributors who serve the trade and mass market. The Division has also made significant investments in e-business tools in order to deliver optimal levels of customer service. 

## ABRASIVES

* Source: Saint-Gobain Thin grinding wheels made by the second abrasives plant in Shangai. • STGOBAIN RA02-CH1/GB 13/06/03 10:36 Page 16**17** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



# Building materials Pipe

Th e Housing Products Sector was largely born out of the acquisition of the Poliet Group in 1996. It includes the manufacturing operations of the Building Materials Division,which has spearheaded the businesses of Poliet and SaintGobain since 1997. This Division proposes a broad range of solutions meeting the needs of builders for both individual housing and industrial facilities. The Building Materials Distribution Division comprises the various building materials distribution operations in France and other countries across the globe. As from January 1, 2002, Building Materials Distribution has integrated the pipe materials distribution activities formerly consolidated by the Pipe Division. One of the Group’s historic businesses, the Pipe Division operates asa specialist producer/provider of equipment for the watersupply industry. The Housing Products Sector’s markets range from household equipment to construction and renovation and to civil engineering. T he different businesses within the Sector share several common features, centered around the Group’s commitment to expanding its role in product distribution. This policy, benefiting all Saint-Gobain businesses, focuses on the importance of marketing, services and logistics. Positioned in regional markets, the Housing Products Sector enjoys a higher growth rate than the Group average with regard to the Building Materials business, and experiences little cyclical fluctuation, thanks to its moderate capital expenditure requirements and the weight of the Renovation segment. There are extensive opportunities for both organic and external growth and all three divisions also show considerable potential for development in emerging economies. 

# Building materials distribution 

# HOU SI NG P RODUCTS 

# SECTOR • STGOBAIN RA02-CH1/GB 13/06/03 10:37 Page 17**18**

> PVC indoor and outdoor sidings (United States) > Roofing products

(United States) > Concrete products > Composite materials, mortars > Terracotta tiles and bricks > New construction and renovation of existing homes Wall coatings, glues and joints for tiling Road-building and utilities Civil engineering Urban furniture Materials for gardens and landscaping > Imerys (France) > Materis (France) > Ow ens Corning (United States) > Trex (United States) > Louisiana Pacific (United States) > James Hardie (Australia) > Etex (Belgium) > Wienerberger (Austria) > Royal Group (Canada) > Bonna-Sabla (France) > European leader for industrial mortars > Among the world leaders in wall

facings and coatings > Joint world leader for roofing products Businesses and products Key uses Key competitors Competitive ranking* 

### BUILDING MATERIALS > Distribution of building materials

for new construction and renovation > Industrial carpentry > Market for houses and apartments Home equipment: kitchens, carpentry, bathrooms, heating > Wo lseley (United Kingdom/France) > Kingfisher / Castorama (United

Kingdom/France) > Travis Perkins (United Kingdom) > Pinault-Bois Matériaux (France) > European leader in building materials distribution and industrial carpentry Businesses and products Key uses Key competitors Competitive ranking* 

### BUILDING MATERIALS DISTRIBUTION

* Source: Saint-Gobain T he Buildings Material Distribution Division is the leading distributor of building materials in Europe, and the top distributor of ceramic tiles worldwide.*

Fo rmed in 1996 following the acquisition of Poliet, the Division was subsequently enlarged in 2000 on the back of major acquisitions in the United Kingdom and Germany. It serves the home building, renovation and interior decoration markets through more than 2,600 outlets in 14 countries, the bulk of which are in Europe.
Customers include building contractors, tradesmen, architects and interior decorators, as well as home owners. Products are distributed by well-established trading names such as Point.P, Lapeyre and La Plateforme du Bâtiment in France, Jewson and Graham in the United Kingdom, Raab Karcher in Germany, Holland, Hungary and the Czech Republic, Point.P in Spain, and Telhanorte in Brazil. Each banner has direct responsibility for deciding its market positioning, product line-up and value offerings.

P oint.P, which is the market leader in France, serves building professionals through a highly decentralized group of businesses operating 1,300 outlets nationwide. It is also present in Catalonia, Spain.
La Plateforme du Bâtiment - a new distribution concept launched in 1 998 - is exclusively targeted at building professionals and is modeled on the cash and carry principle. This brand now has outlets in 14 cities in France and is gradually being rolled out to other countries. Seven branches have been set up in Poland, Spain, 

## BUI LDING MATERIALS DISTRIBUTION > Cast-iron pipes, connectors

and accessories > Hydraulic valves and fountains > Road-building supplies > Pipes and connectors

for wastewater and rainwater in the building industry > Drinking water supply Irrigation Wastewater networks Road-building and civil engineering > US Pi pe (United States) > Mac Wane (United States) > Kubota (Japan) > Buderus (Germany) > Norinco (France) > T yco (United States) > Wo rld leader in ductile cast-iron pipes Businesses and products Key uses Key competitors Competitive ranking* 

### PIPE

* Source: Saint-Gobain • STGOBAIN RA02-CH1/GB 13/06/03 10:37 Page 18**19** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

Hungary, the United Kingdom and Mexico, and there are plans to further step up international expansion.
In 2002, Lapeyre concentrated on repositioning its business. As a specialist in home decoration, Lapeyre covers four essential product “destinations”: fitted kitchens, fitted bathrooms, interior carpentry and exterior carpentry. Other marketing developments throughout the year included renovation of shops, new catalogues and the launch of a new advertising campaign. Lapeyre has an extensive presence in Fr ance, with 300 points of sale, and also operates in Belgium and Switzerland. The company’s presence in São Paulo, Brazil through Telhanorte, has given an additional boost to its international development.

T he Division has two main banners in the United Kingdom: Jewson, which is Britain’s biggest building materials merchant, and Graham, a specialist in plumbing and heating. Both are firmly focused on providing proactive local service to small contractors and tradespeople through their network of 630 agency outlets.
Raab Karcher is the leading building materials distributor for trade customers in Germany, Hungary, the Netherlands and the Czech Republic and has a network of over 410 agency outlets. T he company’s acquisition of Keramundo has given it a leadership position in the German market as a distributor of ceramic tiles. T hanks to robust organic growth and acquisitions made by the Division, Building Materials Distribution practically quadrupled its sales in the six years to 2002, thus bringing total sales to some € 11 billion by the end of 2002.
In the coming years, the Division will keep up its development by stepping up international expansion, achieving organic growth, fostering synergies between banners and launching new distribution concepts. 

## BUILDIN G MATERIALS
T he Building Materials Division is one of the world leaders* in its market and has strong leadership positions in the United States, Europe and Latin America.

The Division provides complete offerings for the outside of the home, in both the construction and renovation segments: vinyl and cement products for wall facings and sidings on individual homes in the United States; roofing materials and ventilation systems for these homes; concrete products; mortars for wall facings and glues for tiles; terracotta tiles, bricks and other roofing and siding products.

T he Division’s global presence does not preclude a strong local dimension in products and solutions that cater to local preferences while serving the traditional needs of the building industry. In each market and region, homes have specific architectural features – wall facings and coatings vary from one country to another, while roof tiles are different in many regions. More than half of the Division’s sales are generated in the Americas, yet its vast product offerings are available in twenty-three countries.

* Source: Saint-Gobain The first Plateforme opens its doors in Mexico. • STGOBAIN RA02-CH1/GB 13/06/03 10:37 Page 19**20**

CertainTeed spearheads U.S. operations, which include on the one hand PVC products for wall facings and outdoor design of the home (sidings, windows, gutters, railings and fittings for terraces) and on the other roofing and ventilation products (asphalt shingles, equipment for artificial ventilation of attics).
Saint-Gobain Weber, the world leader in tiling adhesives and seals*, heads the Division’s global mortars business and is actively expanding its geographic reach. It is the European leader in wall facings* and the market leader in Europe and Brazil for industrial mortars.*

Te rracotta tiles and bricks for roofing and wall decoration are almost unique to the European market. This business, which was recently redesigned under the Terreal brand, has enjoyed strong marketing momentum following two years of buoyant business generated by the storms that swept through Europe in December 1999. European sales have also been boosted by a steady shift away from concrete tiles to this warmer colored product.
Industrial concrete, a France-based business operated by SaintGobain Stradal, manufactures concrete products used in road construction and utilities, as well as in civil engineering projects (railway ties, arch stones, supports). Over the year, this business line continued to actively branch out into urban furniture, floor slabs and paving stones, gardening and landscaping items. 

## PIPE
T he Pipe Division is the world’s leading producer and exporter of ductile cast-iron pipes and connectors and supplies for roadworks and utilities.* The Division intends to firm up its leadership position in all markets where it is present by building on its technical and business expertise. This strategy is rooted in three goals: - Expand into new growth markets to offset flat demand in traditional European markets. The Division has boosted its presence in emerging economies, where it has invested in plant and equipment. A prime example is the development strategy for China, which was given a boost in 2002 by the signing of a joint-venture agreement. This will enable the Division to significantly broaden its reach in China – a country that is in the process of becoming the world’s leading market. At the same time, the network of sales offices is being extended throughout the globe in order to better serve markets with the most growth potential. To this end, 2002 saw new sales offices set up in the West Indies and Ireland. - Accelerate organic growth by innovating. The Division stands apart from its competitors thanks to the high quality of its products and services. By launching new products and overhauling existing ones, it can tap new markets and outplay rivals.
- Continue to enhance productivity, especially by increasing specialization at production sites, leveraging production capacity, pursuing roll-out of manufacturing processes, and containing overheads. Achieving these objectives will be buoyed by the Division’s gradual implementation of an integrated information system covering all marketing and logistical aspects.

* Source: Saint-Gobain 460 km of ductile cast-iron pipes designed to supply drinking water to Abu Dhabi. • STGOBAIN RA02-CH1/GB 13/06/03 10:37 Page 20**21** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

Fo r many years, Saint-Gobain has had the aim of being constantly at the forefront of technological change in all of its businesses. The Group’s global R&D organization works towards three goals. Thefirst of these is to develop a steady stream of innovations for SaintGobain’s historic businesses. In this area, initiatives are focused on designing processes to meet ever-changing standards of efficiency, quality, reliability and environmental compliance and on developing high-functionality, high-value products that respond to emerging needs in the Group’s markets. The self-cleaning glass that has recently been brought to market reflects this aim, as do the new automotive products such as layered glass windshields.
Its second task is to create products that meet demands in high-growth markets and allow Saint-Gobain to bring its expertise to bear in ensuring their commercial development. New products have been designed in the field of environmental applications, water transportation and treatment, renewable energy (in particular solar and wind energy) and information technology and communications, such as printed circuit manufacturing equipment, visual display units or optical transmission systems and more. Th irdly, to enable the entire Group to benefit from the complementary technical skills developed in its various business lines of Glass, Ceramics, Plastics, Metals, Cements and Mortars. In 2002, a new research unit specialized in high-performance polymers was commissioned in Northboro, Massachusetts. The breadth and depth of expertise in each of these product groups opens the door to unique combinations, yielding unrivalled capabilities and performance.

T he Group’s 16 R&D centers in Europe and the United States are responsible for pursuing an ambitious program of research initiatives and are supported in their efforts by around 100 smaller-sized development units, which are spread across the world, wherever the Group has manufacturing operations.
At the core of R&D processes, several sites play a key coordinating role: - Aubervilliers (France) includes both SGR, the Group’s largest research

center on Glass, and an R&D unit specialized in Building Materials.

- Cavaillon (France) which is a center of excellence for Ceramics

research in Europe.

- The sites of Northboro and Worcester in Massachusetts bring together

a key section of researches in Ceramics, polymers and Abrasives. 

## a pipeline of more advanced and environmentally sound processes, yielding innovative products for core businesses and new markets

In € millions 2 002 2001 2000 R & D expenditure 312 320 300

Sa int-Gobain Recherche (SGR) All Glass divisions Aubervilliers (France) Centre de Recherche et d’Etudes Européen (European Research & Engineering Center) Ceramics Cavaillon (France) R&D Center Abrasives Worcester (United States) Northboro R&D Center Ceramics, Plastics and Abrasives Northboro (United States) Solon Development Center Crystals and Detectors Solon (United States) Centre de Développement Industriel Flat Glass Thourotte (France) Sekurit Saint-Gobain (ZAF) Flat Glass Herzogenrath (Germany) Centro de Investigacion y Desarrollo Flat Glass Avilés (Spain) Centre Recherche/Développement (CRIR) Insulation Rantigny (France) Te chnology Center Insulation/Building Materials Blue Bell (United States) Vetrotex R&D Center Reinforcements Chambéry (France) Development Center of Wichita Falls Reinforcements Wichita Falls (United States) Process & Product Devt. Pipe Pont- à-Mousson (France) Chalon Technical Center Containers Chalon sur Saône (France) Vinyl Siding & Windows Building Materials Jackson (United States) Development Center Bayex Technical Fabrics Sainte Catharines (Canada) 

# RES EARCH

The table below summarizes the Group’s research centers and their capabilities. • STGOBAIN RA02-CH1/GB 13/06/03 10:37 Page 21**22**

Saint-Gobain’s R&D community is nearly 3,000 strong and represents a highly interactive and mobile group of individuals. T he various communication and knowledge-sharing forums made available to researchers enable them to pool talents, cross-fertilize and innovate together. Saint-Gobain has forged partnerships with leading university research laboratories, particularly in Europe and North America. In France, it has set up a mixed research center in conjunction with CNRS, France’s national research council. Researchers are strongly encouraged to move between R&D and other Group operations, as well as to pursue cross-business line and international experience. Such exchanges do not only enrich the Group, but also help to empower and provide incentives for staff members.
R&D operations play a central role in the growth of all Saint-Gobain Group business lines. The Group’s nearly 250 new patent applications per year, as well as 2,500 applications for international extension, reflect its ongoing design of new products offering constantly upgraded performance. Saint-Gobain brings original solutions to rapidly-changing markets and mobilizes a highly varied mix of skills worldwide.

MORE INFORMAT ION IS AVAI LAB LE AT 

### www.saint-gobain.com **(Innovation section).** • STGOBAIN RA02-CH1/GB 13/06/03 10:37 Page 22**23** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



# Human resources environment, health and safety general principles of conduct and action for the saint-gobain group II - SUST AINABLE DEVELOPMENT • STGOBAIN RA02-CH2/GB 12/06/03 19:01 Page 23**24**

In January 2003 the Board of Directors of Compagnie de SaintGobain adopted the following as the Group’s principles of behavior and action:
The Saint-Gobain Group has developed a number of shared principles applied by both management and employees which have guided the activities of the Group over the years.

T oday the Group wishes to give written expression to these principles in order to facilitate their communication and consolidate their implementation throughout the Group worldwide. The purpose of this document is also to make a public statement of Saint-Gobain’s adherence to these basic principles of conduct and action, which apply to all companies forming the Group without regard to the country of activity.
The principles set out are not intended to be exhaustive but to cover the most essential areas. They are complemented, and may in the future be further complemented, by sometimes more specific rules having regard to local conditions or particular positions of responsibility, but in any case without detracting from the basic principles.
The application of these principles is a requirement for belonging to the Saint-Gobain Group. 

## PRINCIPLES OF CONDUCT The Saint-Gobain Group considers that the basic values shared by management and employees alike are professional commitment, respect for others, integrity, loyalty and solidarity. These are principles of conduct which apply to each one of us.

Professional commitment for us means mobilising to the best of one’s ability the knowledge and know-how of the individual and also calls for training to keep both up to date. It requires personal commitment and a willingness to take on those tasks which have been assigned and to acquire needed knowledge. It implies the effective contribution of each person in caring particularly for the environment and for worker health and safety. Respect for others is an absolute prerequisite for the professional and personal development of each person. It must be applied throughout the Group worldwide and implies an acceptance of pluralism and other cultures and of people of all origins. It is expressed in a readiness to listen to others, to inform, to explain and to engage in dialogue.
Integrity requires a rigorous adherence to probity in one’s professional activities. It admits of no compromising of the interests of the Group entrusted to the given individual in favour of that person’s own private interests – whether in dealings within the Group or in dealings on behalf of the Group with third parties, whatever local practices might be. De tailed rules of conduct may be adopted for certain categories of Group personnel where the nature of their responsibilities so requires.

Loyalty requires honesty and fairness in dealing with superiors, colleagues, subordinates and third parties dealing with the Group. In particular, it is incompatible with the pursuit of self-interest where the latter conflicts with the goals of the individual Group company or the Group as a whole. It implies the adherence to the guidelines and internal rules of individual Group companies and of the Group as a whole.
Solidarity is based on a sense of individual responsibility at work which prevails over self-centered thinking and encourages team work and bringing out the best in each person. It means rejecting management or operational methods which are geared more to the self-satisfaction of given individuals rather than the interests of the particular Group company or the Group as a whole. 

## PRINCIPLES OF ACTION The Saint-Gobain Group wishes to set out the principles of action which govern the activity of all management and employees in the exercise of their professional responsibilities regardless of the country involved. These principles of action (1) contribute to the realisation of sustainable development and responsible patterns of growth in accordance with the long-term strategy pursued by the Group.

(1) T hey are intended to embody the OECD Guidelines for Multinational Enterprises,

adopted in June 2000. 

# GENERAL PRINCIPLES OF CONDUCT AND ACTION FOR THE SAINT-GOBAIN GROUP • STGOBAIN RA02-CH2/GB 12/06/03 19:01 Page 24**25** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



### RESPECT FOR THE LAW All Group companies are to apply in all areas all laws and regulations in force in those countries where they carry on business.

Particular attention is drawn to the areas described below. All Group companies shall prohibit all actions which might breach applicable norms of competition law. They shall refrain from any form of financing political parties or activities, even if allowed under local law. They also are to reject all forms of active or passive corruption whether in domestic or international transactions(2). Furthermore, Group companies are to renounce exploiting loopholes or inadequacies in any such laws or regulations where this would mean non-compliance with the norms of the Saint-Gobain Group in the areas described below.



### CARING FOR THE ENVIRONMENT Group companies are to actively promote the protection of the environment. At company sites management methods shall be followed, wherever the site may be located, which allow measurable environmental performance standards to be set, and actual performance to be regularly evaluated and checked against the applicable standards.
They shall strive to raise the main relevant environmental performance standards of their own sites to the level of particularly effective performance standards found in the Group for comparable sites – even if that means going beyond the requirements of local legislation.



### WORKER HEALTH AN D SAFETY Group companies are to take particular care to adopt all measures necessary to ensure the best possible protection against health and safety risks in the workplace. They shall adopt risk reduction policies and follow-up on the due application of the same, checking actual results against the applicable standards. Such policies shall apply both to their own employees and to employees of sub-contractors where the latter are working on a Group site. They shall strive to raise the main relevant health and safety performance standards of their own sites to the level of particularly effective performance standards found in the Group for comparable sites – even if that means going beyond the requirements of local legislation. 

### EMPLOYEE RIGHTS Group companies are to scrupulously ensure that employees’ rights are respected.
They are to promote an active dialogue with their employees. In addition, and without limitation, they shall respect the following rules, even if not provided for by applicable local law: 1. t hey shall refrain from any form of recourse to forced labour, compulsory labour or child labour(3) – whether directly or indirectly or through sub-contractors where the latter are working on a Group site; and 2. they shall refrain from any form of discrimination of whatever

kind with respect to their employees whether in the recruitment process, at hiring, or during or at the end of the employment relationship.
Each member of management and employee of the Saint-Gobain Group is personally responsible for applying these principles of conduct and of action.
Each management level - company, business unit, Delegation or Branch - carries its own responsibility for ensuring the application of these principles of the Group.
The Branches and Delegations are to report regularly to the general management of the Group on how the principles are being applied.
The general management of the Group is to implement awareness and training programmes in order to promote these principles across the Group. It will stipulate the measures required to enable effective testing, and checking of actual results against the applicable standards, to be carried out.

In defining its strategy and the conduct of its operations, the Group is mindful of its responsibility of working towards sustainable development. T he Group’s human resources management policy revolves around a central aim of providing a caring environment in which each individual can find personal fulfillment. Further objectives are to promote teamwork, listen actively, engage in constructive dialogue with employee representatives, develop employee skills and offer opportunities for professional growth. The Group is also intent on facilitating the entry of young people into professional life and encourages the involvement of its subsidiaries in local community life. (2) Covered by the OECD Convention on Combating Bribery of Foreign Public

Officials in International Business Transactions of 17th December 1997. (3) As defined by the applicable conventions of the International Labour Organisation. * * * • STGOBAIN RA02-CH2/GB 12/06/03 19:02 Page 25**26**

Respect for the environment is another aspect of Saint-Gobain’s commitment to human well-being. The development of its operations must not only take into account the health and safety of its employees and of all persons residing near Group sites, but also avoid impacting the environment. Over the past several years, the Group has implemented procedures to guarantee the health and safety of its employees, to prevent industrial risks and to monitor and minimize the impact of its manufacturing processes. Saint-Gobain is also actively involved in research and innovation to improve the environmental quality of its industrial processes and to develop “green” products.

Saint-Gobain’s Human Resources management policy is a major strategic focus. Its purpose is to anticipate the needs of the organizations that make up the Group, to create the conditions that cause employees to support company objectives, to meet employee needs by taking into account their career projects and providing satisfactory work conditions.


## 1. GROUP EMPLOYEES Living in more than 45 different countries, working in manufacturing, processing or retailing, the Saint-Gobain Group’s 172,357 employees at December 31, 2002 are a particularly diverse group of people.

A • BUSINESS LINES 51 % of the Group’s employees work in its “historic“ businesses, while the remaining 49% are in the high-growth businesses. Most of Saint-Gobain’s historic businesses, namely Containers, Insulation, Pipe and Building Materials, have seen their share of employee headcount decline over the past several years. These businesses have automated their manufacturing processes to raise productivity and generate free cash flow, which is for the most part invested in emerging countries. Flat Glass stands out as an exception among the historic businesses, since its share of employee headcount rose to 21.5% in 2002, up from 15% in 1997. This is due to the consolidation of processing subsidiaries, but also to expansion in the United Kingdom and in the emerging countries of South Korea, China, Poland and India. T he high-growth businesses of High-Performance Materials, Reinforcements and Building Materials Distribution have experienced mixed trends in recent years. Although developing High-Performance Materials operations remains a major strategic imperative for the Group, their share of employee numbers has eased back in recent years, for three major reasons. First, the numerous acquisitions in the field of Abrasives that the Group carried out in the 1990s gave rise to reorganizations when the new companies were integrated. Second, many sites have been switched to more automatic processes, particularly in the more traditional ceramics activities, such as refractories. Lastly, plummeting capital expenditure in the manufacturing sector made downsizing unavoidable in Abrasives, as the crisis in the telecommunications and semi-conductors markets did in Ceramics & Plastics. These economic trends were amplified by the fact that both businesses are strongly established in the United States, where layoffs in response to economic downturns are more common and larger than in Europe. T he Reinforcements business has maintained a steady share in recent years despite increasing automation at European plants, due to the offsetting effect of acquisitions in countries where plants are less automated, and developments in the processing of glass threads, a more labor-intensive activity. T he Building Materials Distribution division, which now represents 28 .5% of total staff against 13% in 1997 is by far the fastestgr owing. This jump is the result of large-scale external growth operations, with Jewson and Graham in the United Kingdom and Raab Karcher in Germany, as well as of many bolt-on acquisitions which reflect the Group’s determination to develop the business. It is also attributable to dynamic organic growth. One example is the setting up and international roll-out of La Plateforme du Bâtiment, which has allowed 1,524 new jobs to be created in the past four years in Europe and Mexico. 

# HUMAN RESOURCES

Breakdown by division of employee headcount • STGOBAIN RA02-CH2/GB 12/06/03 19:02 Page 26**27** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

B • THE GROUP’S GLOBAL PRESENCE

T he share of Western countries is tending to decline in favor of emerging nations. France accounts for 29% of employees, against one-third five years ago, while North America saw its share diminish from 21% to 16%. Over the past five years, the workforce in Asia, Latin America and South Africa has grown by 60%. Overall, emerging countries now host 19% of Group employees, a consequence of Saint-Gobain’s strategy of expansion in those rapidly growing markets.



### C. E MPLOYEE CATEGORIES • Executives (1) Executives and managers represent 11.1% of total Group employees. The Flat Glass and Containers divisions, which have lean organization structures, include 8.6% and 8.1% of executives, respectively. At the other end of the scale, the Insulation and Abrasives divisions have the highest proportions of executives, with 15 .3% and 14.3% respectively, as the more dispersed nature of their markets calls for larger sales and marketing teams. The Insulation business also has more extensive research and development operations in relation to its size than the other Group divisions.

• Blue-collar workers (2) Number of blue-collar employees Blue-collar workers account for 53.7% of total Group employees on average, but the proportion varies widely from one division to another. The Building Materials Distribution division includes only 24 .6%, in Lapeyre plants, as sales outlets employ virtually no bluecollar workers. In the industrial divisions, blue-collar workers represent between 58 .5% and 76% of employees, mainly depending on the type of organization structure. Divisions in which shift work is particularly prevalent, such as Containers and Reinforcements, tend to have a higher proportion of blue-collar workers. Further, in each division, the size of structures not directly linked to production, such as sales and marketing or R&D, also influences these figures.

Wo rking hours (3) Wo rk is organized in shifts in many manufacturing activities, to meet technical requirements. Distribution operations do not have this type of work. In industrial operations 51% of employees perform shift work, and the proportion rises to two-thirds in Reinforcements and Containers. Each workstation can have two or three shifts, or even more in some cases, when work takes place 24/7, in uninterrupted production. The latter schedule concerns 34% of employees within Saint-Gobain’s industrial companies, mainly in glass production lines. Th roughout the Group, any uninterrupted production takes place in cycles, in an alternation of working and rest & recuperation periods. Overall, in all countries the number of hours worked annually by shift workers is lower than that of workers who have a daily schedule.

Overtime (4) To meet a temporary increase in their workload, some Group companies sometimes need to ask their employees to work overtime. On average, these overtime hours represented 3.9% of hours worked in 2002. This figure is fairly low (between 2.5% and 6%) in most industrial divisions, since production lines that work uninterruptedly only very rarely need to call upon overtime. The figure is slightly lower, 2,2%, in Building Materials Distribution, since this division’s sales outlets have regular opening and closing hours, while it is higher in Building Materials, reaching 7.2%. In the latter division, where the proportion of shift work is the Group’s lowest, the use of overtime hours in 2002 was attributable to buoyant sales volumes.



### D. AGE DISTRIBUTION AMONG EMPLOYEES (5) T he average age of Group employees is 39 years and a half and average seniority amounts to 12 years. Seniority is particularly high in the divisions which have the largest industrial facilities, where employee populations are very stable: the average in the Pipe division is 17 years and a half and in Containers it is 15 years and a half.
In industrialized countries, average age and seniority are roughly consistent from one country to another, and at a fairly high level. The average age varies from 39 to 44 and average seniority is (1) Data concerning executives are based on 83% of total Group staff. (2) Data concerning blue-collar workers are based on 90% of total Group staff. (3) Data concerning working hours are based on 86.4% of total Group staff,

excluding Building Materials Distribution. (4) Data concerning overtime are based on 89% of total Group staff. (5) T he average age of employees is based on 90% of the total and average

seniority on 88% of total Group staff. Breakdown by country of employee headcount • STGOBAIN RA02-CH2/GB 12/06/03 19:02 Page 27**28**

approximately 12 and a half years. In Germany, Belgium and particularly Spain, where the Group has a long-standing industrial presence, seniority is higher. It is however lower in the Netherlands (8 years and a half ) since the Group’s presence there is mostly in Building Materials Distribution, where employee turnover is higher.
In the emerging countries of Eastern Europe, Latin America and Asia, the average age is 35 and the average seniority about 7 years. These figures, considerably below the Group average, reflect Saint-Gobain’s recent development in these areas.


## 2. EMPLOYMENT

A. HIRES AND DEPARTURES • Employment trends In 2002, the number of Group employees contracted by 1.5%. This downward movement was principally due to unfavorable economic conditions, which slowed organic growth and called for restructuring in a number of businesses. The most heavily affected divisions were Flat Glass, Pipe, Insulation and above all Ceramics & Plastics and Abrasives.
Building Materials and Containers, which enjoyed better trading conditions, kept their employee numbers more or less level.

T wo businesses that had a slight job-creating effect were Building Materials Distribution, which continued its organic growth, and Reinforcements, where downsizing in some countries was offset by the recommissioning of a Vetrotex America furnace in the U.S. and by development in emerging countries. On average, Western Europe and North America streamlined their workforces in order to upgrade operations that were struggling and to make the necessary productivity-boosting efforts to stay competitive. All emerging countries created jobs in 2002, on the back of favorable market conditions that supported the Group’s active expansion drive. The outcome was that, based on a comparable structure, Asian headcount grew 4.3%, while the Brazilian workforce edged up 0.2% and the Baltic states saw their employee populations surge 13%.
• Employee turnover Aside from job creations, employee turnover rates can vary from country to country based on cultural factors in each job market and possible recruitment difficulties. In the United Kingdom, because the job market has traditionally been dynamic, employee turnover rates are higher than in other Western European countries. In emerging countries, higher turnover reflects both numerous opportunities offered by a growing domestic economy and some difficulties encountered in recruiting, integrating or training local staff.
• Reasons for departures (6) In 2002, 18.1% of Group employees left Saint-Gobain. Among these, layoffs affected 6.6% of total Group staff (7) . The proportion did not exceed 5.2% in the Glass Sector and in the Pipe Division, but was 7.2% and 8.9% respectively in Building Materials and Building Materials Distribution, where employee turnover tends to be higher. It reached 9.4% in the Ceramics & Plastics Division and 11 .1% in Abrasives, as both of these divisions were hard-hit by the market slowdown and had to reduce their workforces in 2002.

(6) All data concerning departures and reasons for departure are based on 90%

of total Group staff. (7) T he layoff rate has been calculated based on 90% of total Group staff

at December 31, 2002. Recruitment Rate and Departure Rate by Division Recruitment Rate and Departure Rate by Country • STGOBAIN RA02-CH2/GB 12/06/03 19:02 Page 28**29** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

Resignations were tendered by 6.9% of Group employees in 2002. T he percentage varies from 4 to 8% in most divisions, but it is noticeably lower, at 1.7%, in the Pipe Division where the employee population tends to be stable, and considerably higher (11.4%) in the Building Materials Distribution business which has a higher turnover rate.

Among executives, resignation and layoff rates were roughly equal, at 3% . (8)



### B. PROGRAMS TO PRESERVE JOBS T he Group carries out layoffs or restructuring programs only when these are unavoidably required for the economic health of the subsidiary concerned. In such cases, a great deal of resources are mobilized both in-house and externally to minimize the impact on employees. In these difficult situations, the Group’s size is undeniably an advantage, since it is often possible to offer employees a new position in another subsidiary, if they so wish. Group companies also provide many types of support to employees affected by downsizing, such as outplacement help, assistance to families needing to relocate, personalized training programs or contribution to the launching of a personal project.
As an example, when Saint-Gobain Céramiques Avancées Desmarquest (SGCAD, France) had to be reorganized, 263 positions available within the Group were offered to the 172 employees whose jobs had been eliminated. Each of these persons receives individual attention from an employment counselor, who seeks to provide the best possible outplacement solution, whether in-house or outside the Group. Lastly, SGCAD takes into account the difficulties that can be involved in adapting to new job requirements, by providing complementary training and offering the same help to the spouse as well as assistance in seeking housing or a school if the family has to move. The job preservation plan was approved by SGCAD’s employee representatives on January 8, 2003.



### C. USE OF TEMPORARY WORKERS AND CONTRACTORS Te mporary work W hen future orders are hard to forecast, if recruitment is hampered by temporary difficulties, or if an employee needs to be replaced, Group subsidiaries may call upon temporary workers.

T he services of temporary work agencies (9) are particularly well suited when there is little advance notice and the duration of the need is unknown, therefore they are used for replacements. Absenteeism, of which 69.4% is due to illness, 8% to exceptional leave (mainly family events) and 6.8% to work accidents, creates a need for labor that is generally filled by temporary workers. The proportion of temporary workers, 4%, is practically equal to the absenteeism rate of 3.9%.

(8) Th is figure is based on 87.5% of Group executives. (9) Data concerning temporary work agencies and absenteeism are based on 73.9%

of the total Group staff. Layoff Rate by Division

Resignation Rate

Proportion of Temporary Workers (based on 73.9% of total Group staff) • STGOBAIN RA02-CH2/GB 12/06/03 19:02 Page 29**30**

At December 31, 2002, 3.7% of employees had fixed-term work contracts (10) , from a low of 2.2% in Building Materials Distribution to 7.8% in Insulation. However, the percentage of fixed-term workcontracts is higher for new hires. These contracts accounted for onethird of recruitments for the Group as a whole, and up to half in Flat Glass, Insulation and Pipe. The reason for this high proportion is that, in addition to needs related to a spike in the workload or to replacements for long-term leave (particularly maternity leave, whichaccounts for 5.4% of absenteeism), these divisions recruit on fixedterm contracts the persons who replace their employees during summer vacations.

Use of contractors In all countries where the Group has operations, other companies are called upon to perform work that does not match the Group subsidiary’s expertise. Two types of work may be outsourced in this way. The most common are ancillary tasks such as security, maintenance, cleaning, catering, medical services and, for smaller units, payroll services, information technology or accounting. Other tasks that are sometimes outsourced are packaging, and handling or shipping of products. Although related to the manufacturing and distribution of products, such tasks remain outside the Group’s core business.
Before signing any outsourcing contract, Group subsidiaries take great pains to verify that the partner company’s operations and work contracts comply with applicable regulations. Since site managers can be held responsible for any health or security matters affecting an individual working on their site, the employees of contractors called upon to work at Group sites are subject to the same rules as Group staff. In a certain number of cases, they receive specific training on health and safety rules. 

### D. PART-TIME WORK (11) Pa rt-time work is not very well suited to industrial work patterns, and it concerns only 2.4% of Group employees, 8.7% of women and 0.8% of men. 

## 3. HUMAN RESOURCES MANAGEMENT

A. RECRUITING WITH A VIEW TO THE FUTURE In 2002, the Group recruited approximately 26,000 individuals worldwide. • Bringing in a new generation Y

oung people under 25 made up 35.5% of new hires in 2002 (12)

. Th is proportion varies according to each country’s traditions of higher education, and due to different activity levels in the job market for that age group. It reflects an attempt to ensure balance in the age distribution of the employee population.
In Western Europe, most industrial subsidiaries must ensure that a new generation is brought in, as the baby-boomers are reaching retirement age.
Companies based in emerging countries, particularly in Asia and Central Europe, do not share the same concern, as their employees tend to be younger. They have no need to reach out specifically to the under-25 bracket.
• Attracting top talent Saint-Gobain seeks to attract top talent through public relations campaigns aimed at the student body and by building special relationships with universities and programs that teach the skills the Group needs. Each year, the Group takes part in three international recruitment forums, two in the United States and one in Europe, and in ten domestic forums in France. It has also built many ties with business and engineering schools, from sponsoring a specialized program or class to personalized support for individual students (in particular to finance thesis work).
A recent study showed that the recruitment section of the SaintGobain website is its most visited area. This dedicated space receives over 12,000 applications per year, of which 30% are then redistributed to the divisions and subsidiaries. The Group has also signed up with the French job search engine “Keljob”, to give its job offers maximum exposure.

(10) Data concerning employees on fixed-term work contracts are based on 89% of total Group staff, while data on the breakdown of hires by type of contract are based on 88.5% of total Group staff. (11) Data concerning part-time work are based on 89% of total Group staff. (12) Data concerning the hiring of young people are based on 75.4% of Group staff, excluding North America. Pe rcentage of Employees on Fixed-term Contracts at December 31, 2002 • STGOBAIN RA02-CH2/GB 12/06/03 19:02 Page 30**31** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

Locally, each Delegation and company conducts its own recruitment strategy, generally using its own website. Each builds its own relationships with local educational institutions, based on its own needs. In France, for example, the three annual product catalogs issued by the “Lapeyre, la maison” building materials distribution banner include a recruitment section, to attract potential applicants.
In Sweden, Saint-Gobain Isover, in partnership with five other industrial companies, has since 1995 worked extensively to give teenagers from 16 to 18 a positive view of work in industry, by organizing in-depth sessions during which the young people discover all of the company’s functions.
In Germany, the Delegation set up a particularly attractive integration program for high-level new hires. Entitled “Become a Global Player”, this program allows ten young people of all nationalities to carry out three six-month assignments in two countries before taking up a permanent position in Germany. This helps them to integrate intothe global Group and improves their ability to work within multicultural teams.
Lastly, in Brazil the Group partly finances the studies of young people whom it has identified as high-potential future hires.



### B. P ROMOTING DIVERSITY Wo men now account for 18.6% of Saint-Gobain’s workforce (13)

. Th is low proportion is mainly due to the nature of Saint-Gobain’s operations. For a long time, night-time work was illegal for women in many countries (in France until 2001), therefore female workers could not join shifts working in uninterrupted production. They are consequently very much under-represented among blue-collar workers, while they make up 27.3% of the non-blue collar workforce.

T here are slightly more women (over 20% of employees) in the high-growth businesses where work is often organized on a daily basis and where few tasks require great physical strength, as compared to the historic businesses whose high-temperature processes run in an uninterrupted fashion. For cultural reasons, there is a more strongly feminine workforce in the Nordic countries, and especially in the Baltic states (27%) and in Central Europe (over 30 %), than in the rest of the Group. T he Group aims to achieve a better balance between men and women, particularly at the management level. This is part of a broader aim of promoting diversity and better taking into account different approaches and sensitivities in human relations, not only in-house but in dealing with all of the company’s stakeholders.

Th e workforce is becoming increasingly feminine, as 20.4% of new hires are women. This trend is apparent in most countries and particularly noticeable in Spain, where the proportion of women (14) is still below the Group average but 30% of new hires are women.

T he drive to build a more feminine management is bearing its first fruits. Today 13% of executives are women, up from 10% in 1997. T hey work mostly in finance (25% of the staff), human resources (36%) and tax and legal functions (46%), and are much fewer in manufacturing-related work and in general management of facilities or companies.
Because women still do not occupy a substantial share of executive functions, particularly in senior management, and because they still have on average much less seniority within the Group (their average seniority is 2 1/2 years lower than men’s) and because more of them work part-time, women still receive only 14.6% of total wages.
Saint-Gobain’s policy is to ensure, in recruitment and access to functions wielding responsibility, equal opportunity that is compatible with the nature of the work involved.

(13) Data in this paragraph are based on 86% of total Group staff and data on the proportion of women executives are based on 87.5% of Group executives. (14) The percentage of women among new hires is based on 86% of total Group staff. Proportion of Female Employees • STGOBAIN RA02-CH2/GB 12/06/03 19:02 Page 31**32**

• Increasingly international teams (15) One of the Group’s key strengths is its global dimension, since exchanges among countries and internationally diverse teams help boost competitiveness. The Group’s first priority is to create local management in each country where it is based. Whether in Eastern Europe, Latin America or Asia, at least 84% of executives are from the local country. Saint-Gobain also seeks to develop a multicultural flair among its managers, by giving them assignments outside their home country, especially at the outset of their careers. 7% of executives and 10% of those under 30 work in internationalpostings. In several divisions, each European country offers an entrylevel position to a newly-hired young person from another country. In 2002, some twenty young graduates were also admitted into Group companies worldwide as part of France’s Volontaires Internationaux en Entreprise (VIE) program.
Even in Building Materials Distribution, where the very nature of the business makes it an essentially local operation, creating international teams and multiplying exchanges between countries have allowed significant synergies to arise and have promoted the sharing of best practices. For this reason, the Division considers that developing international mobility among its executives is an added strength in its business.



### C. OFFERING CAREER OPPORTUNITIES THAT PAVE THE WAY

FOR REAL R ESPONSIBILITY Mobility between regions and functions is one of the essential building-blocks of Saint-Gobain’s development. Through the varied experience offered within the Group, executives can prepare themselves step by step to taking on greater responsibility. In-house promotion is a dynamic actuality, because individuals’ wishes are taken into account, particularly through annual performance evaluations that have been applied across the board. In addition, job offers are posted on the intranet and the criteria governing expatriate positions have been explained and are applied in all transparency.
In 2002, the rate of mobility among executives, calculated by dividing all movements within the Group by the total number of executives, came to 8% (16)

.


### D. BUILDING SKILLS THROUGH TRAINING (17) Continual improvement in the Group’s performance relies on consolidation and development of its employees’ skill-sets. In 2002, each employee received an average of 17 hours of training. The total investment in increasing skills came to 

### € 62 million, representing 2.1% of total payroll costs. Training programs focused on five key

areas:

• Strengthening competitiveness through the development

of technical skills and expertise Over two-thirds of all training initiatives focus on technical skills, ranging from applied research to production techniques and methods. In addition to each division’s own resources, Saint-Gobain has a cross-functional unit, the University of Glass, established in 1 985, which aims to roll out knowledge of glass manufacturing and consolidate Saint-Gobain’s technological advance. In 2002, 134 engineers and technicians from all divisions and all continents attended training courses at this University.
• Developing the ability to innovate, and sales and marketing

skills, to promote organic growth Organic growth requires a proactive research and development policy and continually improved performance in the market. Training programs support these efforts, with specific cycles aimed at certain audiences, e.g. for young researchers to help them bring their work in line with what markets expect.
Improving sales relationships is of interest to all divisions, and many training programs have been set up to develop better listening skills and boost service quality not only within the sales and marketing teams but also among technical and functional teams. Toward this end, Point.P set up its Point.P School in 1996. This institution, which now includes two campuses and a technical training center, offers seminars on all aspects of the retailing business including sales techniques, product knowledge and management. It welcomed 3,553 trainees in 2002.

(15) All data concerning the international diversity of executives are based on 87.5% of Group executives. (16) Th is statistic is based on 87.5% of Group executives (17) Data concerning training are based on 80.5% of Group staff outside North America. A verage Number of Training Hours per Employee • STGOBAIN RA02-CH2/GB 12/06/03 19:02 Page 32**33** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

• Assisting with the Group’s international development by

transferring know-how to countries where greenfield operations are being launched Fo r international development to work, it must involve a transfer of know-how from the Group’s traditional markets to the regions where it is newly present. In these countries, training efforts are more extensive than in most Western countries. In Brazil and Central America, for example, employees received an average of 54 hours and 36 hours of training, respectively, in 2002. Although transfers of executives and on-site training are the main avenues by which this transfer of know-how takes place, new technology also proves to be an effective tool for the acquisition of technical knowledge. In Mexico an e-Learning training program using multimedia technology has been set up for workers in glass-cutting operations. This project, called MKT2 (Managing Knowledge and Technological Transfer), began in early 2002 and significantly raised the skill levels of all the trainees even as it shrank the training period from 6 months to one month.
Language skills provide the necessary support system for the Group’s international development, therefore a considerable degree of training is provided in this area, essentially in the Group’s two working languages of English and French.

• Making the most of each person’s skills, by enhancing

the efficiency of teams One of the key challenges of training is to leverage the as yet untapped skills of all employees, by training leaders who can facilitate, energize and develop their teams.
Management training takes place both at Group level and within the various countries and operating units. The Group invested heavily in this area in 2002, particularly in emerging countries, and this reflects the importance Saint-Gobain attaches to building a local management structure. The average number of training hours provided to executives was 40 in Central America, 50 in Poland, 60 in other Central European Countries and 98 in Brazil.

• Strengthening the Group’s corporate culture and promoting

the sharing of best practices Lastly, one of the principal aims of the training policy is to ensure that all Saint-Gobain employees share the same values and the same management principles, by building on synergies between the various entities. T he head office organizes “Development of Saint-Gobain Management” programs, in which nearly 350 participants from all operating units take part each year. These forums for learning, exchanges, discussions and experimenting can take the form of itinerant seminars or specific sessions in various countries. They revolve around major themes that tie in with the key strategic objectives. External guests such as university professors, consultants and other professionals are often brought in, but the programs also rely on strong involvement from the Group’s most senior leadership and on the personal work of each participant. These events are the crucible in which the Saint-Gobain corporate culture continues to be forged. They contribute greatly to the Group’s cohesiveness.


## 4. EMPLOYEE RELATIONS

A. AN EMPLOYEE RELATIONS POLICY BA SED ON DIALOGUE WI TH EMPLOYEE REPRESENTATIVES • Consultation with employee representatives (18) T he Saint-Gobain Group attaches a great deal of importance to the quality of its dialogue with employee representatives. Indeed, to raise performance within a perpetually changing environment, the Group frequently has to make rapid changes in organization and working conditions. In each region, therefore, general delegations coordinate employee relations, to ensure that specific local features are adequately taken into account.
Approximately 82.7% of Group employees have an employee representative body within their company. In all, 768 agreements were signed within the Group in 2002, dealing with wages (35%), working conditions (24.5%), and, to a lesser degree, employment (12%), vocational training (2%) or other issues.

(18) Data concerning consultation with employee representatives are based on 88% of total Group staff and 417 companies. Percentage Represented by an Employee Representative Body • STGOBAIN RA02-CH2/GB 12/06/03 19:02 Page 33**34**

In addition to a Group Works Committee and central employee representative coordinators for all of France, the Group has since 1 988 set up a European-level forum for employee relations. A plenary meeting has been held each year since 1992 as part of the Collective Agreement on European Employee Consultation. It brings together 70 employee representatives from European Union countries, Switzerland and Norway. During this meeting the Chairman of Saint-Gobain exchanges views with employee representatives concerning the Group’s strategy and various economic, financial and social issues of interest to all European subsidiaries. A permanent secretariat in charge of the year-long follow-up with employee representatives keeps up regular exchanges with Human Resources management at Group and Delegation levels. This secretariat includes eight members of seven different nationalities: German, French, British, Spanish, Italian, Dutch and Norwegian.
• Compensation policy T he Group’s compensation policy aims to be fair, motivating and transparent. Basic wages are set in each country and each economic sector in relation to market conditions.
In all subsidiaries, the average wage for blue-collar workers is higher than the domestic minimum. In emerging countries it is at least 2.5 times the minimum, and even up to 5 times more in Mexico.
In France, the average annual wage of blue-collar workers is 68% higher than the SMIC minimum wage (19) and payroll taxes in the Containers Division, as one example, amount to 54.75% of total wages.
Executives’ wages include a variable portion for which rules are set at Group level and tailored to each region based on local conditions.
Also, to encourage teamwork and ensure that the fruits of success are shared by all, the Group encourages its subsidiaries to sign collective employee incentive profit-sharing agreements whenever possible. In France 85% of subsidiaries have signed these agreements, which cover nearly 93% of employees in the country (20) . In 2002, these companies paid 

### € 42.8 million to their employees as profit-sharing bonuses, which represented 4% of total wages. • Employee benefits In most countries where the Group is based, whether in Europe, Asia or Latin America, Group subsidiaries give their employees complementary benefits in addition to those provided by law (e.g. additional medical cover, pensions or life insurance), as well as g rants for meals and sometimes for commuting. In France, in all companies with over 50 employees, 1.2% of the payroll is earmarked for activities to benefit employees, managed by the W orks Councils.



### B. HELPING YOUNG WORKERS ENTER PROFESSIONAL LIFE Thanks to its size and the variety of professions that it brings together, the Group plays a major role in facilitating the entry of young workers into professional life. Most of its subsidiaries welcome young people during their studies, through specific contracts that provide an opportunity to contribute directly to the training of future employees. More than 1.5% of the Group’s employees in 2002 were beneficiaries of such “youth contracts.” Germany is traditionally the most active participant in this type of program, and in 2002 over 750 young students received vocational training in German subsidiaries, representing 4.9% of the domestic workforce. Over 500 people benefited from such “youth contracts” in the United Kingdom, and approximately 600 in France. T he Building Materials Distribution companies Jewson and Graham in the United Kingdom and Point.P in France have even set up their own work/study training programs which allow them both to provide the young trainees with a nationally recognized qualification and to prepare cohesive teams of highly motivated salespeople who are specially trained in their products and methods. The Brazilian subsidiaries also welcomed over a hundred young trainees from a work-study program for workers and technicians at SENAI, a specialized vocational institute.

C. DISABLED EMPLOYEES (21) W hen an employee is affected by a disability, Group companies attempt, as far as possible, to keep the person in their job. In France, 12 2 workstations in 36 subsidiaries have been adapted for disabled persons.
In many countries, Group sites have decided to support organizations that employ disabled persons, by selecting them as preferred vendors. Such plants help bring disabled employees into professional life in a setting that is specifically tailored to their situation, in terms of the nature of tasks performed, the pace at which the work is carried out and especially the training received by management teams. (19) Based on 169 hours worked per month (20) Data concerning profit-sharing are based on 92% of total French staff. (21) Data concerning disabled employees are based on 70% of total Group staff. • STGOBAIN RA02-CH2/GB 12/06/03 19:02 Page 34**35** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

73 companies that employ 84% of Group staff in France are customers of the Centers for Aid through Work (Centres d’Aide par le travail or CAT), and Saint-Gobain PAM hosts one such center at its P ont-à-Mousson site. The siting of this CAT center allows its disabled employees to benefit from the plant’s infrastructure, such as the cafeteria and medical services, yet its economic independence is preserved, since the factory is only one customer among several.
Disabled persons represent 3.4% of employees in Germany, 2.9% in Italy, and approximately 2% in France, the Netherlands and Brazil.



### D. LOCA L IMPACT • Saint-Gobain Développement: Teams dedicated to promoting

a dynamic local economy in the regions of France where Saint-Gobain has operations Because the Group has such a dense presence in France, it has set up a specific structure, Saint-Gobain Développement, to represent the Group in the various regions and in particular to take steps to promote job creation. With its three regional delegations, this organization is a permanent contact point for local officials and stakeholders.
Saint-Gobain Développement’s first responsibility is to carry out, on the Group’s behalf, programs to preserve jobs, in outplacement of employees through specialized units, and in re-industrializing and re-energizing areas. Its skills have sometimes been exported as in 20 01 when its teams took part in the redeployment of a Canadian site of the Ceramics & Plastics Division.
Additional services are offered to employees, such as support in the evaluation and implementation of personal projects, assistance in pursuing new opportunities within the Group for both executives and non-executives and, if needed, facilitation for a spouse or child.
Supporting job creation in small businesses located near Group sites and involved in either manufacturing or services to industry, is part of the Group’s involvement in local economic development. Saint-Gobain Développement offers low-interest loans to these companies, without requiring any collateral, against job creation commitments. These loans may even be converted into grants if the beneficiary company recruits former employees or spouses or children of employees. Alongside this, technical support is provided to heads of small businesses, particularly in optimizing their industrial organization. The aim is to set up long-term partnerships between Saint-Gobain Développement and local small and medium-sized businesses. Th rough Saint-Gobain Développement, the Group also supports associations that help people confronted with social or financial difficulties to re-enter the working world.
Lastly, Saint-Gobain Développement supports divisions and local sites in coordinating the handling of issues with a strong local dimension, such as environmental matters.

• Saint-Gobain Corporation Foundation, financing many

initiatives in the United States In the United States, Saint-Gobain Corporation Foundation was born in January 2002 as a result of the merger of the corporate foundations of CertainTeed and Norton. Its mission is to contribute to the progress of local communities in the regions where the Group has sites. The foundation is run by a board of directors and comprises three programs, Corporate Direct, Matching Gifts and Plant Community. Through Corporate Direct, the board of directors provides grants to charities and cultural organizations, as a first priority in the regions where the U.S. subsidiaries have their headquarters. Matching Gifts allows employees or retired former employees taking part in this program to support organizations they care about, and to have the Foundation double the amount of their contribution, up to a maximum of US$2,500 per year and per person. Lastly, those facilities taking part in the Plant Community Program are granted an annual budget based on their number of employees, and they are free to make donations to the organizations of their choice.

T hese programs are highly decentralized, and the Group grants its subsidiaries a great deal of flexibility in getting involved as they see fit in the economic and social development of their immediate environment, or in local cultural life. • STGOBAIN RA02-CH2/GB 12/06/03 19:02 Page 35**36**

Fo r the past several years, the Group has brought together these three aspects of its industrial operations into a comprehensive and consistent approach. Based on tangible objectives and drawing upon substantial financial and human resources, this policy has allowed Saint-Gobain facilities to make great strides. However, the Group’s involvement in environmental issues goes beyond minimizing pollution from its facilities. It also includes positive contributions to better environmental performance through the development of “green” markets.


## 1. THE GROUP’S POLICY

A. MODERATE ENVI RO NMENTAL IMPACT Saint-Gobain’s industrial operations pose relatively few technological risks. For the most part they process mineral materials and require practically no explosive or environmentally toxic substances.

The main pollution generated by Group subsidiaries comes from the melting processes required to produce glass, cast-iron pipes, various building materials and some industrial ceramics. These processes take place in furnaces where temperatures exceed 1,500°C (2,700°F), drawing upon substantial energy consumption and causing emissions of carbon dioxide (CO 2 ) and other atmospheric pollutants such as nitrous oxides (NOx) and sulfur oxides (SOx).
One third of Group sales come from the distribution of building materials, a business of people and services that entails very little risk for the environment, but in which the safety of employees and satisfactory working conditions are very important issues.



### B. OVERALL OBJECTIVES, TRANSLATED AT A LOCAL LEVEL In its Principles of Conduct and Action (see pages 24 to 25), the Group requests that its subsidiaries “actively promote the protection of the environment” and “ take particular care to adopt all measures necessary to ensure the best possible protection against health and safety risks in the workplace”, both for Group employees and for contractors working at Group sites.

Fr om these principles stem concrete objectives for environmental protection, health and safety, that are set by the divisions, delegations and companies, with the aim of achieving regular progress, taking into account the specific constraints of each situation. 

### C. RESOURCES DEPLOYED Significant human and material resources have been allocated to achieve these objectives.

1. A dedicated structure Wi thin the Group, Environment, Health and Safety issues arehandled by a specific EHS structure that is matrix-based like SaintGobain itself and coordinated by a central Department reporting directly to General Management.
In each Division, depending on its size and type of organization, one or more persons are in charge of translating and tailoring the EHS policy to the specific context of the Division’s operations. These EHS managers generally work with their team of correspondents within the various companies, and within each General Delegation a coordinator is also responsible for adapting locally the EHS initiatives of the Group and its Divisions.

These division and delegation-level managers meet twice a year with the Group EHS Department as an EHS Committee, to review issues of interest to all Group companies and share feedback. In turn, these managers organize meetings with their own network of correspondents, and invite the Group EHS Director to attend. As in the operational sphere, this matrix-based organization structure makes it possible to be close to business operations and aware of specific national circumstances, while keeping a consistency with the overall objectives.
Once a year, on the “Health & Safety Diamonds” awards day, the entities obtaining the best results in health and safety are recognized and share their best practices with the rest of the Group. Conversely, those companies that recorded poorer performance over the previous year are required to explain the reasons and set out their objectives for the future. This event promotes a healthy rivalry for higher performance and provides an opportunity for fruitful exchanges among all participants.
2. Investment in Research and Development Saint-Gobain has two organizations that also contribute to raising the Group’s environmental performance:

- Saint-Gobain Conceptions Verrières, whose brief includes

improving the environmental performance of glass manufacturing processes, in working on furnace design. In particular, two issues are the subject of in-depth work: developing mathematical models to reduce nitrous oxides (NOx) and the further improvement of energy-saving and carbon-dioxide (CO 2 ) reduction processes. 

## ENVIRONMENT, HEALTH AND SAFETY (EHS) • STGOBAIN RA02-CH2/GB 12/06/03 19:02 Page 36**37** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

- Research & Development teams in 16 research centers and

around 100 development units, which work on many environment-related issues.
In 2002, research expenditure directly related to environmental matters came to 

### € 11 million. This sum represents the first step in the overall Research and Development investment. Each of the projects funded in this fashion is then followed with one or more development programs at division level, which requires at least three times the amount invested initially.
3. Specific tools • Tools made available to industrial facilities The Group EHS Department has designed a certain number of tools that it makes available to the various sites to help them implement their own actions in line with Group policy. An EHS Reference Manual, which stems from the Group’s Principles of Conduct and Action, explains in very tangible steps how each site’s management should organize operations to ensure continuing progress: defining an appropriate policy and setting concrete objectives, informing and training employees and monitoring the effectiveness of measures implemented. A second tool offered by the Group is a self-diagnostic test. It is made up of a detailed list of questions and an evaluation grid to allow plant managers to review their site’s situation against a variety of indicators. It also includes regulatory and technical information, and suggested corrective action. Lastly, the Group recommends five methods for assessing risks at each workstation. As part of its reporting process, each company is required to specify which method it uses. The initial aim of this approach is to assess how risk analysis for each workstation is being rolled out throughout the Group.

• Audits and feedback Health and safety audits are an indispensable tool to obtain a reliable outside assessment. The Group’s size enables it to entrust the auditing of its sites to outside teams that offer the necessary independence, but are also familiar with Saint-Gobain’s EHS policy. These audits are launched at the discretion of divisions and operating units, but also, in some cases, following a decision from the parent company. The Group has trained in-house approximately one hundred health and safety auditors, who are provided with two very detailed audit guides, one on health and the other on safety. Each auditor performs an average of two to three audits per year in various Group companies.
A guide to environmental auditing has also been produced and auditors are in the process of being trained in this third area. Beginning in 2003, it will be possible to carry out comprehensive Environment, Health and Safety audits. Regular audits are needed to measure progress, offering detailed feedback at division, delegation and Group level concerning each site’s situation at any given time. Reporting takes place on a monthly schedule for safety and annually for health and environmental issues. Progress made in implementing the policy is thus easy to measure, with an overview of results at Group level.

4. Financial resources allocated to environmental protection T he Group’s capital expenditure on environmental protection has surged 33% over the past two years, to 

### € 70 million in 2002. This covers four types of investment:

- Protective equipment, e.g. soundproofing, dust abatement,

wastewater treatment plants, fireproof walls, waste storage areas;

- Recycling, e.g. systems for recycling raw materials, production scrap,

water, calories, etc.

- Economizing, e.g. equipment for reducing consumption of raw

materials or energy, primary measures. - R&D expenditure to optimize product life-cycles.

Environment-related expenses have jumped 14% since 2000, reaching 

### € 1 42 million in 2002. This includes the wages of all individuals working in environmental protection, training costs, depreciation and amortization, insurance cover and guarantees, provisions for environmental risks and all other environment-related expenses. Investment in Environmental Protection in 2002, by Sector (in € millions)

Environmental Expenses in 2002, by Sector (in € millions) • STGOBAIN RA02-CH2/GB 12/06/03 19:02 Page 37**38**

Counting both investment and expenses, Saint-Gobain spent a total of 

### € 21 2 million in 2002 to improve its environmental performance and prevent environmental risks. This represents a 20% increase over two years. More than 60% of this amount was taken up by the Glass Sector, owing to its size and its proactive policy of working to reduce the environmental impact of glass furnaces.
Charges to provisions for environmental risks amounted to 

### € 4.8 million in 2002, with more than half attributable to the Glass Sector which uses the greatest number of high-temperature processes and includes seven of the Group sites that are regulated under France’s “Seveso” legislation for storage of hazardous products (see page 40).
5. Communication and training To drive continually improved EHS performance, Group companies also seek to shape corporate culture for greater awareness and responsibility. EHS managers are in charge of ensuring that all employees concerned receive adequate training for the protection of both their own health and safety and the environment.

Th anks to the Group’s EHS intranet portal, the entire EHS organization can exchange information and feedback, and any employee interested in these matters also has access to this content. In the event of serious accidents, the portal is used to roll out very rapidly all relevant feedback and lessons learned, to prevent any re-occurrence of dangerous situations.
6. Integrating outside contractors Group health and safety requirements also apply to outside companies working at Saint-Gobain sites, and any accidents involving the employees of those companies are included in the reporting process.
Saint-Gobain has also issued a specific booklet of health and safety recommendations for the staff of outside companies, setting out the responsibilities and obligations of the client company (the Group subsidiaries) as well as the duties of the outside company. 

### A. AD DR ESSING THE CAUSES The Group improves its performance continually, by acting upon the potential causes of accidents and occupational illnesses. Its focus is increasingly on preventive action and subsidiaries are encouraged to analyze the risks that their workers are exposed to and to respond even to “near-accidents.”
Priority efforts have been devoted to evaluating and controlling risks at each workstation, to stricter enforcement of the requirement to wear protective equipment and to greater employee education and training.



### B. INDUSTRIAL HEALTH FOR EMPLOYEES: SPECIFICAL L Y-TAILO RED ANSWERS • Muscular-skeletal diseases The vast majority of known occupational health problems come from muscular-skeletal diseases or back pain due to the handling of heavy weights as well as from the physical labor that is inherent to the Group’s various businesses. Automation at Group plants has gradually reduced the number of employees affected by such troubles. In addition, in many divisions, the most physically demanding workstations have been redesigned following ergonomics studies.

• Dust and fibers In plants where there is a risk of inhaling dust or fibers such as silica or wood, measurements are regularly taken to ensure that legal standards are complied with. In the vast majority of cases, dust and fiber levels are well below the maximum allowed by law. W ithin the Lapeyre group for example, wood dust levels were significantly reduced to well below the legal maximum of 5 mg per cubic meter, by redesigning several sites. Now only some 15% of Fr ench employees are exposed to dust levels that exceed the recommended threshold of 1 mg/cubic meter. These workers are required to wear individual protective equipment.
• Hazardous products Lapeyre factories have set up an approval procedure for wood finishing and preservation substances, which has resulted in the replacement of some aggressive products with substitutes that are less harmful to the people handling them. Several people at each site have also received training in chemical risks. 

## 2. HEALTH AND SAFETY • STGOBAIN RA02-CH2/GB 12/06/03 19:02 Page 38**39** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

Fu rther, in Abrasives plants as an example, a study is in progress to analyze all products entering each site and what becomes of them during the production process. Following this evaluation, companies will be able to see whether it is appropriate to replace some products or to provide additional protective gear for operators.

T he other risks to which employees may be exposed vary considerably from one division to another, which means that industrial health initiatives need to focus on the specific conditions of each site.



### C. SAFETY: CONT INUING PERFORMANCE IMPROVEMENT (22) T he Group has made considerable progress since it developed a comprehensive policy in this area, and 2002 was in line with this trend. Over the past ten years, the incidence rate of injuries with lost workdays (number of lost time injury/days, or LTI/Ds, for every million hours worked) was divided by more than three, falling to 10.2 in 2 002 from 32.5 in 1992, while the severity rate (SR, number ofperson-days lost as a result of disabling injuries per thousand personhours of exposure) fell to 0.36 from 0.77. Although this is a satisfactory trend overall, it reflects mixed results among the various countries and businesses. In particular, Saint-Gobain deeply regrets five accidents in 2002, that claimed the lives of four employees and one outside contractor. Such accidents are immediately reported to the Group EHS Department and are analyzed at length to ensure that all sites can learn from the resulting feedback as quickly as possible.

T he leading causes of accidents remain the movements of persons at Group sites as well as all risks related to handling operations – impact injuries and incorrect maneuvers causing injuries to the hands, head or feet. Specific programs have been implemented to address these risks. T he Asia-Pacific region, North America and Brazil have attained the lowest incidence rates. Brazil’s performance, however, was marred by two fatal accidents in 2002, and this has highlighted the need to develop a whole range of education programs to promote safe conduct. Among the most remarkable achievements of the year, India and the Nordic countries (Scandinavia and the Baltic states) improved their incidence rates very significantly in 2002: India’s fell to 10.8 from 24 a year ago, and in the Nordic countries it was 10 .2, down from 19.2 in 2001. These results are largely attributable to the Group’s determination to drive improvements in these two regions, backed by vigorous action by the delegations and the companies themselves. The use of systematic audits in India clearly helped focus maximum attention on safety issues. Poland also kept up the progress it had started to achieve in 2001.

France’s results, which had deteriorated markedly since 1998, picked up in 2002. The incidence rate fell to 19.9 from 23.9 in 2001 and the severity rate dropped to 0.94 from 1.06. The measures taken, which included a series of systematic audits, will be maintained in 2 003, with the aim of catching up with the Group average as quickly as possible.
Italy, conversely, was unable to follow up on the improvements it had recorded in 2001, despite continuing, regular steps. Its incidence rate rose substantially in 2002. The Mexico, Colombia and Venezuela delegation, whose incidence rate worsened by two points, is seeking to address the situation with targeted measures.
Because of the different nature of its business, data for the Building Materials Distribution division are recorded separately from those for the rest of the Group. Its performance is poorer than the Group average, with an incidence rate of 15.7 and a severity rate of 0.47. Th is can be explained by the fact that the companies of this division have entered the Group only recently (1996 for Point.P and Lapeyre, 2 000 for Jewson and Graham and Raab Karcher) and have had less time to implement Saint-Gobain safety policies. It must also be added that the extensive handling operations in Building Materials Distribution increase accident risks. The Flat Glass division also has a higher incidence rate than the rest of the Group, mainly because of the handling and glass-cutting operations at its subsidiaries specialized in glazing for the building industry. Both of these divisions have made improving safety an utmost priority. They are continuing to implement carefully targeted measures, such as strict enforcement of the wearing of safety equipment or better floor markings for safer movements throughout facilities. Changes in Incidence Rate of Injuries with Lost Workdays (LTI/D) and Severity Rate (SR), 1992-2002 Group Industrial Sites, Actual Structure

(22) All data concerning safety are based on approximately 85% of total Group staff. • STGOBAIN RA02-CH2/GB 12/06/03 19:02 Page 39**40**

In all, the progress achieved in 2002 represents nearly 600 accidents that have been avoided compared with 2001, and 3,000 fewer days of missed work due to accidents. 

## 3. ENVIRO NMENTAL PROTECTION

A. LIMITED AND CONTROLLED INDUSTRIAL AND ENVIRONMENTAL RISKS 1. Three levels of risk • Nine sites subject to specific regulations At December 31, 2002 eight sites were regulated under France’s “Seveso” legislation implementing the European Directive of December 9, 1996 on “controlling risks related to major accidents involving hazardous substances.” The Directive calls for specific legislation to regulate facilities deemed to involve particular industrial risks. Three plants of the Insulation division store phenol and formaldehyde, toxic materials used to manufacture the resin that binds glass wool. One facility belonging to the Abrasives division stores phenol-based resins used to glue abrasive grains to their base. One site of the Insulation division and two of the Containers division store the explosive gases LPG, oxygen and hydrogen. Lastly, one Flat Glass factory stores arsenic oxide used in manufacturing vitroceramics. These sites are kept under very close supervision, both by the Group and by the appropriate local authorities. In the United States the Lake Charles site is subject to similar legislation due to its use of vinyl chloride to produce PVC pellets used as raw materials for some of CertainTeed’s construction materials, e.g. sidings, windows or garden furniture. This site is regulated by both the Risk Management Program Rule (RMP Rule) and the Emergency Planning and Community Right to know Act (EPCRA).
• Sites subject to permit requirements Most of the Group’s industrial sites are subject to permit requirements (administrative authorization in France) and must first and foremost comply with the terms of their permit. These terms include annual reporting requirements.

• Other sites Sales outlets of the Building Materials Distribution division as well as smaller-sized industrial sites or plants that pose no significant risks, mainly the processing subsidiaries of the Flat Glass division and various sites of the Building Materials division, do not require a permit and therefore only need to address local community concerns. 2. The Group’s requirements, from regulatory compliance to certification T he Group’s first demand of its sites is full compliance with all applicable requirements set out in national legislation and local regulations. Beyond this, Saint-Gobain’s approach revolves around a commitment to proactive work for continuous progress in environmental protection. While it takes into account the particular constraints faced by each site, the Group’s aim is for subsidiaries “to raise the main relevant environmental performance standards of their own sites to the level of particularly effective performance standards found in the Group for comparable sites” (Principles of Conduct and Action, see page 24).
Quality certification is increasingly a standard within the Group, as there were 428 ISO 9000-certified companies at December 31, 2 002, not including the 1,250 Point.P sales outlets which have been certified collectively. In addition, at December 31, 2002, 71 facilities had obtained ISO 14000 environmental certification.
3. Preserving biodiversity Some facilities conducted in-depth surveys of potential risks to their surrounding environment. These showed that the factories were far below critical thresholds for all discharged pollutants.
4. Environmental disputes (23) In 2002 the Group did not have to pay any court-ordered damage settlements related to environmental matters.



### B. CON SUMPTION OF RESOURCES (24) 1. Mainly mineral raw materials, and an increasing

proportion of recycled content Consumption of raw materials is closely related to the nature of each business, therefore it has to be addressed differently for different types of operations. Nevertheless, one of the unusual features of the Group is that all divisions use, to varying degrees, silica sand as a rawmaterial. This sand comes partly from quarries owned by SaintGobain and partly from outside purchases. Saint-Gobain consumes a total of approximately 8.5 million metric tons of silica sand per year.

(23) In Europe. (24) Data concerning resource consumption have been estimated from data based on approximately 80% of the defined scopes. • STGOBAIN RA02-CH2/GB 12/06/03 19:02 Page 40**41** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

The paragraphs that follow list only Group sectors that consume a significant amount of non-renewable raw materials.

• Glass Sector In 2002, Saint-Gobain’s Glass Sector consumed 6.1 million metric tons of silica sand, which makes up about 70% of the weight of glass. Additives used in processing this crystalline silica were sodium carbonate, of which the sector used 1.9 million metric tons in 2002, as well as lime and dolomite (2.2 million metric tons).

Group companies use an ever-increasing proportion of recycled glass among raw material inputs entering their furnaces. Nearly 30% of the glass they produce is melted from cullet, up from 26% in 1 993. The Containers and Insulation divisions have taken this recycling the furthest. In Containers, 36.7% of the glass produced, i.e. more than one bottle out of three, comes from recycled glass. In Insulation the proportion is as high as 37.8% worldwide and 45.5% in Europe. T here are, however, limits to how much recycled matter can be included in glass production, because the quality requirements of some products require new materials. This is the case for extra-white glass used to make glass flasks for perfumes and medicines. In Reinforcements the use of recycled glass also faces technical challenges.
• High-Performance Materials T he High-Performance Materials Sector includes a large number of companies working in narrow niche markets. Each company consumes its own mix of specific raw materials, in amounts that are not truly material. • Housing Products Sector

- Pipe T he Pipe Division uses two types of melting processes. In the first, known as “primary smelting”, cast iron is obtained in blast furnaces, from iron ore and mineral fluxes. In the second process, known as “secondary smelting”, the cast iron is produced from scrap metal and recovered cast iron, melted in cupola furnaces, electric arc furnaces or fuel-heated furnaces. The breakdown among these two types of production depends on the types of markets served, the requirements of specific products, scheduling, market prices of primary and secondary raw materials, etc. In 2002, as in 2000, primary smelting accounted for a greater share of production than did the use of recycled materials, whereas in 1999 and 2001 the reverse was true. In 2002 the Division consumed 1.17 million metric tons of ores and mineral materials, and nearly 700,000 metric tons of recycled materials.

- Building Materials Distribution Jewson and International Timber in the United Kingdom, as well as Lapeyre in France, are heavy users of wood, and the Division as a whole purchases over 1.5 million cubic meters per year.
In Great Britain, Saint-Gobain Building Distribution UK is a co-founder of the Forests Forever NGO and a member of WWF1995+. It has also signed the charter of the Timber Trade Federation, undertaking to monitor its supply sources and give preference to purchases of wood from certified forests when this is possible, and if it is not, to choose suppliers that are committed to a policy of environmental progress.
Several of Lapeyre’s industrial carpentry factories use wood as a raw material. Among the types of wood used, 70% are pines or temperate-climate deciduous trees from countries where forests are managed, and the remaining 30% are tropical woods. The Lapeyre group is committed to protecting forests. It has undertaken to stop using, after 2005, any wood other than from managed or certified forests, i.e. forests for which sustainable conservation is guaranteed. In this spirit, the Lapeyre group in Brazil has joined a grouping of wood buyers certified by the Forest Stewardship Council, set up by Friends of the Earth.

2. Water Practically none of the Group’s manufacturing processes use water as a raw material. However, it is used in large volumes for cooling high-temperature processes. In most cases, this cooling water is recycled internally, which helps limit actual consumption considerably. Consumption of Raw Materials by the Glass Sector in 2002 (millions of metric tons) • STGOBAIN RA02-CH2/GB 12/06/03 19:02 Page 41**42**

In 2002, the Glass Sector used 30.2 million cubic meters of water, in processes that consume from 0.99 to 16.10 cubic meters of water per metric ton of glass produced. The upper end of that range is attributable to the Reinforcements Division’s particular situation. In Reinforcements, the bonding process demands heavy water inputs, as chemicals dissolved in water need to be deposited on glass fibers to give them all the required properties. The Pipe Division, for its cooling processes, consumes 22.9 cubic meters of water per metric ton produced, making a total of 33 million cubic meters in 2002. The High-Performance Materials Sector consumes 11.4 million cubic meters of water per year.
Liquid effluent to be discharged is generally treated prior to being reinjected into the natural or municipal network from which it came.

3. Energy The following paragraphs only deal with Group operations that consume significant amounts of energy.

To melt glass or cast iron, furnaces have to reach high temperatures, from 1,500 to over 1,600° C (2,700°F to over 2,900°F).

T he Glass Sector’s energy consumption in 2002 amounted to 33 ,200 Gigawatts/hour (GWh), of which two-thirds was in Europe, mainly in the form of fuel oil and natural gas. Electricity serves as the main energy source for 50% of the furnaces of the Insulation Division, and serves as a backup power source for the other divisions.

W ithin the Housing Products Sector, terracotta operations used 1,412 Gwh during the year, and the Pipe Division required 5,380 GWh. The main energy sources for these two divisions are coal coke (in blast furnaces and cupola furnaces), but also electricity.

T wo businesses account for the bulk of energy consumption within the High-Performance Materials Sector: silicon carbide is melted at more than 1,500°C, and the manufacturing of fused-cast refractories takes place in furnaces where temperatures exceed 2,000°C. For the sector as a whole, energy consumption amounted to 3,518 Gwh in 2002.

T he Group is pursuing energy savings through a variety of methods: - Increasingly efficient energy-recovery systems are being gradually

installed on furnaces. The energy content of gases and fumes is recovered and used to pre-heat furnaces or combustion air in burners, or simply for plant heating; - W here possible, furnace design is optimized to save energy and boost yields. As an example, the yield of smelting equipment in the Pipe Division was considerably improved over the past ten years thanks to oxygen injection through tuyeres;

- Melting cullet does not require the same high-temperature

chemical reactions as standard vitrification, therefore less energy is required to make glass from recycled materials. - Lastly, the gradual roll-out of oxygen furnaces, which already make

up 30% of Reinforcement Division furnaces, have in many cases boosted yields.

Th e search for energy savings will continue in the years to come, with further impetus from the Group’s commitment to reduce its CO 2 emissions (see below).



### C. SOIL USE CONDITIONS 1. Storage Underground storage tanks for potentially hazardous products are unfortunate legacies from the past. They are gradually being replaced by above-ground storage tanks that offer better environmental guarantees, in particular thanks to easy visual controls.

2. Quarries T he Group manages directly several types of quarries, for the most part silica sand quarries, but also limestone, dolomite, phonolite (from which alumina is obtained), rhyolite for pellets used to make CertainTeed’s roof shingles and clay for Terreal’s terracotta products. T hese quarries are located in France, Spain, Italy, the United States and Brazil.
In all these countries, extracting operations are closely overseen by regulatory authorities. The opening of any new quarry is subject to a permit, which is granted only after an impact study on local fauna and flora. Subsequently, the extraction process is closely supervised. Lastly, at the end of operational use, sites are redesigned, sometimes to return them to their previous condition and in any event with a view to matching best practices. The earth that was removed to reach the material of interest, and set aside, is then re-used to cover water-free surfaces of the land, which are reforested in partnership with forestry authorities. Clay quarries are often converted into outdoor activity centers. • STGOBAIN RA02-CH2/GB 12/06/03 19:02 Page 42**43** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



### D. EMI SS IONS (25) T he Group is continuing to pursue efforts to recycle process water and is intent on reducing its atmospheric emissions of dust and gases, particularly carbon dioxide (CO 2 ), sulfure oxides (SOx) and nitrous oxides (NOx).
1. Greenhouse gases T he Group as a whole emitted approximately 10.5 million metric tons of CO 2 in 2002, of which 75% came from the Glass Sector and the Pipe Division.

Th e businesses of the Glass Sector have for several years been taking steps to reduce their CO 2 emissions, and now the Group has made a commitment in line with the timetable set by the Kyoto protocol, to reduce its CO 2 emissions per ton of manufactured product by more than 15%, by 2010, against a 1990 baseline. To bolster this commitment, in December 2002 Saint-Gobain joined the French organization AERES, the Association of Companies for Reducing the Greenhouse Effect. Each of the companies within this grouping must set quantitative targets for reductions in its g reenhouse gas emissions and may incur sanctions if it does not meet its commitments. This initiative in France is intended to serve as an example for the rest of the Group.
2. Emission of substances causing acid rain Saint-Gobain factories emit two types of substances that cause environmental acidification, sulfur oxides (SOx) and nitrous oxides (NOx). Measures taken to limit NOx emissions are described below as part of the paragraph on limiting emissions of nitrification-causing substances.
Sulfur oxides are produced as a result of burning fuel oil and coke. T he sources of such emissions are mostly the Pipe, Flat Glass and Containers divisions. The Glass Sector emitted a total of 27,000 metric tons of SOx in 2002, through a variety of production processes that discharged from 0.77 kg to 3.21 kg of SO2 per metric ton of glass produced.

T he main methods for reducing SOx discharges are energy savings and the use of higher-quality fuel oil or slack coal, with lower sulfur content.
In the Pipe Division, in addition to the approach described above (the use of high-sulfur coal was discontinued in Belleville, France), the Pont-à-Mousson site replaced coke-oven gases with natural gas. The Division consequently was able to shrink its SOx emissions to 0.98kg per metric ton in 2002, down from 1.29kg in 2001 and 1.66kg in 1999. Where possible, the Glass businesses seek to substitute fuel oil with natural gas and, if this is not possible, they use fuel oil with lower sulfur content. They are also gradually putting in place desulfuring systems using limestone, at the end of the production process. Waste products captured in filters can then be recycled in the furnace.
3. Emission of substances causing nitrification Nitrous oxides (NOx) are produced through high-temperature oxidation of combustion air. They too are by-products of Glass and Pipe operations.

T he Group decided over ten years ago to take steps to fight these emissions, by focusing on primary measures that eliminate or at least limit the generation of these NOx gases. As an example, the PHENIX process applied in the Flat Glass Division mainly involves optimizing combustion conditions within furnaces. Saint-Gobain is today one of the world’s best performing industrial groups for the reduction of nitrous oxides through primary measures.
Oxygen furnaces provide another interesting alternative since by displacing nitrogen in combustion air, they cause far less NOx emission. In Reinforcements, nearly 30% of furnaces are now oxygen furnaces, but the economics of this technology make it difficult to apply to Flat Glass or Containers.
4. Substances causing photo-chemical pollution Th e Group emits two types of substances that cause photo-chemical pollution: nitrous oxides (see above) and, to a lesser degree, volatile organic compounds (VOCs), which are created in certain product processing and finishing phases of specific operations.

VOCs are by-products of the various organic substances used for bonding of fibers and glass wool and sizing abrasives (phenol and formaldehyde), for production of silicon carbide (polycyclic aromatic hydrocarbons), for asphalt roof shingles (formaldehyde), as solvents used in coatings for cast-iron pipes, or in various products for wood protection and finishing at Lapeyre.

In the Insulation Division, these emissions have been monitored for about fifteen years. By substituting certain types of glues, significant strides have been made.

(25) Data concerning emissions have been estimated from figures based on approximately 80% of the defined scopes. • STGOBAIN RA02-CH2/GB 12/06/03 19:02 Page 43**44**

T he Abrasives Division has launched a comprehensive inventory of all inputs in its production processes, analyzing the behavior of their components at the various stages. One of the key aims of this is to identify VOC emissions more precisely, as a first step toward being able to reduce them
In the Pipe Division, the following initiatives have been implemented recently to reduce VOCs: - Replacing existing coatings with solvent-free products; - Capturing emissions and treating them through thermal oxidation.
Such efforts will be carried out throughout the Group in coming years, drawing upon the many experiences gained in this field.

5. Dust emissions Th e Group is also involved in an active dust-abatement drive. Pa rticularly for its Glass operations, the Group has decided to use as a reference the new French standard (a draft administrative decree for which France’s high council of regulated sites issued a favorable ruling on December 18, 2002) and to adapt it where possible to the constraints faced by other Saint-Gobain facilities throughout the world.
6. Heavy metals and other substances requiring special monitoring Other hazardous substances emitted by the Group include heavy metals from impurities in raw materials. Although the quantities involved are small, monitoring is necessary and is being extended to all sites. Increasingly, dust particles contained in filters, which often contain traces of toxic metals, are recycled in furnaces or through appropriate channels. Only final waste that cannot be recycled is landfilled. 

### E. MANAGEMENT OF PRODUCTION WASTE 1. Small amounts of hazardous wastes

disposed of through approved channels Waste resulting from the combustion and melting of glass, such as sulfates and heavy metals, is collected at the bottom of regenerators or in furnace flues, as well as in dust filters. The amounts involved are small, and they are disposed of by specialized professionals that also handle paints, solvents or used motor oils.
2. Non-hazardous products are increasingly recycled or reused By-products and production scrap can to a large degree be returned into the manufacturing cycle fairly easily, since glass, cast iron or clay are recyclable materials.
Residues which are not recycled in-house can be reused in various ways outside the Group. Glass wool waste can be added to bricks to strengthen their mechanical properties, used sand serves in cement kilns, slag from blast furnaces or cupola furnaces is usedas public works filler material, PVC waste can be included in lowerquality plastics, glass threads can reinforce lesser-grade ceramics or thermoplastics.

To reduce costs, the Group is planning to enter into a framework agreement with a waste management specialist to rationalize its handling of this issue in France and Germany and, as much as possible, minimize waste generation at source. If this cooperation proves effective, it will be rolled out to the other countries.
Recycling and Disposal of Solid Waste in France (617 thousand metric tons)

Landfill classification based on hazardousness of waste: (1: high, 2: average / household waste, 3: low) • STGOBAIN RA02-CH2/GB 12/06/03 19:02 Page 44In the Spring of 2002, the U.S. implemented a program for the recycling of production scrap, whether at the site where it was produced, in another Group subsidiary located nearby, or through an outside company. This project has a dual aim of better economic efficiency, through lower landfilling costs and recycled or reused by-products, and higher environmental performance. Various working groups have been set up and they have identified 17 types of waste that could be better managed. Extending this approach to the country as a whole will promote a maximum number of synergies among the divisions present in the U.S., and provide lessons for the rest of the global Group.
3. Point.P’s waste collection and recycling centers,

an environmental service T he 130 Point.P outlets have been equipped with waste collection centers that can receive all types of waste, from inert materials to packaging, to hazardous and non-hazardous commercial waste. This service helps small building-industry businesses solve the often difficult problem posed by the disposal of waste from construction or renovation sites. Its 2002 revenues amounted to 

### € 3.5 million. 

### F. NOISE AND ODOR POLLUTION Some noisy manufacturing processes require soundproofing to be installed on the production line and protective equipment to be worn by operators. However, disturbances for neighbors of Group facilities in terms of noise or odors are very limited.



### G. REMEDIATION OF DECO MMISSIONED SITES Decommissioned factories that once contained asbestos have been decontaminated, and two of them have been levelled. In France, administrative rulings governing future use of such sites have been issued by local authorities or are being prepared, to ensure that interested parties are duly informed of the past history of these facilities and to define technical constraints for the future use of the grounds. **45** SAINT-GOBAIN **2 002 ANNUAL REPORT**  • STGOBAIN RA02-CH2/GB 12/06/03 19:02 Page 45**46**



### POLLUTION CONTROL AND ABATEMENT Application PRODUCT / SERVICE DIVISION Emissions control Pa rticle filters for road vehicles Ceramics & Plastics Synflex tubing for fuel and gas hoses Ceramics & Plastics W

astewater management Piping, pumps, valves and filters Pipe for water treatment Building Materials (Stradal) and purification systems Insulation / Reinforcements Effluent filters Ceramics & Plastics Catalysts Solid waste management Silicon carbide components for incinerators Ceramics & Plastics Soil and surface water remediation Sludge separators Building Materials (Stradal) Rainwater drainage systems Pipe / Reinforcements / Building Materials Noise and vibration abatement Acoustic glass for cars and buildings Flat Glass Isover mineral wools (construction + Insulation public works + auto industry) Acoustic windows Distribution (Lapeyre) + Flat Glass Sound insulation system for tile cladding Building Materials Analysis and monitoring equipment Wa ter, chemical (Norwell) and gas (Synflex) Ceramics & Plastics testing equipment (Fluid Systems) Ionizing radiation meters Ceramics & Plastics Cast-iron fiber concrete reinforcements Pipe for hazardous-waste containers Emissions control Compression of insulation fibers Insulation W

astewater management Design and management Pipe of water treatment systems Solid waste management Recycling centers at building materials Building Materials Distribution distribution outlets Building Materials Applications for recycled glass Glass divisions Noise abatement Tw o software solutions: “Clara” and “Bastian” Flat Glass and Insulation Acoustic tests for glass windows Centre de Développement Industriel 

### ENERGY-EFFICIENCY PRODUCTS

PR ODUCT / SYSTEM DIVISION T hermal insulation materials (rock wool) and foams Insulation / Reinforcements Insulating glass (low radiation and sun control) Flat Glass Dayli ghting Flat Glass Ceramics & Plastics (Chemfab) External cladding panels Building Materials Insulation Reinforcements Sealing products for construction Building Materials Refractories for heat exchangers Ceramics & Plastics Wi ndow frames and insulating doors Distribution (Lapeyre) Plastic and fiber composites for cars Reinforcements / Insulation Glass-plastic glazing for cars Flat Glass Ti nted and sun control glass for cars Flat Glass T hermal components and breaks for the building industry Ceramics & Plastics Vi troceramic cooktops Flat Glass Lightweight bottles Containers Norglide (lubricant) Ceramics & Plastics Zero-halogen fire-retardant thermoplastics (chlorine, fluorine) Ceramics & Plastics Pump dispensers for fluids Containers (Calmar) Damp-proofing mortars (renovation of masonry) Building Materials (Weber) 

### FACILITIES USING RENEWABLE ENERGY

PR ODUCT / SYSTEM DIVISION Solar energy: Mirrors and photovoltaic modules for solar power stations Flat Glass Photovoltaic tiles Building Materials Reinforcement of blades for wind turbines Reinforcements 

## 4. ENVIRONMENT-FRIENDLY PRODUCTS • STGOBAIN RA02-CH2/GB 12/06/03 19:02 Page 46**47** SAINT-GOBAIN **2 002 ANNUAL REPORT**  

# III - 2002 MANAGEMENT REPORT

ECONOMIC AND MARKET CONDITIONS
A S UBDUED GLOBAL RECOVERY... THAT HAS NOT YET REACHED EUROPE

The recovery forecast for 2002 was restrained, hampered by geopolitical uncertainties and turbulent financial markets across the globe.

T he United States experienced mixed fortunes. On the one hand, household purchasing power was buoyed by the government’s highly expansionist budgetary policy and record low interest rates, which stood at 1.25% as of December 31, 2002. Consumer spending increased, and households refinanced their home loans in a bid to rebuild wealth eroded by the plummeting equity markets. On the other hand, companies remained in poor financial health, dragged down by debt and low operating margins. Capital expenditure continued to dwindle, although it showed some signs of picking up towards the end of the year. Over full-year 2002, GDP grew 2.4% versus 0.3% in 2001.

In Europe, the weak signs of recovery that emerged in the first half of the year following inventory rebuilding did not firm up in the second half. As in the United States, the key economic driver was consumer spending, but industrial output stagnated, capital expenditure contracted, and employment was flat. During the year the euro rose sharply against the US dollar.

In the euro-zone, Germany once again turned in a weak performance. Jobless rates rose and strict budgetary policy did not encourage consumers to loosen their purse strings. Household spending therefore remained low, although edged up at the end of the year. Manufacturing was bolstered for a while by a rebound in foreign demand, but ebbed again, in tandem with a further contraction in capital expenditure. The year nevertheless ended on a slightly more positive tone, paving the way for brighter prospects in 2003. In addition, the downturn in the construction industry seems to be coming to a halt, judging by the recent increase in building permits.

In France, economic recovery was sparked in early 2002 by inventory rebuilding and a turnaround in exports, but slowed in the third quarter. Once again, the growth engine was private consumption, boosted by cuts in personal income taxes, relatively stable employment levels and moderate inflation. Capital outlay fell across the board, however, with expenditure on industrial equipment shrinking by 11%, but according to manufacturers should rally by an estimated 9% in 2003.
Italy bordered on stagflation, with GDP inching up by a restrained 0.4% over the year. Consumer spending was particularly lackluster, growing by a tempered 0.4%, as inflation curbed purchasing power and employment continued to contract. Capital expenditure flagged until the third quarter, when it picked up on the back of tax breaks provided for in the Tremonti bis Act.
Spain was once again a star player in the euro-zone, despite the slowdown in consumer spending towards the end of the year.

T he UK economy proved particularly resilient, with demand propelled by high consumer and public spending. Households dug into savings and took out huge home loans, pushing up real-estate prices by an average 30% year-on-year and creating a bubble that may well burst. On the supply side, strong performance by the service industry offset a further falloff in manufacturing, which was hurt by a decline in exports engendered by the strong pound. • STGOBAIN RA02-CH3/GB 12/06/03 19:30 Page 47**48**

Japan remained mired in recession in 2002, marked by internal imbalances. The rebound in exports in early 2002 petered out during the year. Asset prices continued to decline and the third-quarter jump in consumer spending did not offset the sharp contraction in capital expenditure.

Asia’s emerging economies fared extremely well, although dipped slightly in the second half following a downswing in exports. China was a premier player in the region, turning in strong growth that helped to boost intra-Asian trade.

In L atin America, Brazil remained shaky. The slide – albeit controlled – of the real weighed on public debt. Meanwhile, Argentina remained deeply entrenched in recession and the oil crisis in Venezuela intensified.

Economies in Eastern Europe continued to hold firm, despite heavy summer floods that swept through the Czech Republic and Hungary. Po land slowly returned to the growth track, having troughed in the first quarter. Overall, domestic demand across Eastern Europe remained healthy, although this in turn weakened the region’s trade balance.



### THE CONSTRUCTION INDUSTRY The negative trend observed in late 2001 in the construction industry continued throughout 2002 in the bulk of euro-zone countries. By the end of the third quarter, the construction index had contracted 2.1% year-on-year.

In France, the downswing was not significant. Activity in the homebuilding sector held up well, with 303,000 residential construction starts, spurring a 0.6% rise compared with 2001. The increase was spread evenly between apartment blocks and individual homes.
Non-residential construction was stymied by a falloff in the office property market, which slipped back to the levels of 2000. Industrial and retail construction plunged at the beginning of the year, but then falteringly leveled off as from spring. The construction market in Germany continued to soften, but total residential building permits rallied towards the end of the second half, raising hopes that the falloff might slow despite the budget cuts planned for the industry in 2003.
Mortgage rates in the United States turned negative in real terms, bolstering home-loan refinancing and fueling a 3.4% increase in home purchases. This in turn propelled housing starts to a record high. The volume of spending on public administration buildings grew 4.7%, but the corporate construction market slumped 16.7%, weakened by companies’ troubled finances.



### THE AUTOMOTIVE SECTOR Across Europe, sales of new cars held firm, down by a restrained 2.9% to 14.4 million vehicles sold versus a 0.6% rise in 2001.

In Germany – the Sector’s main market in Europe – sales of new vehicles were down for the third straight year, declining 2.6%.

In France, new vehicle registrations remained on an excellent trend, with 2,145,000 new vehicles registered, even though this represented a 4.5% decrease on 2001 when sales hit a decade high.
Italy was impacted by Fiat’s trials and tribulations, and had to roll out incentive programs. This kept sales of new cars on an even keel throughout the second half, and the market ended the year down 6.2%.
New vehicle registrations declined by a subdued 3.8% in the United States, with zero interest rates helping to keep the market steady.



### THE ELECTRON ICS SECTOR T rading conditions in the international semiconductors market remained weak in 2002. Sales climbed 1.3%, but this did not offset the 32% plunge experienced in 2001. Prices remained extremely low.

The Asia-Pacific region once again turned in a solid performance, accounting for 37.5% of worldwide sales. • STGOBAIN RA02-CH3/GB 12/06/03 19:30 Page 48**49** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

Saint-Gobain’s solid fundamentals and robust business model were successfully put to the test in 2002. Against one of the toughest economic backdrops in many years, the Group met its target of achieving a similar level of net income excluding capital gains as in 2001, which was the Group’s highest year on record. Performance was particularly robust in the second half of 2002, up significantly both on the first half and on the comparable prior year period, when performance was marred by the first signs of a slowdown.
Operating results were strong in 2002. Like-for-like sales climbed 1.1%, operating income increased 0.2%, and operating margin was 8.5%, or 10.4% excluding Distribution activities. Net income advanced 5.7%, not including capital gains and the charge for asbestos-related litigation, which is discussed further on in this report. Based on the number of shares outstanding at December 31, 2002, earnings per share excluding capital gains dipped by a restrained 0.6% to 

### € 3.08.

Consolidated net income retreated 8.3% to 

### € 1,040 million, due to capital gains decreasing significantly to 

### € 3 million from 

### € 84 million the previous year. Consolidated earnings per share amounted to 

### € 3.05.

T hese sound results also reflect Saint-Gobain’s stronger capital base. Over the year, the Group sharply reduced net debt and interest expense while substantially increasing free cash flow (cash flow from operations less capital expenditure), which came in at 

### € 1,242 million following the record high of 

### € 1,303 million in 2001. T he Group’s performance was achieved in harsh trading conditions. In addition to unfavorable exchange rates – notably for the Brazilianreal and the U.S. dollar – several areas that are crucial to SaintGobain’s business continued to weaken. For instance, capital spending dropped even further, particularly in electronics, which hurt Ceramics, Plastics, Abrasives and, albeit to a lesser extent, Reinforcements. This was exacerbated by the ongoing decline in the German construction market, which slipped 7% on the heels of an 11%falloff in 2001.
Rising to the challenge of these gloomy business conditions, SaintGobain met its price-strengthening objective, lifting sales prices by an average 1.1% throughout the year. The Flat Glass Sector stayed the course, Building Materials performed well, as did Containers, and Building Materials Distribution continued to make headway. Other performance factors, in addition to sharply lower net debt and interest expense, included tight control over capital spending and working capital. Pre-tax income was nevertheless trimmed by a 

### € 1 04 million exceptional charge related to asbestos litigation.

T he Group made no major acquisitions in 2002, preferring to continue supplementing growth with bolt-on acquisitions. These mainly concerned Distribution operations. Several non-core businesses were sold, primarily in the Ceramics and Abrasives divisions. 

# FIRM RESULTS IN 2002, IN LINE WITH TARGETS

(*) of which Essilor € 39 million. (**) of which Essilor € 11 million. 2 002 2001 2000 2000 pro forma Essilor (In € millions) by equity method 

### Net sales 30,274 30,390 27,837 28,815 Operating income 2,582 2,681 2,563 2,693 Income before profit on sales of non-current assets and taxes 1, 848 1,988 1,836 1,947 Net income before minority interests 1,074 1,174 1,594 1,642 Net income 1, 040 1,134 1,517 (*) 1,517 Ca sh flow from operations 2,673 2,733 2,530 (**) 2,643 Cash flow excluding capital gains 2,688 2,765 2,634 (**) 2,747 C apital expenditure 1,431 1,430 1, 638 1,722 • STGOBAIN RA02-CH3/GB 12/06/03 19:30 Page 49**50**

On an actual structure basis, Group sales inched back 0.4%. On a like-for-like basis, however, they climbed 1.1% versus 1.6% growth in 2001. The increase was primarily ascribable to price increases, which averaged an across-the-board 1.1%, combined with a 0.1% rise in sales volumes, driven by improved trends in the fourth quarter. Nevertheless, the 2.9% negative currency translation effect arising on the Group’s trading currencies that lost ground against the euro pushed down euro-converted sales by 1.8%.
Among the sectors, Glass recorded the highest like-for-like increase, posting a 2.8% gain. The rise was due to higher sales volumes across all of the Sector’s divisions. By contrast, sales in the High-Performance Materials Sector slowed significantly during the first half, and continued to decrease in the second half, albeit more moderately. Housing Products registered 1.3% growth, slightly outpacing the Group’s average growth rate over the year. The rise was fueled by two factors. First, a good showing from the Building Materials Division in the United States, driven by the extremely healthy U.S. construction market; and second, the expansion of the Building Materials Distribution Division, achieved through organic growth and bolt-on acquisitions.

The sales trends in North America and Europe – the Group’s major trade areas – moved in inverse directions compared with 2001. In North America, sales volumes swung up 1.5% in 2002, having suffered a 4.8% decline the previous year in the wake of the manufacturing slowdown at the beginning of the summer and the events of September 11. European sales volumes, on the other hand, dipped 1.3% over the full year, buffeted by economic headwinds, compared with a marginal contraction in 2001. The overall breakdown in sales was as follows: France 30%; other European countries 41.5%; North America 21.5% and 7% for the rest of the world.
Operating income decreased 3.7% on an actual structure basis but increased 0.2% like-for-like, reflecting the Group’s ability to hold firm. Operating margin inched down to 8.5% from 8.8%, primarilyon account of the lower sales figure reported by the HighPe rformance Materials Sector. Profitability in the Glass Sector wasslightly eroded by lower sales prices in the Flat Glass and InsulationReinforcements Division. At the same time, operating income for the High-Performance Materials Sector was reduced by 37.8%, due to severe trading difficulties. Group operating margin improved somewhat in the second half, coming in at 8.6%, on a par with the comparable prior year period. The figure was even higher excluding Distribution operations, reaching 10.4% against 10.2%. Operating margin for the Building Materials Distribution Division climbed from 4.5% to 4.9% after neutralizing the one-off transfer of the Pipe Distribution business. In North America, profitability rose, with operating margin increasingto 8.6% from 8.1%. Latin America and Asia also improved on prioryear levels. In Europe, margins increased in the United Kingdom and Spain, but were eroded in France and, to a greater extent, in other European countries, especially Germany.

T he Group’s overall resilience with regard to operating income was rooted in the twin drivers of successful endeavors to boost sales volumes and prices, and continuous efforts to contain costs. The Group’s headcount was reduced by 1.5%. This, combined with slightly higher sales volumes, generated a 2.7% increase in productivity compared with the 1.8% rise recorded for the year ended December 31, 2001.
Other contributors to the Group’s results include a 16.4% reduction in net interest expense and other financial charges, significantly improving interest cover. Net debt was scaled back for the third year in a row, down 10% year-on-year to 

### € 7 billion. The Group’s gearing ratio also improved, pruned to 59% from 61% despite currency effects negatively impacting the capital base.

T he debt paydown is attributable to two reasons. First, ongoing efforts to generate high free cash flow. Cash flow from operations eased back 2% to 

### € 2,673 million, including tax on capital gains from asset disposals and the 

### € 1 04 million pre-tax charge recorded for asbestos-related litigation. At 

### € 1,431 million, or 4.7% of sales, capital expenditure was unchanged from 2001. Free cash flow stood at 

### € 1,242 million. The second explanatory factor is the significant headway made in containing working capital.

Investments in securities declined to 

### € 7 89 million from 

### € 847 million in 2001. This figure included 

### € 350 million for the purchase of minority interests in Lapeyre, 

### € 1 66 million for bolt-on acquisitions in the Building Materials Distribution and Ceramics & Plastics divisions, and 

### € 15 9 million for share buybacks.
Overall, the Group’s financial results in 2002 reflect how SaintGobain strengthened its capital base while holding firm against the dismal economic climate. This performance was achieved by upholding sales volumes, further raising sales prices, continuing to deliver productivity gains and keeping a tight control over working capital. As a result, the Group was able to meet its net earnings per share target while pursuing its cost-cutting program and despite a 

### € 10 4 m illion pre-tax charge booked to cover asbestosrelated litigation. • STGOBAIN RA02-CH3/GB 12/06/03 19:30 Page 50**51** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

Management forecasts are based on a moderate growth scenario for 2003. This factors in continued estimated growth in emerging economies – especially Brazil – and a gradual recovery in the North American market, provided consumption levels remain high and capital expenditure picks up in the second half. However, new construction starts may well slow in North America in the latter six months of the year.

T he European outlook is similar to 2002, with a slight falloff in the construction industry. France is expected to be particularly hard hit, although this should be somewhat offset by the renovation market, which will likely continue to expand – albeit at a more subdued pace than previously. The German construction market will probably experience another decline, but on a lesser scale than in 2002.

T he High-Performance Materials Sector should start to recover, but most likely not before the second half, and more ground should be gained in the Building Materials Distribution and Pipe divisions. Emerging markets will also be an ongoing focus of expansion for the Group, as these economies burgeon. Going forward, the Group will continue to roll out the key strategies of its business model. Assuming that the international economy does not deteriorate, and that the asbestos-related charge stays more or less on a par with 2002, the Group is forecasting a modest increase in operating income and net income excluding gains on asset sales. Cash flow is expected to remain high, and continuous efforts will be made to scale back debt and interest expense.



### 2 003 FINANCIAL CALENDAR 

# OUTLOOK FOR 2003

Release of first-quarter 2003 sales April 24, 2003 Annual General Meeting June 5, 2003 First-half 2003 results announcement July 24, 2003 Release of sales figures for the first nine months of 2003 October 28, 2003 • STGOBAIN RA02-CH3/GB 12/06/03 19:30 Page 51**52**

The Glass Sector posted the strongest like-for-like growth within the Group in 2002, driven by high sales volumes across the board. Profitability eased back slightly however, due to a contraction in sales prices in the Flat Glass and Insulation/Reinforcements divisions which was not offset by the significant increase in earnings for Containers. 

## FLAT GLASS

KEY CONSOLIDATED DATA

Flat Glass sales dipped 1.2% on 2001. The decrease was primarily attributable to a 3% negative exchange-rate effect following the sharp fall in value of the Brazilian real and Argentine peso, combined with a slight rise in the euro against the Korean won, Indian rupee, Mexican peso, U.S. dollar, pound sterling and the zloty.

T here were no significant changes in the Division’s structure, barring several minor acquisitions in the United Kingdom and the fireproof glass segment.

T he European construction market experienced dismal trading conditions during the year, growing by a mere 1% overall, and down by 4% in Germany. In addition, competitors of Saint Gobain Glass brought new float plants on stream in 2002, pushing down sales prices. The Division strove to keep prices firm, even at the cost of gi ving up market share, and was able to partly offset the negative impact of competitive price pressure by enhancing its product offer. Th is engendered a shift in the product mix, marked by a year-onyear contraction in Saint-Gobain’s float glass sales as a percentage of total sales, and an increase in layered glass sales.

Th e situation was somewhat different outside Europe, particularly in Brazil and Argentina, where the Group actively worked towards strengthening prices. This helped to temper the negative currency effect, while an increase in exports mitigated the decline in sales volumes. Sales surged in Mexico and South Korea, but prices were eroded by local competition in Mexico and Chinese imports in South Korea.

For V itrages de Saint-Gobain, 2 002 was a year of declining sales volumes and prices, although the picture was mixed across geographic areas. Whereas sales contracted sharply in Poland, Germany and Italy, and, to a lesser extent, in the Benelux countries, Switzerland and France, they advanced significantly in the United Kingdom, Spain and Portugal, and even more so in the Nordic countries and Central Europe.
In the automotive segment, Sekurit kept sales volumes steady despite a 2% decrease in European automobile production. This was achieved as a result of the trend to increase the glazed surface per vehicle and significant growth in roof sales. The segment’s overall rise in sales also stemmed from product-range extensions – Internal sales are deducted from sales data by Sector and by Division. (In € millions) 

### 2 002 2001 2000 Net sales 11,818 11,813 11,317 Operating income 1,325 

### 1,357 1 ,228 Ca sh flow from operations 1,614 1,560 1,421 C apital expenditure 869 827 961

Contribution to the Group 

### 2 002 2001 2000 % of net sales 15% 15% 14% % of operating income 19% 21% 16% % of cash flow from operations 23% 22% 19%

(In € millions) 

### 2 002 2001 2000 Net sales 4,423 4,478 4,167 Operating income 495 551 430 Ca sh flow from operations 622 613 489 C apital expenditure 377 361 425 

# GLASS SECTOR

New technology used to adjust the color of automobile glass. • STGOBAIN RA02-CH3/GB 12/06/03 19:30 Page 52**53** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

especially highly sophisticated products such as layered glass windshields, and laminated glass roofs and side windows. At the same time, these new offerings helped to spur price increases. Outside Europe, higher sales prices and volumes partially offset negative exchange-rate effects in Brazil. Sales remained stable in Mexico and North America, and soared in South Korea as relations were tightened with one of the country’s most active automobile manufacturers.

Sales in the Tr ansport business line were driven down by the crisis in the aeronautics industry and falling orders from the rail sector. However, sales contributed by Autover, specialized in replacement glazing, were lifted by enhanced inventory management.
Specialty glass posted a rise in sales, primarily stemming from the following factors: an increase in Eurokera sales – especially in the United States – powered by the company’s successful white ceramic glass offering; market share gains recorded by Euroveder in home appliances; continued expansion in fireproof product sales by V

etrotech; and strong growth in South Korea’s insulation market, served by Hankuk Haniso.
Against this backdrop of mixed trends across business lines, operating income for the Flat Glass Division slipped back by 

### € 56 million in 2002, following a strong rise in 2001. Explanatory factors, other than those discussed above, include lower sales volumes and prices for Saint-Gobain Glass Europe.

Saint-Gobain Glass units outside Europe also experienced a sales decline in the year, albeit on a lesser scale than the European outfits. Th is was due to higher repair and start-up costs for glassmaking furnaces and production lines in South Korea and China, as well as a falloff in South Korean sales prices. In Brazil, rising sales prices ran up against higher costs and the fall in value of the real. SaintGobain Glass India, on the other hand, posted a rise in earnings, buoyed by strong marketing positions in its domestic market.

V itrages de Saint-Gobain reported earnings more or less on a par with 2001, whereas 2002 was a year of improved results for Sekurit in Europe. This was due to enhanced technical performance in France; robust sales and earnings in Spain, Portugal and the Czech Republic; more efficient running of industrial facilities in the Benelux countries; and broad-based plans to reduce overheads.
Outside Europe, Brazil improved on its 2001 earnings level, thanks to price strengthening measures. Mexico also reported stronger results than the previous year, spurred by enhanced technical performance and the positive impact of the fall in value of the Mexican peso against the U.S. dollar towards the end of the year. In Asia, South Korea’s earnings figures were lifted by buoyant business at Hankuk Sekurit and the successful start-up in China of the new facility in Changchun.

In the Specialty Glass line, Eurokera once again posted a rise in earnings, driven by stellar sales and strong technical performance in all three of its plants. Euroveder, Sovis North America and Hankuk Haniso likewise posted earnings growth.



### Outlook for 2003 T he Flat Glass Division forecasts a moderate increase in sales during the coming year. Positive contributory factors include expected expansion in sales volumes, higher float glass prices outside Europe, and an enhanced product mix in the automotive segment and in processing operations for the construction industry. Adverse factors will likely comprise ongoing negative exchange-rate effects and further downward pressure on prices in the European construction industry.

T he Division intends to pursue its growth strategy, which is underpinned by three main goals:

- Launch new value-added products on the automotive,

construction, and – if possible – electronics markets;

- Extend capacity across all businesses in Asia and emerging

economies; - Create additional targeted capacity for layered glass manufacturing

in the United Kingdom and China. • STGOBAIN RA02-CH3/GB 12/06/03 19:30 Page 53**54**



## INSULATION AND REINF ORCEMENTS

KEY CONSOLIDATED DATA

Insulation T he European insulation market continued to deteriorate on the heels of a difficult year in 2001. This accentuated the problem of excess capacity, which became structural. The slowdown in Germany showed no signs of coming to a halt. Finland and the former Soviet Union fared well, however.
During the year, alliances were formed among competitors, with Spain-based Uralita and Germany-based Pfleiderer bringing together their insulation activities. Similarly, operations were aligned between Knauf – a German company – and Alcopor, based in Switzerland. Alcopor had previously taken over the European business of Owens Corning.
In the United States, business was much stronger than expected in the wake of September 2001, but was nevertheless restrained compared with the previous year as prices continued to come under pressure.
Against this backdrop, the Insulation Division held out better than anticipated, posting sales closely on a par with 2001.
Operating income contracted slightly, reflecting weaker margins in Europe as sales volumes were hurt by fierce competition. The decline was, however, offset by efficiency gains, enabling the Division to keep up healthy profitability ratios. Operating margin improved in the United States.
Net income came in higher than 2001, thanks to reduced interest and exceptional expense. 2 003 augurs well for the Division’s development, with a likely rise in sales volume and additional success of high-added value products following Europe’s introduction of thermal and acoustic insulation standards in the building industry.

Vo lumes are expected to grow in the United States, boosted by lower interest rates, even though prices may be slightly eroded.
Despite these growth drivers, the Insulation Division expects sales figures to come in only slightly higher than 2002. Earnings should trend more sharply upwards, however, lifted by the Division’s continuous efforts to contain costs, and its ramp-up of technical, logistic and commercial services with high added value.



### Reinforcements T he recovery forecast for the second half of 2002 did not pan out. Consequently, the Reinforcements Division concentrated on bolstering volumes and regaining market share lost in 2001, enabling Saint-Gobain Vetrotex to grow sales in all sectors except electronics despite the cyclical trough. Fiberglass business expandedin parallel with stronger sales prices. Growth was sustained at SaintGobain Technical Fabrics, on account of resilient performances turned in by Saint-Gobain Vertex Fabrics and the Composites business in the United States and Europe. 

### Contribution to the Group 

### 2 002 2001 2000 % of net sales 11% 11% 11% % of operating income 14% 15% 16% % of cash flow from operations 16% 16% 17%

(In € millions) 

### 2 002 2001 2000 Net sales 3,329 3,274 3,254 Operating income 351 402 423 Ca sh flow from operations 436 448 451 C apital expenditure 198 229 258 • STGOBAIN RA02-CH3/GB 12/06/03 19:30 Page 54**55** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

T he Division’s structure reflects the increasingly global nature of the Reinforcements market, with Vetrotex Europe and North America being brought together within Burena (Business Unit Reinforcements Europe & North America). The Division has reorganized its Technical Fabrics business on a worldwide basis around three market segments – construction, industrial materials and composites – with the aim of fostering synergies between existing and new companies in the United States and Europe.
One of the Division’s key priorities during the year was to continue developing low-cost production platforms. At the same time, the construction of two new furnaces was launched, one in Hodonice in the Czech Republic and the other in Hangzhou in China. Operations were firmed up in China in the Division’s two core businesses. In addition, a foothold was gained in Japan via a joint venture set up with Nippon Sheet Glass under the name of NSG Vetrotex K.K., based in Tsu near Nagoya.
R&D functions were reorganized, in order to reduce time-to-market and speed up both global product development and process development and process research functions. These programs include the development of Z glass, renowned for its anti-corrosion properties, and products that are compatible with phenolic resins for the fireproof glass market, road reinforcement, TWINTEX ® applications, and textile processing for abrasive grinding wheels.
In 2002, the Division’s performance was outstanding in terms of quality, output and safety, positively impacting the cost base.
During the year, SAP – a global enterprise resource management software – was successfully rolled out in eight of the Division’s companies in Europe and North America. This will enable Reinforcements to achieve efficiency gains and respond more promptly to customer needs.
Operating in an unsettled market, the Division’s core focus for 2003 will be continuing to defend market share and growing the business. Low-cost production platforms will be put in full production in the Czech Republic, China, Mexico and Brazil, both for glass thread manufacturing and processing operations.
As regards T echnical Fabrics, the Division intends to implement costcutting measures while boosting the added value of products. SG BayForm, specialized in the production of inscet screens and integrated into Saint-Gobain Technical Fabrics, will benefit from capital injections designed to spur growth. The Fiberglass unit will be setting up a new production line in the Czech Republic, as part of its cost-efficiency and product-quality program. The Division will also be expanding its Distribution activities.

2 003 should see the launch of new fireproof products (phenolics), new uses of TWINTEX ® , remodeled fabrics for abrasive grinding wheels and new bulk molding compounds. Another primary point in the year will be firming up smooth running of information systems. • STGOBAIN RA02-CH3/GB 12/06/03 19:30 Page 55**56**



## CONTA INERS

KEY CONSOLIDATED DATA

No significant changes in the structure of the Containers Division occurred during the year. Sales rose 0.1% compared with 2001, negatively impacted by currency conversion effects in the amount of 

### € 17 7 million. At constant exchange rates, sales rose 

### € 17 5 m illion, up 4.3% on the previous year. Trading currencies concerned were the U.S. dollar (+ 

### € 50 .6 million), the Brazilian real (+ 

### € 28 .6 million) and the Argentine peso (+ 

### € 23 .9 million).
Sales from the Bottles and Jars segment held up well across the board, advancing by 4.3% in Europe. The market was particularly buoyant in Italy, whereas France suffered from a weak “still wines” market. In the United States, sales from Bottles and Jars inched up 2.9% excluding exchange-rate effects. South American sales surged, with a more balanced mix between the Tumblers business and Bottles and Jars. Sales from Flasks dipped 1.3%, due to slightly tougher conditions in the perfume market. Trading conditions picked up towards the end of the year, however.
Plastic Pumps increased 3.6% in spite of exchange losses on the U.S. dollar. The increase at constant exchange rates was 7.3%.

Prices and volumes held firm across the Division.
Operating income jumped 18.6%, despite unfavorable currency translation effects. Excluding exchange-rate effects, operating income surged 26.2%. The increase concerned practically the entire Division, except for the Flasks and – more notably – Perfume segments. Plant productivity was optimized, reflecting the first full-year benefits reaped from restructuring carried out in Spain and measures undertaken to ensure that European plants operate at full capacity. Lastly, the Bottles and Jars segment in the United States posted a 35 % leap in net income, at constant exchange rates. Division-wide reorganization measures led to cost savings and productivity gains, which were not offset by the significant negative impact of rising energy costs in 2001 and recent months. Plastics reported a very strong 29% rise in sales, after 

### € 1.6 million in negative currency translation effects. Restructuring efforts in both the United States and Spain in 2001 and 2002 enabled the segment to achieve satisfactory profitability levels.
Another contributor to the Division’s robust results was tight control over overheads across all business lines. Cash flow climbed 11% to a high 

### € 556 million, enabling the Division to finance the 24% increase in capital expenditure while paying down a significant 

### € 38 7 m illion worth of debt.
Notwithstanding the unsettled economic conditions prevailing in countries where the Containers Division has operations, and barring any major incident that might impact energy costs and exchange rates in particular, Management expects performance in 2003 to be on a par with 2002. 

### Contribution to the Group 

### 2 002 2001 2000 % of net sales 13% 13% 14% % of operating income 19% 15% 14% % of cash flow from operations 21% 18% 18%

(In € millions) 

### 2 002 2001 2000 Net sales 4,076 4,070 3,906 Operating income 479 404 374 Ca sh flow from operations 556 499 480 C apital expenditure 294 237 278

Significant investments for flasks in France and Germany. • STGOBAIN RA02-CH3/GB 12/06/03 19:30 Page 56**57** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



### KEY CONSOLIDATED DATA

Business and earnings in the High Performance Materials Sector – which slowed considerably during the first half – continued to contract in the second half of the year, albeit less significantly. Markets linked to industrial investment remain severely depressed both in Europe and the United States and as at early 2003, the global electronics sector had not shown any tangible signs of recovery. 

## CERAMICS & PLASTICS Earnings in Ceramics & Plastics contracted in 2002, reflecting continued lackluster conditions in the global electronics sector, combined with limp capital expenditure and industrial output.
Sales were down 4.8% on a like-for-like basis, and operating income eased back to 

### € 2 44 million from 

### € 3 92 million.
Restructuring measures were undertaken during the year, which should lift earnings in 2003 even if the markets – especially electronics – do not stage a major recovery. 

### Ceramics 2 002 was another challenging year for Ceramics. Specialty Ceramics suffered from the sluggish electronics and semi-conductor markets. Businesses serving the medical sector began to be wound up towards the end of 2002, with the restructuring of Saint-Gobain Céramiques A

vancées Desmarquest. This will enable Specialty Ceramics to focus on markets where the Division leads the industry or is climbing up the leadership ranks.
Industrial Ceramics was adversely affected by the decrease in orders for repairs of glassmaking furnaces.

T he last quarter of the year saw operations successfully start up at the particle filter plant located in Courtenay, France – the outgrowth of a joint venture between the Division and Ibiden, a Japanese group. Also in 2002, the first silicon carbide filters were delivered to PSA Peugeot-Citroen. The carmaker’s long-term plan is to incorporate these filters into all of its diesel vehicles. 

# HIGH-PERFORMANCE MATERIALS

(*) Including Essilor for six months in 2000. 

### Contribution to the Group 

### 2 002 2001 2000* % of net sales 12% 13% 15% % of operating income 9% 15% 21% % of cash flow from operations 9% 12% 18%

(*) Including Essilor for six months in 2000. Internal sales are deducted from sales data by Sector and by Division. (In € millions) 

### 2 002 2001 2000 Net sales 3,637 4,018 5,073 Operating income 244 392 668 Ca sh flow from operations 246 330 582 C apital expenditure 160 173 290 • STGOBAIN RA02-CH3/GB 12/06/03 19:30 Page 57**58**



### Plastics T he Plastics business was likewise hit by the tough semiconductor market, as well as by a slowdown in new airport projects. These adverse effects were, however, mitigated by stable sales in the health, food-processing and automobile industries. In response to this market contraction, the Division closed five industrial sites in the north-east region of the United States, and streamlined operations at its remaining sites. Meanwhile, it focused on expanding in the ever-growing health sector via an acquisition in the second half of the year.
Numerous synergies were fostered in the Division through 2002, including industrial and expense synergies generated from acquisitions made between 1998 and 2001. R&D synergies were also reaped, as the Division began to combine R&D teams from the Plastics business line at Northboro in the United States, in order to start joint operations in 2003. The new structure – organized around two main R&D centers, one in Cavaillon in France, and the other in Northboro in the U.S. – will serve as the launch pad for designing and developing vanguard concepts for plastic products.
Assuming that the market holds steady in 2003, sales volumes of ceramics and plastics should come in slightly higher than 2002, propelled by new product concepts and launches.
Operating margin is expected to significantly improve, with restructuring plans set up in 2002 starting to bear fruit. Efforts to run production sites at full capacity will be ongoing throughout the year, while a broad range of projects launched in 2002 will be completed during the first quarter.

The Division’s full-year target for 2003 is twofold: put organic growth back on track and sharply improve operating income irrespective of market conditions. Achieving such goals will require further restructuring as well as an earnings upswing in the semiconductor sector, which has already been retooled in line with the current environment. Other primary factors will be marketing and selling new products developed in 2002, coupled with targeting R&D efforts at a select number of major growth projects. 

### Abrasives Fo llowing a decade of acquisitions and external expansion, the main path of development for the Abrasives Division lies in organic growth.

2 002 was marred by difficult business conditions and the negative impact of the fall in value of the U.S. dollar and Brazilian real. However, while some markets continued to falter, such as aeronautics and tooling, others turned around, as was the case for the U.S. automotive sector and the automotive repair industry in Europe and the United States. On balance, Saint-Gobain Abrasives was resilient, outperforming several competitors and thereby strengthening its market positioning.
Supply chain management was honed in Europe, with major distribution centers set up in a bid to further enhance customer service.
Although sales figures were down compared with 2001, the picture was mixed across product lines.

• Sales of bonded abrasives, which are closely tied to the capital

spending cycle, were particularly hard hit in Europe and North America, due to the recession in the United States. Strong falls were • STGOBAIN RA02-CH3/GB 12/06/03 19:30 Page 58**59** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

recorded in the aeronautic segment, following the relocation of many European and U.S. foundries. Conversely, the U.S. automotive industry rallied strongly. In one of the most challenging environments of recent years, the Division gained market share, especially in the United States. R&D spending was kept up despite the harsher operating conditions, paving the way for the launch of new products in 2003 that set the standard in terms of quality, reliability, and accuracy.
• Coated abrasives felt the brunt of foundry relocations and fallout

in the home improvement market in Europe. On the other hand, the Division benefited from robust performance in the U.S. by both the automotive industry and automotive repair market (wood trimmings and panels). It also reaped the gains of an enlarged footprint in the Asian markets – mainly India and South-East Asia – as well as in South America. Restructuring operations conducted in North America further drove up the Division’s price competitiveness.

• Sales of thin grinding wheels inched back in the main European

markets, especially with respect to distribution operations. Price competitiveness improved, however. This was achieved by focusing capital expenditure on the twin goals of automating plants with high labor costs and increasing capacity at plants located in countries where labor costs are low. A particular focus in this regard was the plant at Shanghai. In the course of 2002, this business firmed up its leadership position.
• Superabrasives continued to suffer from softer demand during the

year. The Division is seeking to outplay rivals in 2003 by fully leveraging new products that are due to come on stream and reaping the benefits of significant capital expenditure programs aimed at automating production lines.
Major restructuring plans have been rolled out in Europe and North America, to create a leaner structure for the coming years that will help boost Saint-Gobain Abrasives’ price competitiveness.
Capital outlay was driven by the above twofold goal of automating plants with high labor costs and increasing capacity in countries where labor costs are low. At the same time, the Division is continuing to invest in upgrading information systems. Further substantial productivity gains were generated in 2002, both in Europe and the United States, offsetting the negative effects of lower sales volumes and inflation.
Assuming that markets will remain weak, the priorities for 2003 are furthering sales growth in Asia and bolstering market share across all business lines. Another primary focal point will be lifting the Division’s cost competitiveness, by expanding operations at the Po lish and Chinese manufacturing sites and pursuing automation programs in Europe and the United States. Finally, the Division will continue to roll out its strategy of fully leveraging production capacity and productivity gains. Norton abrasive sponge. • STGOBAIN RA02-CH3/GB 12/06/03 19:30 Page 59**60**

Over the full year, the Housing Products Sector continued down the same growth track as in the first half, boosting profitability and slightly outstripping the Group’s average growth rate. The Building Materials Division benefited from the buoyant construction market in the United States. The Building Materials Distribution Division continued to expand, fueled by organic gr owth and bolt-on acquisitions, and was thus able to deepen synergies. Operating margin surged to 4.9% against 4.5% in 2001 (including full-year contributions from Pipe Distribution operations). Pipe Division sales slipped slightly over the year however, but swung sharply upwards in the fourth quarter, led by the first deliveries under the Abu Dhabi contract.



## BUI LDING MATERIALS DISTRIBUTION

KEY CONSOLIDATED DATA 2 002 saw the Pipe Division’s distribution operations being integrated into the U.K. and German sales networks of the Building Materials Distribution Division. The restructuring pushed down sales of these networks ensuingly by 8.5%, from 

### € 460 million to 

### € 421 million.
External growth was an ongoing objective in 2002, with 41 bolt-on acquisitions, representing full-year sales of 

### € 3 82 million. At 

### € 30 5 m illion, the contribution to sales from external growth operations was up 2.8% against the previous year. Conversely, the move to refocus the Division’s distribution operations – begun in 2001 with the disposal of equipment leasing companies in the United States and industrial carpentry production facilities in Germany – pushed down sales by 1.5% to 

### € 1 60 million. Total sales for Building Materials Distribution advanced 4.1%. Based on a constant Group structure and excluding the negative 0.7% impact of exchange rates, sales rose 1.5%.



### Contribution to the Group 

### 2 002 2001 2000 % of net sales 36% 33% 28% % of operating income 21% 18% 16% % of cash flow from operations 15% 12% 12% 

# HOUSING PRODUCTS SECTOR

2002 2001 20 01 2 000 2000 (In € millions) pro forma pro forma 

### Net sales 10,953 10,521 10,0 61 8, 383 7,930 Operating income 534 475 490 415 422 Ca sh flow from operations 414 321 339 296 309 C apital expenditure 227 252 247 244 229 (In € millions) 

### 2 002 2001 2000 Net sales 15,102 14, 824 12,596 Operating income 1, 004 915 780 Ca sh flow from operations 814 768 702 C apital expenditure 401 429 469 Internal sales are deducted from sales data by Sector and by Division.

Pro forma data for 2001 and 2000 include Pipe Division distribution operations within the Building Materials Distribution Division. The new banner created from the merger between the Lapeyre and GME stores. • STGOBAIN RA02-CH3/GB 12/06/03 19:30 Page 60**61** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

Fo llowing two banner years in 2000 and 2001, there was a 1.5% contraction in the French renovation and home improvement markets, where the Division’s networks enjoy strong coverage. On the other hand, the French building industry saw a 1.2% increase in construction starts on private houses during the year. This market is dominated by tradespeople and small and medium-sized companies, who make up the bulk of Point.P and La Plateforme customers. New apartment block construction dipped 2.1%.
In a year when the market as a whole lost ground, Building Materials Distribution posted a rise in like-for-like sales in France, which accounts for nearly 50% of the Division’s total sales. This growth was primarily powered by market share gains achieved by all distribution networks, as well as the opening and renovation of new generation “Lapeyre, la maison” shops and additional La Plateforme outlets, bringing the total number to 14. External growth accounted for 

### € 13 0 m illion of sales. The number of Point.P stores has risen to 1,300, fueled by 24 acquisitions representing full-year sales of 

### € 18 6 m illion.
In the United Kingdom, Saint-Gobain Building Distribution (formerly Meyer) increased like-for-like sales, within a market that experienced underlying volume growth of some 2.3%. La Plateforme du Bâtiment launched two new outlets in 2002, in Birmingham and Cardiff. External growth operations were pursued, with ten acquisitions whose full-year sales amounted to 

### € 93 million. During the year, Pipe Distribution was impacted by its integration into the specialized networks of Saint-Gobain Building Distribution.
In a depressed German market which contracted by 7% in 2002, Raab Karcher pursued its strategy of growing market share in the renovation industry. Sales in Germany were boosted over the year, driven by external growth operations, particularly the September 20 01 acquisition of Keramundo, Germany’s leader in ceramic tiles*. Pipe Distribution operations are currently being fully integrated into the Raab Karcher network. Outside Germany, Raab Karcher strengthened market positions in Holland, Poland, Hungary and the Czech Republic through organic gr owth that was buoyed by sales from the three Plateforme du Batiment outlets in Warsaw and Katovice in Poland, and Budapest in Hungary. External growth operations were also pursued, via the acquisition of Czech builder’s merchant Bay Wa and Van Ditshuizen in Holland, representing 

### € 16 million and 

### € 30 million of sales, respectively. Point.P reinforced its customer base in Spain, with 18 new stores in Catalonia, and opened the first Plateforme outlet in Madrid. Lapeyre streamlined its international network in Switzerland and Belgium, having closed stores in Spain and Poland. It also restructured Okfens in Poland, specialized in the manufacture of PVC windows and joinery products.
In Brazil, Lapeyre vigorously expanded the store network of Te lhanorte, a mass-market distributor of fitted bathrooms. Three new Te lhanorte outlets were opened during the year. Rent X, an equipment leasing company, was sold in the United States. This was followed by the disposal at end-December 2002 of half of the distribution network of melamine-coated products, putting sales from this business at 

### € 80 million. A first Plateforme outlet was launched in Mexico at September 2002.

T otal operating income for Building Materials Distribution climbed 12 .7% from 

### € 47 5 million in 2001 to 

### € 534 million in 2002, including 

### € 15 million worth of Pipe Distribution losses. This performance, although partly eroded by substantial start-up costs, reflects 

### € 10 million worth fewer losses from Pipe Distribution operations, as well as synergies achieved by leveraging the Division’s reach in Europe. Operating margin climbed to 4.9% against 4.5% in 2001, including contributions from Pipe Distribution operations.

T he Division is aiming to steadily grow all its business lines in 2003 despite Europe’s weak trading conditions forecast by analysts. By building on momentum in its networks, continuing to seek out synergies, and ramping up bolt-on acquisitions and the launch of new sites, the Division expects to outpace market growth and boost profitability.

* Source: Saint-Gobain • STGOBAIN RA02-CH3/GB 12/06/03 19:30 Page 61**62**



## BUI LDING MATERIALS

KEY CONSOLIDATED DATA

Like-for-like Building Materials sales advanced 1.9%, marking an improvement on 2001, which was already a very good year. Growth was mainly led by the Mortars segment, where volumes and prices were up on 2001, especially in France, Spain and Brazil. In the United States, sales were on a par with 2001. Roofing products contracted slightly, but this was offset by sales volumes from other business lines. Sales prices held firm in the Tiles business, enabling this segment to report similar sales to 2001, which was a buoyant year.

On an actual structure basis, the Division’s sales eased back 3.5%, stemming from the fall in value of the U.S. dollar and Brazilian real.
Like-for like operating income jumped 19%, driven by operations in the United States, which benefited from improved raw materials yields and efficiency gains, as well as strong sales and increased productivity in the Mortars segment.
Operating income on an actual basis climbed 14% year-on-year, and operating margin rose to 11%.
Net cash flow from operations rose 5.4%, excluding the impact of the charge for asbestos-related litigation. Including the impact of this charge, net cash flow was 17% lower than in 2001. The Division nevertheless continued to pay down debt, by containing capital expenditure and working capital. T he outlook for construction in the U.S. remains favorable. In 2003, California-based Marshall – purchased at the end of 2002 –will be consolidated into CertainTeed’s Window’s business. In Europe, business is likely to remain stable, and may even contract slightly.

T he positive effect of ongoing productivity gains may be offset by rising prices for raw materials such as asphalt, PVC and cement, combined with unfavorable exchange rates. These factors will not facilitate the task of improving the Division’s operating income, which reached a record high in 2002.
Debt paydown will continue, however, reflecting the Division’s aim of keeping up its conservative capital expenditure strategy in 2003 and maintaining tight control over working capital.
A dual strategic goal has been set for the coming year: reinforce positions in core market segments and sub-segments, such as the United States, Central Europe and Brazil, while expanding into new markets in China and Eastern Europe. 

### Contribution to the Group 

### 2 002 2001 2000 % of net sales 10% 10% 11% % of operating income 13% 11% 9% % of cash flow from operations 9% 11% 10%

(In € millions) 

### 2 002 2001 2000 Net sales 3,074 3,184 3,067 Operating income 335 294 252 Ca sh flow from operations 247* 297 273 C apital expenditure 135 134 172
* After the € 1 00 million CertainTeed asbestos-related litigation charge (before tax) Wall facing renovation by Saint-Gobain Weber in Venice, Italy. • STGOBAIN RA02-CH3/GB 12/06/03 19:30 Page 62**63** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

To permit meaningful comparisons, 2001 figures have been adjusted to take into account the transfer to the Building Materials Distribution Division of distribution operations concerning all materials for pipe systems developed in Germany and the United Kingdom.

In 2002, the Pipe Division had to confront challenging economic conditions in its main markets of Europe and Brazil. Meanwhile, Distant Export sales stayed strong.

Overall sales decreased 3.8% to 

### € 1,344 million, of which 1.6% was linked to currency fluctuations primarily arising from devaluation of the Brazilian real.
In Europe, sales decreased nearly 4% on 2001. The decline was mainly ascribable to ongoing contraction in the construction and public works markets in Germany and a sharp slowdown in the water industry in Italy, due to market participants waiting for new tranches of European funding, scheduled to be freed up as of 2003. In other European countries, the Division managed to maintain sales on a par with 2001, notably in France and the United Kingdom, where firm pipe system sales mitigated weak public highway markets. Spain also held up well, with demand hovering around the same high levels of 2001.
By upholding sales prices and continuing to launch new products that stand out from the competition, the Division was able to limit the impact of harsh trading conditions. The “Natural” pipe offering was broadened in European markets; sales of the “Pluvial” rainwater drainage system took off in France; a new multi-material pipe connector offering was rolled out; and the product offer for pipe systems for the construction industry and highway products continued to be revamped. 

### Contribution to the Group 

### 2 002 2001 2000 % of net sales 4% 6% 6% % of operating income 5% 5% 4% % of cash flow from operations 6% 5% 5%



### 2002 2001 20 01 2 000 2000 (In € millions) pro forma pro forma 

### Net sales 1,344 1,397 1,782 1,392 1,778 Operating income 135 146 131 113 106 Ca sh flow from operations 153 150 132 133 120 C apital expenditure 39 43 48 52 67 Pro forma data for 2001 and 2000 exclude Pipe Distribution operations to reflect their transfer to the Building Materials Distribution Division. 

## PIPE

KEY CONSOLIDATED DATA • STGOBAIN RA02-CH3/GB 12/06/03 19:30 Page 63**64**

In Brazil, sales were hurt by lower spending on public infrastructure arising from the abrupt economic slowdown. Conversely, sales expanded in China, a strong growth market, powered by increased production capacity.
Distant Export sales were on a par with the high levels of 2001. Th is performance was led by the signing of the largest contract to date, for 460km of ductile cast-iron pipes designed to supply drinking water to Abu Dhabi. The first deliveries under this contract began in the fourth quarter. Other major contracts were won towards the end of the year, mainly in the Middle East, putting the order book at an all-time high at the start of 2003.
Operating income decreased to 

### € 13 5 million from 

### € 1 46 million the previous year, due to declining volumes. Operating margin dipped only slightly, however, from 10.5% to 10%, mainly attributable to firm sales prices and ongoing productivity gains at plants.
Capital expenditure was contained, representing a restricted 2.9% of sales, and exceptional expenses were lower than 2001, boosting free cash flow. T he Division continued to expand operations during the year, acquiring a foundry in the Czech Republic. This will be integrated into its manufacturing operations and will help sharpen the competitive edge of the connectors product line. Other developments in 2002 included the signing of an industrial partnership agreement with Xuzhou General Iron and Steel in China, the aim of which is twofold: to extend the Division’s product range and help to serve strongly growing demand in the Chinese market. Overall, the Division expects its production capacity in China to double as of 2003 thanks to the development of both the new partnership and its existing manufacturing facility. Another highlight of the year was the successful implementation of Enterprise Resource Planning (ERP) software in Germany and Brazil, which is due to be gradually rolled out in all other companies of the Division.

2 003 should see gains being reaped from the major contracts won in the Distant Export business line, buoyed by the Abu Dhabi contract. At the same time, sales are expected to rebound, especially in France and Italy. Two unknown factors nevertheless remain as 2 003 starts to unfold. One is the German market, which has trended downward over the past few years, and the other is Spain, where the market has been at a record high for two consecutive years. • STGOBAIN RA02-CH3/GB 12/06/03 19:30 Page 64At December 31, 2002, Saint-Gobain ranked twenty-fourth in France as regards market capitalization (

### € 9,535 million) and sixteenth as regards the volume of shares traded on the Premier Marché of Euronext Paris SA (Euroclear France SA code: 12 500), with an average of 1,682,752 shares traded daily in 2002. Saint-Gobain stock is also traded on the principal European stock exchanges of Frankfurt, London, Zurich (since 1987), Amsterdam, and Brussels (since 1988). The average transaction volume on these foreign markets was also large, notably on the London Stock Exchange. T he Saint-Gobain share is also included in the Dow Jones “Sustainable Development” indexes (DJS World Index and DJS European Index) and in the DJ Euro Stoxx 50 index of 50 leading European stocks. T he Saint-Gobain share forms part of the support shares on the traded options market of the Paris Stock Exchange (MONEP) and of the London Stock Exchange. The number of option transactions on the Paris Stock Exchange in Saint-Gobain shares was 2,576,045 lots in 2002, against 1,652,060 in 2001. **65** SAINT-GOBAIN **2 002 ANNUAL REPORT**  

# IV - STOCK EXCHANGE INFORMATION

High Low Year-end price Y

ear in € in € 

### 1 998 182. 48 99.70 120.28 1999 189.90 103.10 186.70 2000 195.70 116.50 167.30 2001 180.00 128.20 169.50 2002 * 49.05 18.57 27.96
(*) After the four-for-one stock split of June 27, 2002.

(*) After the four-for-one stock split of June 27, 2002.

Dividends which are not claimed within five years of the date of payment become statute-barred and are then paid to the State. Number of shares for Income per share Total income Yield based on which a dividend was paid in € closing price Dividend + tax credit for the year Y

ear 

### 2000 85,213,263 shares 4.30 2.15 6.45 3.86% 2001 85,258,628 shares 4.50 2.25 6.75 3.98% 2002 (*) 

### 34 1,010,680 shares 1.13 0.565 1.695 6.06% 

### DIVIDENDS HIGHEST AN D LOWEST SHARE PRICES (source: Euronext Paris SA)



# STOCK EXCHANGE INFORMATION

TRANSACTIONS SINCE JANUARY 2002 (source: Euronext Paris SA)

(*) After the four-for-one stock split of June 27, 2002. Paris Stock V olume of shares Market capitalization High Low Exchange (in € thousands) in € in € 

### January 9,642,076 1,624,970 176.50 162.20 February 11,537,468 1,955,600 180.50 161.00 March 11,094,990 2,032,420 189.80 173.60 April 10,235,755 1,918,240 194.80 179.40 May 9,998,522 1,930,260 196.20 185.40 June (*) 

### 20,442,993 2,806,690 190.40 169.10 July 74,091,650 2,597,520 46.10 24.50 August 59,997,794 1,721,280 32.70 24.23 September 49,966,232 1,349,500 30.74 21.94 October 80,463,477 1,822,070 27.13 18.57 November 56,958,538 1,491,420 31.18 20.60 December 34,672,358 990,520 32.20 26.11 Tota l 429,101,853 22,240,490 2 003 January 46,700,460 1,262,186 30.00 24.02 February 48,509,235 1,351,797 29.90 25.60 March (to 20) 32,352,700 812,478 28.51 22.40 • STGOBAIN RA02-CH4-5-6/GB 13/06/03 8:52 Page 65**66**



### S HARE PRICE (IN € ) (source: Datastream)



### NUMBER OF S HARES TRADED

**(in euros)** After the four-for-one stock split

**Saint-Gobain share price Paris Stock Exc hange (average trend)**  55 50 45 35 30 25 20 15 10 5 0 Dec. 24, 1986 Dec. 31, 2002

**(in thousands)** After the four-for-one stock split

20,000

15,000

10,000

5,000

0
Dec. 24, 1986 Dec. 31, 2002 (*) Four-for-one stock split on June 27, 2002. London Stock Volume Value Exchange of shares In £ thousands 

### January 3,863,569 402,421 February 2,516,861 263,931 March 2,750,274 308,745 April 1,484,389 172,317 May 845,7 89 1 01,493 June (*) 3,593,227 325,670 July 31,867,461 703,763 August 17,892,302 325,160 September 31,52 1,677 563,121 October 19,653,921 286,529 November 5,186,619 80,913 December 2,634,878 47,797 Total 123,810,967 3,581,860 

### TRANSACTIONS SINCE JANUARY 2002 (source: London Stock Exchange)

A total of 399,400 shares were traded on the Frankfurt Stock Exchange in 2002 (source: Datastream).
In 2001, the Group issued succesful public tender offers for the minority interests in its Spanish subsidiary Saint-Gobain Cristaleria and three Brazilian subsidiaries Saint-Gobain Canalização, Brasilit and Saint-Gobain Vidros SA. All four companies were de-listed following these offers.
In February 2002, a public tender offer was launched for the shares in Lapeyre held by minority interests, following which the Group held 94.6% of Lapeyre’s capital. In May 2002, the Group filed a public buyback offer, followed by a compulsory buyout, for the Lapeyre shares still held by the public.

T he only two Group companies that are currently listed on a regulatory stock exchange – other than Compagnie de Saint-Gobain – are Saint-Gobain Oberland, listed on the Frankfurt, Munich and Stuttgart stock exchanges, and Hankuk Glass Industries, listed in Seoul. • STGOBAIN RA02-CH4-5-6/GB 13/06/03 8:52 Page 66**67** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



### TRAN SAC TI ON S SINCE FEBR UARY 2002 (source: Euronext Paris SA)

Paris Stock Number of In € thousands High Low Exchange bonds in € in € 

### February 71,640 15,333,052 219.9 212.0 March 48,849 10,666,755 224.5 213.5 April 38,005 8,307,219 224.0 213.0 May 46,888 10,319,160 222.8 201.0 June 26,656 5,737,902 220.5 210.2 July 10,416 2,194,965 2 21.0 189.0 August 42,021 8,141,586 219.0 188.0 September 3,147 619,208 215.0 193.3 October 12,267 2,380,748 210.1 185.0 November 49,283 9,505,568 200.5 188.0 December 3,431 684,114 204.9 198.6 Tota l 352,603 73,890,277



### TRANSACTIONS SINCE JANUARY 2002 (source: Euronext Paris SA)

Paris Stock Number Market capitalization High Low Exchange of securities In € thousands in € in € 

### January 1,909 308,146 163.5 160.0 February 2,991 482,543 163.4 160.0 March 3,587 573,461 162.3 159.1 April 910 145,335 162.3 157.5 May 3,745 606,429 162.4 160.0 June 2,105 339,028 162.1 159.5 July 4,692 741,180 162.4 150.0 August 1,567 236,040 153.8 148.0 September 989 148,905 156.8 142.1 October 1,832 259,784 150.0 131.0 November 5,781 814,712 154.0 134.6 December 4,145 584,430 146.7 135.0 Total 34,25 3 5,239,993 

### OC ÉANE BONDS (CONVERTIBLE INTO EITHER NEW OR EXISTING SHARES) In February 2002, Compagnie de Saint-Gobain issued five-year “Océane” bonds that are convertible into either new or existing shares, for a total amount of 

### € 920 million. These securities have been listed on the Premier Marché of Euronext Paris SA since February 18, 2002.



### NON-VOTING PARTICIPATING SECURITIES In June 1983, Compagnie de Saint-Gobain issued non-voting participating securities for FRF 700 million with an attached warrant giving the right to subscribe to an additional FRF 700 million of non-voting participating securities. In all, 1,288,299 securities of FRF 1,000 have been issued. Their par value now stands at 

### € 152. 45 following the conversion into euros carried out in 1999. Since their issue the remuneration of the non-voting securities has always reached the maximum permitted under the terms of the prospectus, that is 125% of the average rate of interest of bonds (TMO). Based on the 2 002 results, the remuneration in 2003 should be at the same level. The remuneration is in fact fixed between 75% and 125% of TMO, based on the consolidated results of Saint-Gobain. The amount paid per security in 2002 in respect of the 2001 fiscal year was 

### € 10.21. • STGOBAIN RA02-CH4-5-6/GB 13/06/03 8:53 Page 67**68**



### TRANSACTIONS SINCE JANUARY 2002 (source: Euronext Paris SA) Paris Stock Vo lume Market capitalization High Low Exchange of securities (in € thousands) in € in € 

### January 169 26,062 157.0 153.9 Febr uary 1 07 16 , 427 157.0 151.0 March 40 6,160 154.0 154.0 April 112 17,277 156.0 152.0 May 59 9,216 156.2 156.2 June 139 21,944 160.0 157.8 July 22 3,412 160.5 150.3 August 25 4,023 160.9 160.9 September 300 48,044 161.0 160.0 October 309 47,548 154.9 152.0 November 200 30,405 152.1 152.0 December 340 51,393 152.7 151.0 Total 1,822 2 81,911 In April 1984, non-voting participating securities amounting to EC U 1 00 million were issued together with a warrant giving the right to acquire an equivalent number of participating securities in ECUs. In all, 1 94,633 securities of ECU 1,000 have been issued. Their par value is

now 

### € 1,000. The remuneration of the non-voting participating securities in ECUs comprises a fixed portion of 7.5% per annum applied to 60% of the par value of the security and a variable amount on the remaining 40% based on the consolidated net income of the previous year within the limits set by the prospectus. The total remuneration varies, depending on consolidated net income, between the average rate of interest on bonds (TMOE) less 0.50% and the TMOE plus 1.75%. The amount paid by security in 2002 was 

### € 71.57, paid in two installments. There are no other Compagnie de Saint-Gobain securities traded on a market other than shares, “Océane” bonds and non-voting participating securities.



## S HAREHOL DER INFORMATION

The services of the Financial Communications and Investor Relations Department are available to any person interested in the Group. This Department regularly issues a Letter to Shareholders, as well as a Shareholder’s Handbook.

In 2002, Compagnie de Saint-Gobain organized several meetings with its shareholders in France – in Montpellier in April, Lyon in May, Toulouse in June, Bordeaux in November and Lille in December. It also organized a meeting abroad for the first time – in Brussels in November. The Company also took part, for the seventeenth consecutive year, in the Décisions Patrimoine event held in October in Nantes (formerly known as Journées Investir ) as well as in the fifth Actionaria trade fair in Paris in November. In addition to the two annual meetings with analysts and journalists held in January and July in Paris and London at the time of the publication of estimated results, several other information meetings took place during the year in European cities where the Company’s shares are listed, as well as in the United States and Japan. A Minitel service 3615 code GOBAIN (

### € 0.15/min), (a videotext system operated by France Telecom) is available for shareholders, financial analysts, stockbroking firms, portfolio managers and individuals. This provides current information regarding the Group and the market price of its shares and enables shareholders to contact Saint-Gobain correspondents directly. Information on the Group can also be obtained from the Compagnie de Saint-Gobain website as can presentations to financial analysts.

T he following e-mail address has also been set up for shareholders:

Th rough BNP Paribas, Compagnie de Saint-Gobain makes available to its shareholders a number of complementary services to improve the administration of their fully registered shares. For further information, contact the Financial Communications Department at Compagnie de Saint-Gobain or: Saint-Gobain Financial Communications Department Les Miroirs F- 92096 La Défense Cedex To ll-free number (France): 0800 32 33 33

BNP Pa ribas Les Collines de l’Arche GIS - Emetteurs F- 75450 Paris Cedex 09 To ll-free number (in France) 0 800 03 33 33 To ll-free fax (in France) 0 800 77 25 85 www.saint-gobain.com

actionnaires@saint-gobain.com • STGOBAIN RA02-CH4-5-6/GB 13/06/03 8:53 Page 68**69** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

The breakdown of ownership and voting rights has changed in recent years. As a result of the policy of unwinding cross-shareholdings, Suez and Saint-Gobain have not had any capital ties since 1998 and Vivendi Universal has not held a stake in Saint-Gobain since May 2002. Institutional investors such as Caisse des Dépôts et Consignations have gradually taken over the role previously occupied by these two historic shareholders. Lastly, the Group Savings Plan has considerably increased both its ownership interest and its voting rights, since these amounted to only 4.1% and 5.8% respectively at the 1999 year-end, becoming the Company’s leading shareholder.
In September 2002, U.S.-based State Street Bank and Trust Company notified the Company that it had crossed the 5% disclosure threshold. In November, it announced that the shares held once again represented less than 5% of the Company’s capital. The shares concerned are held in accounts managed by State Street Bank and Tr ust Company on behalf of its clients. State Street Bank and Trust Company acts solely as custodian and does not own the shares. To the best of the Company’s knowledge, there are no pacts concerning the capital stock.
According to the December 31, 2002 identification of holders of bearer shares, the number of shareholders is estimated to be around 250 ,000. In accordance with the Company’s bylaws fully paid up shares registered for two years in the name of the same shareholder carry double voting rights. In addition, when the capital is increased by the capitalization of reserves, profits or issue premiums, a right to a double vote is granted on issue to each bonus share distributed free of charge to a shareholder owning shares giving rise to this right. Any share converted into bearer form or whose ownership is transferred loses the right to a double vote. Nevertheless, transfers resulting from an inheritance or from the liquidation of the joint estate of a husband and wife or donations inter vivos in respect of a husband, wife or parent entitled to share in the estate of an intestate, do not result in the loss of the right and do not interrupt the two-year period referred to above. These provisions were included in the Company bylaws following the authorization of the Ordinary and Extraordinary General Meeting of February 27, 1987.
At December 31, 2002 the number of voting rights was 358,837,078 for 341,010,680 shares. Given the 670,580 outstanding stock options at that date (1) the potential capital would be made up of 341, 681,260 shares assuming all rights were to be exercised and not taking into account any conversion of Océane bonds into new shares. If all of the bonds were to be converted, the Company’s capital would be made up of 359,205,072 new shares.

Th e percentage of the share capital held personally by members of the Board of Directors is below 0.5%. The same applies to Group Management. 

### OWNERSHIP STRUCTURE December 31, 2002 March 1, 2002 December 31, 2000 % interest Voting rights % interest Voting rights % interest Voting rights 

### Group Savings Plan 6.3% 9.6% 6.5% 9.4% 6.1% 8% Ca isse des Dépôts et Consignations 4.6% 4.4% 4.6% 4.3% - - BNP Paribas Group 1.0% 1.8% 2.1% 4% 3.0% 5.5% AXA Group 2.4% 3.8% 1.9% 3.3% 1.7% 1.7% Vivendi Universal 0 0 0.2% 0.2% 1.6% 3.0% Tr easury stock 1.5% 0 1.4% 0 2.3% 0 Other shareholders 84.2% 80.4% 83.3% 78.8% 85.3% 81.8% TOTAL 1 00% 100% 100% 100% 100% 100%



# SHAREHOLDERS CAPIT AL STOCKAt December 31, 2002, the capital stock of Compagnie de SaintGobain amounted to 

### € 1,364,042,720, breaking down into 34 1,010,680 ordinary shares (after the four-for-one stock split of June 27, 2002) with a par value of 

### € 4 each, compared to 85,258,628 shares with a par value of 

### € 16 at December 31, 2001. The reason why the number of shares was practically unchanged was due to the balance between the issue of 1,175,849 shares subscribed by employees under the Group Savings Plan and the issue of 113,320 shares following the exercise of the same number of stock options (1) on the one hand and, on the other, the cancellation of 4,953,708 shares in November 2002.

(1) Since 1997, these plans no longer involve subscription options on new shares but purchase options on existing shares held in treasury stock for this purpose. 

# V - SHAREHOLDERS, BOARD OF D IRECTORS, OFFICERS • STGOBAIN RA02-CH4-5-6/GB 13/06/03 8:53 Page 69**70**



## FI NANCIAL AUTHORIZATIONS
Fo llowing resolutions adopted by shareholders at the Ordinary and Extraordinary General Meeting of June 28, 2001, the Board of Directors has been granted authority, until August 2003, to issue, if it deems it advisable, any type of shares or share equivalents. The authorizations given are for a maximum aggregate par value of 

### € 76 0 m illion, and may involve a waiver of shareholders’ preemptive subscription rights (the authorization was partly used with a waiver of preemptive subscription rights in February 2002 for the Océane convertible bond issue described below).

The same shareholders’ meeting renewed for the same period the authority granted previously to the Board of Directors to grant share purchase options in a number not to exceed three percent of capital stock and to cancel up to 10% of capital stock before June 2003 (this authorization was partly used in November 2001 and November 2002).
Lastly, the Shareholders’ Meeting of June 28, 2001 renewed until August 2003 the authorization granted previously to the Board of Directors to issue shares subscribed by employees under the Group Savings Plan, up to a maximum aggregate par value of 

### € 64 million (the authorization was partly used in January 2002 and March 2003), and also granted authority to the Board to issue shares subscribed by employees of the Group’s U.S. subsidiaries via a company selected for the purposes of employee savings operations likely to be organized for their benefit, up to a maximum par value of 

### € 16 million (included within the previous 

### € 64 million limit). This latter authorization, renewed by the Ordinary and Extraordinary General Meeting of June 6, 2002, has not been used.


### ISSUE OF OCÉANE BONDS In February 2002, Compagnie de Saint-Gobain issued “Océane bonds” that are convertible into either new or existing shares, for a total amount of 

### € 920 million, at an annual interest rate of 2.625%. These bonds, maturing on January 1, 2007, have a nominal value of 

### € 210 each. They have been listed on the Premier Marché of Euronext Paris SA since F ebruary 18, 2002 (see page 88) and carry an early repayment optionthat can be exercised by the issuer as from February 18, 2005 if the SaintGobain share price exceeds 31.25% of the bond issue price, taking into account the stock-split. If all of the bonds were to be converted, this would give rise to the issue of 17,523,812 new Saint-Gobain shares. 

### C HANGES IN CAPITAL IN THE LAST FIVE YEARS Capital Number of shares 

### 5-98 FRF 9,019,220,500 90,192,205 Group Savings Plan: issue of 965,392 shares (at FRF 666) 12 -98 FRF 9,029,578,800 90,295,788 Subscription to 103,583 shares by the exercise of as many stock options 1-99 € 1, 37 6,550,410 90,295,788 Conversion into euros of capital stock 6-99 € 1, 307,722,916 85,781,000 Cancellation of 4,514,788 shares 6-99 € 1,3 72,496,000 85,781,000 Increase in the par value to € 16 6-99 € 1, 391,283,744 86,955,234 Group Savings Plan: issue of 1,174,234 shares (at € 97) 12-99 € 1, 395,788,000 87,236,750 Subscription to 281,516 shares by the exercise of as many stock options 6-00 € 1, 342,036,944 83,877,309 Cancellation of 3,359,441 shares 9-00 € 1, 3 73,336,528 85,833,533 Group Savings Plan: issue of 1,956,224 shares (at € 106) 11- 00 € 1, 361,990,544 85,124,409 Cancellation of 709,124 shares 12- 00 € 1, 363,412,208 85,213,263 Subscription to 88,854 shares by the exercise of as many stock options 6-01 € 1, 37 7,862,608 86,116,413 Group Savings Plan: issue of 903,150 shares (at € 1 33) 11-01 € 1, 362,189,600 85,136,850 Cancellation of 979,563 shares 12-01 € 1, 364,138,048 85,258,628 Subscription to 121,778 shares by the exercise of as many stock options 6-02 € 1, 382,951,632 86,434,477 Group Savings Plan: issue of 1,175,849 shares (at € 1 35.50) 6-02 € 1, 383,404,272 86,462,767 Subscription to 28,290 shares by the exercise of as many stock options 6-02 € 1, 383,404,272 345,851,068 Four-for-one stock split (par value of shares reduced from € 16 to € 4 ) 11- 02 € 1, 363,589,440 340,897,360 Cancellation of 4,953,708 shares 11- 02 € 1, 364,000,000 341,000,000 Subscription to 102,640 shares by the exercise of as many stock options 12-02 € 1, 364,042,720 341,010,680 Subscription to 10,680 shares by the exercise of as many stock options • STGOBAIN RA02-CH4-5-6/GB 13/06/03 8:53 Page 70**71** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



## G ROUP SAVINGS PLAN

T he Group Savings Plan (PEG) is a key feature of the social contract within the Group. It represents an excellent means of including employees in the Company’s successes and resulting profits.

T he Company implemented two standard Plans in 2002, one with a five-year term and the other with a ten-year term. The total amount of subscriptions to the PEG for the two plans came to 

### € 15 9 million, up from the 

### € 12 0 million recorded in 2001, corresponding to 1,175,849 shares.
In France, some 70% of employees have subscribed to the PEG through company mutual funds. The PEG has been extended to employees in twenty other European countries and six countries on other continents. In all, about 35,000 Group employees have now subscribed to the PEG.
At December 31, 2002, the Group Savings Plan held 6.3% of the Company’s capital stock and 9.6 % of its voting rights.
In January 2003, a new Group Savings Plan, offering the standard options of five- and ten-year terms, was launched, as well as an optionwith a five-year term leverage effect. The total number of SaintGobain shares open for subscription is 6,500,000 (See prospectus dated February 11, 2003 bearing COB approval No. 03-053).


## SAINT-GOBAIN STOCK OPT ION PLANS
Stock option plans have been approved by the Board of Directors every year since 1987; the plans for the years from 1987 to 1993 inclusive are now terminated, as the maximum term to exercise these options had been set at five years up to 1991 and eight years then ten years subsequently.
Saint-Gobain stock option plans are decided by the Board of Directors following a review of proposals presented by the Appointments Committee, which in 2002 included Bernard Esambert, Chairman, as well as Daniel Bernard and Bruno Roger.
In addition to Group Management (9 persons), the options granted in November 2002 concerned three categories of recipients: - Category A includes the Presidents of the Divisions, the General Delegates, and Functional Directors who are part of the Group Coordination Committee (18 persons); - Category B includes the main operations and functional managers of the Divisions and General Delegations (772 persons); - Category C includes high-potential executives as well as managers or employees who have achieved superior performance (569 persons). T he total number of beneficiaries of the November 2002 plan was therefore 1,368, on a par with 2001 when they numbered 1,351. In each of the above categories, the number of options granted is individually tailored according to responsibilities handled and performance achieved. The total number of options granted in 2002 was 3,785,500 (compared with 3,774,800 in 2001) and amounted to 1.1% of capital stock at December 31, 2002.
Since 1997, these plans no longer involve subscription options on new shares but purchase options on existing shares held in treasury stock for this purpose.
All discounts on the average share price for the period immediately preceding the date of grant of the options were discontinued in 1 999; the exercise price was therefore set at 100% of this average price, i.e. 

### € 23 .53 for the November 2002 plan.

T he main general conditions set by the Board for the exercise of these options are the following: - options must be exercised within ten years of the date of grant ;

- the minimum period before the options vest is either three or

four years;

- all rights to options are forfeited if the employee terminates

employment with the Group, unless expressly agreed otherwise by the Chairman of the Board and the Appointments Committee.
Specific exercise conditions are attached to some categories of beneficiaries. For instance, the Board of Directors has made the vesting of half of the options granted to Group Management andCategory A recipients in November 2002 conditional upon the SaintGobain share price outperforming the exercise price by more than 20% on the exercise date.

Fu rt her, in accordance with an internal rule instituted by the Board of Directors in 1997, Group Management and Category A persons who are members of the Group Coordination Committee and benefit from stock options were required at the end of 2002, if they had more than five years’ seniority in their current function, to own at least 2,800 registered Saint-Gobain shares and to increase their holdings by at least 400 shares per annum; Category B beneficiaries are required to own at least 400 registered shares at all times. • STGOBAIN RA02-CH4-5-6/GB 13/06/03 8:53 Page 71**72**

(*) T aking into account the four-for-one stock split of June 2002. (**) T he list of the 18 members of the Group Management is provided on page 80. (***) In addition, a specific grant of 5,000 purchase options at an exercise price of € 13 2.43 was carried out on March 30, 2000. 

### T he following three tables summarize key data on unexpired stock option plans at December 31, 2002, with the latter two dealing with the stock options of corporate officers and of the ten largest recipients. Date of Shareholder’s Meeting 6/14/1991 6/13/1995 6/13/1995 6/25/1997 6/25/1998 6/24/1999 6/24/1999 6/28/2001 6/28/2001 authorizing the plan 6/11/1992 Date of Board of Directors’ Meeting 9/15/1994 11/16/1995 11/21/1996 11/20/1997 11/19/1998 11/18/1999 11/16/2000*** 11 /22/2001 11/21/2002 T ype of options subscription subscription subscription purchase purchase purchase purchase purchase purchase Number of beneficiaries 127 121 161 182 218 393 780 1 351 1 368 T otal number of shares which 210,775 208,790 303,690 296,865 321,995 437,725 674,125 943,700 3,785,500 * may be obtained Of which: • number of shares that 78,700 83,800 121 ,200 137,600 137,000 134,500 202,600 231,200 936,200*

Group Management may obtain • number of corporate officers concerned 15 14 20 19 19 19 20 18 18 ** Effective date of options 9/15/1996 11/16/1997 11/21/1998 11/20/1999 11/19/2001 11/18/2002 11/16/2003 11/22/2004 11/22/2005

or 11 /20/2002 or 11 /1 9/2003 or 11 /1 8/2004 or 11 /1 6/2005 or 11 /22/2005 or 11 /22/2006 Expiry date 9/14/2002 11/15/2003 11/20/2004 11/19/2005 11/18/2006 11/17/2009 11/15/2010 11/21/2011 11/21/2012 Subscription/Purchase price € 81.56 € 70.13 € 85.68 € 11 3.88 € 118.15 € 1 62.53 € 15 0.89 € 16 0.87 €23.53 * Discount on average share price 20% 20% 20% 10% 5% 0 0 0 0 Number of options outstanding 24,445 41,150 126,495 226,226 302,670 417,725 659,425 923,700 3,785,500* at December 31, 2002

Stock purchase options granted to each corporate officer Number of options Exercise price Expiry date and options exercised in 2002 granted/Number of shares subscribed or purchased 

### Options granted in 2002 to each corporate officer by the issuer or by any Group company Jean-Louis Beffa 240,000 € 

### 23.53 (

### *) 

### November 2005 Gianpaolo Caccini 130,000 Options exercised in 2002 by each corporate officer Jean-Louis Beffa 0 - Gianpaolo Caccini 7,620 €

### 20.39 /€ 

### 17 .53 Sept 2002/Nov 2003

Stock purchase options granted to the ten largest recipients Number of options granted/ Unit price other than corporate officers and options exercised by these individuals Number of shares subscribed or purchased 

### Options granted in 2002 by the issuer and any Group company 479,000 €

### 23.53 (*) 

### granting options, to the ten largest recipients of options among employees of the issuer or any other Group company granting options (aggregate figure)

Exercise in 2002 of options granted by the issuer and any Group 103,900 Average weighted company granting options, to the ten largest recipients of options price among employees of the issuer or any other Group company €

### 25.91 granting options (aggregate figure)
(*) As mentioned above, the vesting of half of the options is conditional upon the Saint-Gobain share price

outperforming the exercise price by more than 20% on the exercise date. • STGOBAIN RA02-CH4-5-6/GB 13/06/03 8:53 Page 72**73** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

T he only other stock option plans on shares in Group companies, whether publicly traded or not, concern Lapeyre, whose last plan dates back to 1996 and ended in 2002.



### SAINT-GOBAIN S HARE BUYBACKS AND CANCELLATIONS In the course of 2002, the Company bought back 5,403,148 of its own shares in accordance with the authorizations granted by the Ordinary and Extraordinary General Meeting of June 6, 2002 (prospectus dated May 7, 2002 bearing COB approval No. 02-527). Of these Saint-Gobain shares held in treasury stock, the Board of Directors canceled 4,953,708 shares at its meeting of November 21 , 2002, using the authorization granted by the Ordinary and Extraordinary General Meeting of June 6, 2002.



# BOARD OF DIRECTORS
Compagnie de Saint-Gobain upholds the principles of corporate governance defined by the Committees chaired by Marc Viénot (of which Jean-Louis Beffa was a member) as well as by the Committee chaired by Daniel Bouton, and implements in full the recommendations that they have issued. 

## BOARD OF D IRECTORS At March 1, 2003, the membership of the Board of Directors of Compagnie de Saint-Gobain was as follows: 

### JEAN-LOUIS BEFFA Chairman and Chief Executive Officer. Jean-Louis Beffa, 61, is also Vice-Chairman of the Board of Directors of BNP Paribas, a Director of the Bruxelles Lambert Group, President of Claude Bernard Participations, and a member of the Supervisory Board of Le Monde, Le Monde Partenaires and Société Editrice du Monde. Within the Saint-Gobain Group, Jean-Louis Beffa is the permanent representative on the Board of Saint-Gobain PAM, a Director of Saint-Gobain Cristalería and Saint-Gobain Corporation, and joint Chairman of the corporate foundation Saint-Gobain Center for Economics Research. He is also Vice-Chairman of the Supervisory Board of the Pension Reserve Fund. He owns 172,000 Saint-Gobain shares. Les Miroirs - F - 92096 La Défense Cedex, France



### DANIEL BER NARD Chairman and Chief Executive Officer of Carrefour. Daniel Bernard, 57, is also a Director of Alcatel. Within the Carrefour Group, Daniel Bernard is Vice-Chairman of Dia S.A., Director of Comptoirs Modernes, Eterco, Grandes Superficies de Colombia, Presicarre, Carrefour Comercio e industria, Centros Comerciales Carrefour, Finiper and GS, as well as Chief Executive Officer ofCarrefour Americas Ltda, Chief Operating Officer of SISP and VicePresident of Vicour. He owns 4,400 Saint-Gobain shares. 6 avenue Raymond Poincaré - F - 75769 Paris Cedex 16, France 

### ISABELLE BOUILLOT Chairwoman of the Management Board of CDC Finance - CDC Ixis. Isabelle Bouillot, 54, is also a Director of San Paolo IMI, a member of the Supervisory Board of Accor and permanent representative on the Supervisory Board of CNCE. Within the Caisse des Dépôts Group, she is a member of the Supervisory Board of CNP Assurances, as well as Chairwoman, Supervisory Board member or permanent representative on the Board of Directors or Supervisory Boards of various subsidiaries of CDC Finance - CDC Ixis. She owns 1,200 Saint-Gobain shares. 26 -28 rue Neuve Tolbiac - F - 75658 Paris Cedex 13, France



### RO LF- E. BREUER Chairman of the Supervisory Board of Deutsche Bank AG. Rolf-E. Breuer, 65, of German nationality, is also Chairman of the Supervisory Board of Deutsche Börse AG, a member of the Supervisory Boards of Deutsche Lufthansa AG, E.ON AG and Bertelsmann AG, and a Director of Landwirtschaftliche Rentenbank. He is a member of the Consultative Committee of C.H. Boehringer Sohn, and Chairman of Bundesverband Deutsche Banken e.v. During 2002, Rolf-E Breuer was also appointed Vice-Chairman of the Supervisory Board of Siemens AG and a member of the Supervisory Board of Münchener Rück AG. He owns 4,516 Saint-Gobain shares. T aunusanlage 12, D-60262 Frankfurt am Main (Germany)



### PAUL ALLAN DAVID Professor of Economics at the Universities of Stanford and Oxford. Pa ul A. David, 68, a U.S. citizen, is Professor of Economics at Stanford University (USA), and Professor of Economics and History at the University of Oxford (United Kingdom). He does not hold any other directorships. He owns 800 Saint-Gobain shares. Stanford University, Department of Economics, Stanford, CA 94305- 6072 (USA) • STGOBAIN RA02-CH4-5-6/GB 13/06/03 8:53 Page 73**74**



### BERNARD ESAMBERT Vice-Chairman of the Supervisory Board of the Lagardère Group. Bernard Esambert, 68, is also Chairman of the Supervisory Board of Banque Arjil et Cie and Arjil & Associés Banque (Lagardère Group), a Director of Bolloré and Compagnie des Glénans (Bolloré Group), as well as of Hachette Filipacchi Medias and Pierre Fabre S.A. He is a member of the Supervisory Board of Paroma and Compagnie Financière Saint-Honoré. Bernard Esambert is also Chairman of the French Foundation for Epilepsy Research and of the Federation for Brain Research, Vice-Chairman of the Companies Institute (Institut de l’Entreprise), a member of the Board to the French stock market authorities (Commission des Opérations de Bourse), Director and Treasurer of Fondation Touraine and Association Georges Pompidou. He owns 4,200 Saint-Gobain shares. 43 rue Vineuse - F - 75016 Paris, France



### JEAN-MARTIN FOLZ Chairman of the Management Board of Peugeot SA. Within the PSA group, Jean-Martin Folz, 56, is Chairman of the Board of Directors of Automobiles Peugeot and Automobiles Citroën, and a Director of Banque PSA Finance, Peugeot Citroën Automobiles and Faurecia. He is also a Director of Solvay. He owns 1,200 Saint-Gobain shares. 75 avenue de la Grande-Armée -F - 75116 Paris, France



### ER ICD’HAUTE FEUILLE Fo rmer Chief Operating Officer of Compagnie de Saint-Gobain. Eric d’Hautefeuille, 63, is also a Director of Gaz de France. Within theSaint-Gobain Group, he is a Director of Saint-Gobain Emballage, SaintGobain Isover, Saint-Gobain Glass France, Saint-Gobain Cristaleria and International Saint-Gobain. He owns 4,000 Saint-Gobain shares. 46 quai Henri IV - F- 75004 Paris, France



### SYLVIA JAY Director General of the British Food and Drink Federation. Lady Jay, 56, is a British citizen. She does not hold any other directorships. She is a Lay member of the Disciplinary Committee of the General Council to the Bar, Governor of the British Nutrition Foundation, and trustee of the Pilgrim Trust, the Food Foundation UK, the Food and Drink Federation Pension Fund, and the Entente Cordiale Scholarships Scheme. She owns 800 Saint-Gobain shares. 6 Catherine Street, UK - London WC2B 5JJ (United Kingdom) 

### JOSÉ-LUIS LEAL MALDONADO Chairman of the Spanish Banking Association. José-Luis Leal Maldonado, 63, of Spanish nationality, is also a Director of CEPSA, Alcatel España and Renault España, as well as Saint-Gobain Cristalería. He owns 4,000 Saint-Gobain shares. C/Velasquez, 64-6e E-28001 Madrid (Spain)



### SEHOON LEE Co-Chairman of Hankuk Glass Industries and Hankuk Sekurit (South Korea). Sehoon Lee, 53, of South Korean nationality, is also the Chairman of the Management Committee of the Hanglas Group, Chairman of the Board of Directors of Saint-Gobain Hanglas (Asia), SL Investment Co and SL Advisory Co, as well as Vice-Chairman of the Korean Chamber of Commerce. He owns 1,000 Saint-Gobain shares. Sehoon Lee was appointed by the Board of Directors on November 21 , 2002 to replace Jean-Marie Messier, who resigned from his position on June 7, 2002. Y

oungpoong Building, 33 Seorin-dong, Jongno-gu, Seoul 100-752 (South Korea)



### J EAN-MAURICE MALOT Former President of the Saint-Gobain Employees’ and Former Employees’ Shareholders’ Association and Chairman of the Supervisory Board of the Group Savings Plan Mutual Funds. Jean-Maurice Malot, 63, is Chairman of Sivaq SA and Vice-Chairman of the Libourne Chamber of Commerce and Industry. He owns 800 Saint-Gobain shares. Les Miroirs - F - 92096 La Défense Cedex, France


### GÉRARD MESTRALLET Chairman and Chief Executive Officer of Suez. Gérard Mestrallet, 53, is also a member of the Supervisory Boards of AXA and Taittinger, and a Director of Crédit Agricole and Pargesa Holding. Within the Suez Group, Gérard Mestrallet is Chairman of Société Générale de Belgique and of Tractebel and Vice-Chairman of Hisusa and Sociedad General de Aguas de Barcelona. In 2002 he was also a Director of Ondeo and Frabepar, a member of the Supervisory Board of Casino, Crédit Agricole Indosuez, Métropole Télévision M6, SAGEM and Société du Louvre, and a permanent representative on the Board of Directors of Fimalac and Le Monde Entreprises. He owns 840 Saint-Gobain shares. 16 rue de la Ville-l’Evêque - F - 75008 Paris, France • STGOBAIN RA02-CH4-5-6/GB 13/06/03 8:53 Page 74**75** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



### MICHEL PÉBEREAU Chairman and Chief Executive Officer of BNP Paribas. Michel Pébereau, 61, is also a Director of Lafarge and TotalFinaElf, a member of the Supervisory Boards of AXA and Dresdner Bank, and a non-voting director of Galeries Lafayette. Within the BNP ParibasGroup, he is a Director of BNP Paribas UK. In addition, he is ViceChairman of the International Monetary Conference, a member of the International Advisory Panel of the Monetary Authority of Singapore, of the International Capital Markets Advisory Committee, and of the Federal Reserve Bank of New York, and Chairman of the French Banking Federation. He owns 820 Saint-Gobain shares. 3 rue d’Antin - F - 75002 Paris, France



### BRUNO ROGER Member of the Executive Committee of Lazard LLC and President of Lazard Frères SAS. Bruno Roger, 69, is also a Director of Cap Gemini Ernst & Young and Sofina, and a member of the Supervisory Boards of AXA and Pinault Printemps Redoute. Within the Lazard Group, he is the Chairman of the Supervisory Board of Eurazeo. He owns 48,040 Saint-Gobain shares. 12 1 Boulevard Haussmann - F - 75008 Paris, France
Chief Operating Officer: 

### GIANPAOLO CACC INI Gianpaolo Caccini, 64, is also a Director of Nexans and JM HuberCorporation. Within the Saint-Gobain Group, he is a Director of SaintGobain Corporation. He owns 4,820 Saint-Gobain shares.
Secretary to the Board of Directors: 

### BERNARD FIELD, Corporate Secretary of Compagnie de Saint-Gobain. 

## MEMBERSHIP OF THE BOARD OFD IRECTORS Acting upon a recommendation presented by the Appointments Committee, the Board of Directors reviewed the independence of each Director in compliance with criteria established in the Bouton report on corporate governance. It was subsequently concluded that in accordance with the above criteria, the following are independent Directors: Daniel Bernard, Isabelle Bouillot, Paul A. David, Bernard Esambert, Jean-Martin Folz, Sylvia Jay and Gérard Mestrallet. This corresponds to seven Directors out of fifteen. The Board does not include any Director that has been elected by employees (although does include a Director representing employee shareholders), or non-voting Directors. In accordance with the Company bylaws, each Director must own at least 800 shares (2)

. 

## RENEWAL OF THE BOARD OF DIRECTORS
The dates on which Directors were first elected are as follows: - Jean-Louis Beffa, Bernard Esambert and Bruno Roger: February 1987; - Rolf-E. Breuer and Michel Pébereau: June 1993; - Gérard Mestrallet: November 1995; - Jean-Maurice Malot: June 1997; - Isabelle Bouillot and José-Luis Leal Maldonado: June 1998; - Eric d’Hautefeuille: June 1999; - Daniel Bernard: June 2000; - Jean-Martin Folz: March 2001; - Paul A. David and Sylvia Jay: June 2001.

T he dates on which Directors’ terms of office expire are as follows:

- Bernard Esambert, Sehoon Lee, Jean-Maurice Malot and Gérard

Mestrallet: 2003 Annual Meeting.

- Jean-Louis Beffa, Isabelle Bouillot, Sylvia Jay and José-Luis Leal

Maldonado: 2004 Annual Meeting.

- Rolf-E. Breuer, Jean-Martin Folz, Eric d’Hautefeuille, Michel Pébereau

and Bruno Roger: 2005 Annual Meeting. - Daniel Bernard: 2006 Annual Meeting. - Paul A. David: 2007 Annual Meeting.
Acting upon a recommendation of the Appointments Committee, the Board of Directors will be submitting for approval the ratification of the following appointments or renewals at the next Annual General Meeting scheduled to take place on June 5, 2003:

Sehoon Lee
Sehoon Lee, 53, of South Korean nationality, is CoChairman of South Korea-based Hankuk Glass Industries and Hankuk Sekurit. After obtaining a doctorate in Philosophy from the University of Seoul and an MBA from Wharton (the University of Pennsylvania), Sehoon Lee joined the South-Korean Hanglas Group in 1977 as Chief Financial Officer. He occupied various positions within the group before becoming Chairman and Chief Executive Officer in 1995. Mr Lee is also the Chairman of the Management Committee of the Hanglas Group, Chairman of the Board of Directors of Saint-GobainHanglas (Asia), SL Investment Co and SL Advisory Co, as well as ViceChairman of the Korean Chamber of Commerce. He is a Chevalier de la Légion d’Honneur à titre étranger. He owns 1,000 SaintGobain shares. Sehoon Lee was appointed by the Board of Directors on November 21 , 2002. The sixth resolution provides for the ratification of his appointment and the renewal of his term of office.
(2) After the four-for-one stock split. • STGOBAIN RA02-CH4-5-6/GB 13/06/03 8:53 Page 75**76**

Gérard Mestrallet

Gérard Mestrallet, 53, is Chairman and Chief Executive Officer of Suez. He graduated from the Ecole Polytechnique, the Ecole de l’Aviation Civile and the E.N.A. After occupying various posts at the Ministry of the Economy and Finance, Gérard Mestrallet joined Compagnie de Suez as Chargé de Mission in 1984, before being appointed Deputy General Delegate in charge of industrial affairs in 1 986. In 1991 he became a Director and Chairman of the Management Committee of Société Générale de Belgique. In 1995, he was appointed Chairman and Chief Executive Officer of Compagnie de Suez, and then in 1997 Chairman of the Management Board of Suez Lyonnaise des Eaux. Mr Mestrallet is also a member of the Supervisory Boards of AXA and Taittinger and a Director of Crédit Agricole and Pargesa Holding. Within the Suez Group, Gérard Mestrallet is Chairman of Société Générale de Belgique and of Tractebel and Vice-Chairman of Hisusa and Sociedad General de Aguas de Barcelona. In 2002 he was also a Director of Ondeo and Fr abepar, a member of the Supervisory Board of Casino, Crédit Agricole Indosuez, Métropole Télévision M6, SAGEM and Société du Louvre, and a permanent representative on the Board of Directors of Fimalac and Le Monde Entreprises. Gérard Mestrallet owns 840 Saint-Gobain shares. Shareholders are invited to renew Gérard Mestrallet’s term of office in the seventh resolution.

Pierre Kerhuel
Pierre Kerhuel, 59, is a Civil Engineering Graduate of the Ecole des Mines de Nancy. He began his career in 1967 in the IT department of Everitube, which subsequently became Everite, part of the Building Materials Division of the Saint-Gobain Group. He went on to be successively appointed Head of Scheduling, Logistics, Sales Management and Products, before becoming Sales Director – France in 1977. In 1979 he was appointed as Marketing Director for Everitube and in 1981 Sales Director. Between 1985 and 2000, he worked as the Chief Executive Officer of Tuiles Lambert, before being appointed as Senior Vice-President of Saint-Gobain Terreal, part of Saint-Gobain’s Tiles business, in November 2000. He has been a member of the Supervisory Board of the Group Savings Plan Mutual F unds since December 1999 and in December 2002 became President of the Saint-Gobain Employees’ and Former Employees’ Shareholders’ Association, replacing Jean-Maurice Malot. Pierre Ke rhuel is also a Director of Toit Dak, a Belgium-based Saint-Gobain subsidiary. Shareholders are invited to elect Pierre Kerhuel as a Director in the eighth resolution.
Denis Ranque
Denis Ranque, 51, is Chairman and Chief Executive Officer of Thales. After graduating from the Ecole Polytechnique and the Ecole des Mines de Paris. Denis Ranque occupied various energyrelated posts at the Industry Ministry. He joined the Thomson Group in 1983 as Corporate Strategy Director and went on to become Aerospace Director for the Electronic Tubes Division. In 1986, he was appointed Director of the High Frequency Tubes Department of the division which was spun off in 1988 under the name Thomson Tubes Electroniques (TTE). In 1989, he became Chief Executive Officer of TTE, before taking up the position of Chairman and Chief Executive Officer in 1991. In 1992, Denis Ranque became Chairman and Chief Executive Officer of Thomson Sintra Activités sous-marines. He was then appointed by Thomson-CSF and GEC-Marconi as Chief Executive Officer of Thomson Marconi Sonar, a joint-venture created in 1996 operating in sonar systems. Since January 1998, DenisRanque has been Chairman and Chief Executive Officer of ThomsonCSF, which has now changed its corporate name to Thales. He is also Chairman of the Board of Directors of l’ Ecole Nationale Supérieure des Mines de Paris, a Director of the F ondation de l’Ecole Polytechnique and Chairman of the Cercle de l’Industrie since 2002. Shareholders are invited to elect Denis Ranque as a Director in the ninth resolution. • STGOBAIN RA02-CH4-5-6/GB 13/06/03 8:53 Page 76**77** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



## OP ERAT IO NAL STRUCTURE OF THE BOARD OF DIRE CTORS Acting upon the recommendations presented in the report by the Appointments Committee, at its July 25, 2002 meeting, the Board of Directors resolved that Jean-Louis Beffa, Chairman of the Board of Directors and holding the title of Chairman and Chief Executive Officer, would continue to be responsible for the general management of Compagnie de Saint-Gobain for the term of his directorship.
Acting upon the recommendation of the Chairman and Chief Executive Officer, the Board of Directors resolved that Gianpaolo Caccini would continue to exercise the duties of Chief Operating Officer.
In accordance with the recommendations of the Bouton report, it has been decided that the Board of Directors will issue internal rules of operation in the course of 2003. Details of these will be provided in the 2003 annual report.
In addition, following the request of the Appointments Committee, the Group has commissioned a specialized consultant to carry out a formal appraisal of the operations of the Board of Directors. The outcome of this appraisal will also be detailed in the 2003 annual report. A similar type of evaluation was conducted in 2000 (3) enabling the Board to approve and enact from that date relevant measures to provide Directors with information and documents necessary for performing their tasks, especially prior to Board meetings.
Since 2000, the Board of Directors has defined periods when Directors are requested to abstain from carrying out any transaction relating to Saint-Gobain shares. These periods cover the 45 days preceding publication of the estimated annual and interim consolidated financial statements, and the 15 days preceding publication of the final version of the annual and interim consolidated financial statements, as well as the trading day following each of said publications. The Group’s other top executives are also subject to these restrictions, as are employees with access to “sensitive” information.
During all other periods, transactions concerning Saint-Gobain sharesmay be carried out, except if certain specific information about SaintGobain or Saint-Gobain shares has not been rendered public and which might otherwise have had an impact on the Saint-Gobain stock price. In February 2003, in application of Commission des Opérations de Bourse (COB) regulation 2002-01, the Company published on the COB website declarations by the Group’s Directors and corporate officers with regard to transactions in the second half of 2002 concerning the subscription, purchase or sale of Saint-Gobain shares (excluding stock options) and any forward financial instruments relating to Saint-Gobain shares. According to these declarations, no such transactions had taken place.
Lastly, the Board of Directors held seven meetings during fiscal 2002. T he attendance rate at these meetings was 84%. 

## BOARD OF D IRECTORS’ COMMITTEES
FI NANCIAL STATEMENTS COMMITTEE • Michel Pébéreau, Chairman • Isabelle Bouillot • Gérard Mestrallet

Tw o-thirds of the Committee is composed of independent directors (see page 75).

Th e Financial Statements Committee performs all of the tasks recommended by the Viénot and Bouton reports.

T he Committee met four times in 2002. The attendance rate at these meetings was 92%.
At each meeting, the Committee reviewed issues with Group Management, the Finance Department and the statutory auditors.
Firstly, the Committee examined in detail prior to the Board meetings the estimated consolidated financial statements (January), the parent company’s accounts and the annual consolidated financial statements (March), as well as the estimated and final interim consolidated financial statements (July and September, respectively).
Also at each meeting, a summary of the main points brought up by the statutory auditors with the Finance Department during the preparation of the financial statements was reviewed in the presenceof the statutory auditors, notably concerning significant risks and offbalance sheet commitments.
At each meeting, the Committee was presented a status report on asbestos-related litigation in the United States. In conjunction with the statutory auditors, the Committee conducted a detailed review of the financial impact and accounting implications of asbestos- (3) See 2000 Annual Report, page 55. • STGOBAIN RA02-CH4-5-6/GB 13/06/03 8:53 Page 77**78**

related litigation on U.S. subsidiaries concerned and on the Group as a whole. This review was subsequently presented to the Board of Directors.
In addition, the Committee was informed by the auditors of the amount of fees received from Group companies during 2001 in relation to statutory audits, legal and tax advice, and advisory services. Fees for the latter two categories did not exceed 37% of the total amount of fees paid to one of the statutory auditors. The other statutory auditor only received fees related to audit work.
In addition, the Committee reviewed the budget for 2002 and considered several issues related to changes in accounting standards. It also reviewed the report on the operations of the T

reasury and Financing Department for the year ended December 31 , 2001, the treasury and financing operations of the Benelux Delegation in 2001 and the activity report of the Internal Audit Department for 2001 as well as this Department’s audit program for 2002 and activity report for the first half of 2002.

T he Committee presented its work to the Board of Directors at meetings held on January 24, March 28, July 25 and September 19, 2 002.



### APPOINTMENTS COMMITTEE • Bernard Esambert, Chairman • Daniel Bernard • Bruno Roger

Tw o-thirds of the Committee is composed of independent directors (see page 75).

T he Appointments Committee also performs the work of a remunerations committee, as provided for in the Viénot and Bouton reports.

T he Committee met four times in 2002. The attendance rate at these meetings was 83%.
During these meetings, the Committee reviewed Saint-Gobain’s stock options policy (4) and finalized its recommendations to the Board of Directors concerning the number of beneficiaries and their breakdown, as well as the general and specific conditions for exercising the options and the performance conditions to which a proportion of these options is subject. Prior to presenting them to the Board, the Committee reviewed the proposed allocations of stock options based on the objectives as defined, and finalized its proposals for options to be granted to Group Management. (5)

T he Committee also commissioned a specialized consultant to compare total compensation of corporate officers with the Company’s peers, based on the amount of the fixed compensation and on criteria used to determine the variable portion. The Committee presented its report to the Board of Directors and put forward recommendations concerning compensation of corporate officers for 2002 (see below).

In addition, the Committee reviewed the nomination of Sehoon Lee as Director and recommended his appointment to the Board.

T he Committee presented its conclusions to the Board of Directors at the meetings of March 28, July 25 and November 21, 2002. 

## REMUNERATION OF DIRECTORS
T he Ordinary and Extraordinary General Meeting of June 28, 2001 set the annual amount of attendance fees payable to Directors at 

### € 5 00,000.

T he Board of Directors decided to allocate the amount according to the following rules: - The Chairman of the Company does not receive attendance fees. - Each of the other members of the Board of Directors is allocated

an annual lump sum of 

### € 16 ,000, to which is added 

### € 2,200 for each meeting attended.

- In addition, each Director who is a Chairman or member of the

Financial Statements Committee or Appointments Committee is respectively allocated an annual lump sum of 

### € 4,600 or 

### € 1,600, to which is added 

### € 1,600 for each Committee meeting attended. - Lump-sum amounts are paid on an accruals basis when terms of

office begin or end in the course of the period. - Payments are made in arrears at the end of each half-year, and any

remaining balance in the allocated annual amount is distributed at the outset of the following year proportionally to attendance at Board meetings during the previous year.
Attendance fees paid for fiscal 2002 amounted to 

### € 5 00,000, unchanged from the previous year.

(4) Company policy on granting stock options and details of current stock option

plans are presented on pages 71 to 73. (5) See pages 71 and 72. • STGOBAIN RA02-CH4-5-6/GB 13/06/03 8:53 Page 78**79** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

T he net (6) individual amounts of attendance fees paid by the Company to its Directors (including both lump-sum and variable payments) for 2002 were as follows: Daniel Bernard 

### € 34,967, Isabelle Bouillot 

### € 39 ,820, Rolf-E. Breuer 

### € 22,535, Paul A. David 

### € 24 ,642, Bernard Esambert 

### € 46,396, Jean-Martin Folz 

### € 32,857, Eric d’Hautefeuille 

### € 35 ,666, Sylvia Jay 

### € 26 ,7 50 , José-Luis Leal Maldonado 

### € 22 ,535, Sehoon Lee 

### € 3,456, Jean-Maurice Malot 

### € 35 ,666, Jean-Marie Messier (7) 

### € 12 ,558, Gérard Mestrallet 

### € 37 ,777, Michel Pébereau 

### € 45,630, Bruno Roger 

### € 45,439. 

## REMUNERATION OF CORPORATE OFFICERSAttendance fees paid by the subsidiaries of Compagnie de SaintGobain to Directors representing the Group, particularly Group Management, are either transferred by the individual to the company which employs him or her, or are paid directly to the company.

Fo r companies in which the Group has interests but which are not members of the Group, Director attendance fees paid to the Chairman of Compagnie de Saint-Gobain are fully repaid to the Company.
Remunerations of Group officers are set with the dual aim, on the one hand of placing them on a par with remuneration levels in comparable industrial groups and on the other, structuring them in a way that ensures that the personal work of these officers contributes to growth in the Group’s results.

To define a remuneration structure meeting these two criteria, Group Management commissioned specialized consultants to produce specific studies.
Corporate officers’ remunerations have for several years included a variable portion which is directly linked to the officer’s personal involvement in leading an organization. This principle is gradually being rolled out to all European countries which had not yet developed pay schemes taking into account quantifiable data such as return on assets (ROA) or the return on investment (ROI), as well as more qualitative objectives such as the development of a specific business line or the setting up of Group operations in a new country.

T he remuneration of corporate officers is now clearly tied to management by objectives, requiring intense personal commitment on their part, with the possibility of significant changes in pay from one year to the next according to results.

T he total direct and indirect remuneration received in 2002 from Group companies by Group Management, as defined below, amounted to 

### € 13 million (the amount for 2001 was 

### € 12 .9 million), of which the variable portion represented 

### € 4.6 million (

### € 4.7 million in 2001).

T he gross fixed remuneration, as well as compensation in kind, paid in 2002 to Jean-Louis Beffa, Chairman and Chief Executive Officer, and to Gianpaolo Caccini, Chief Operating Officer, by Group companies (8) amounted respectively to 

### € 980,000 (

### € 776,689 on a comparable basis in 2001) and 

### € 490,000 (

### € 451,733 on a comparable basis in 2001). Their variable remuneration is mainly linked to changes in earnings per share (on a consolidated basis and excluding capital gains on asset disposals and share buybacks) from one year to the next, and secondly to growth in the Company’s dividend distributions in relation to the amount distributed the previous year. The estimated gross amount which should be paid for 2002 by Group companies (8) comes to 

### € 660,000 for JeanLouis Beffa (

### € 969,700 for 2001) and 

### € 330 ,000 for Gianpaolo Caccini (

### € 485,000 for 2001).
On a pro forma basis (9) , all of the above remunerations represent net compensation of approximately 

### € 770 ,000 for Jean-Louis Beffa and 

### € 415 ,000 for Gianpaolo Caccini.
Messrs. Beffa and Caccini do not receive any Director’s attendance fees for their functions as corporate officers carried out in Group companies (8)

.

(6) After deduction of the withholding tax for Messrs. Breuer, David, Leal Maldonado,

and Mrs. Jay, whose tax residence is outside France. (7) Fo r the period covering January 1, 2002 to June 7, 2002, the date on which

Jean-Marie Messier’s resignation came into effect. (8) Meaning all French and foreign companies either fully consolidated or accounted

for by the equity method in the Group’s financial statements. (9) Gross remuneration minus income tax and payroll charges, i. e. approximately

53% on a pro forma basis. • STGOBAIN RA02-CH4-5-6/GB 13/06/03 8:53 Page 79**80**



## GENERAL DE LEGATES O LIVIER DU BOUCHERON General Delegate to Benelux



### JEAN-CLAUDE BREFFORT General Delegate to Brazil and Argentina



### RO BERTO CALIARI General Delegate to Italy and Greece



### GILLES COLAS (6) General Delegate to the Asia-Pacific region



### JEAN LARONZE General Delegate to Poland 

### NIELS CH RISTIAN LÄRSEN General Delegate to the Nordic Countries and the Baltic States



### ANAND MAHAJAN General Delegate to India



### PAUL NEETESON General Delegate to Germany and Central and Eastern Europe


### JEAN-FRANÇOIS PHELIZON General Delegate to the United States and Canada 

### GUY RO LLI General Delegate to Mexico, V

enezuela and Colombia



### PATR ICK ROUX-VAILLARD (7) General Delegate to the United Kingdom and Ireland



### PIERRE TRACOL General Delegate to Spain, Portugal and Morocco 

# GROUP MANAGEMENT (as of March 1, 2003)

(6) Pa trick Roux-Vaillard up to January 31, 2003. (7) Pierre-André de Chalendar up to January 31, 2003. 

## EX EC UTIVE MANAGEMENT JEAN-LOUIS BEFFA Chairman and Chief Executive Officer



### GIANPAOLO CACC INI Chief Operating Officer



### JACQ UES ASCHENBROICH Senior Vice-President


### PIERRE-ANDRÉ DE CHALENDAR (1) Senior Vice-President



### PHILIPPE CROUZET Senior Vice-President


### EMILE FRANÇOIS Senior Vice-President


### JEAN-FRANÇOIS PHELIZON Senior Vice-President



### CHRI STIAN STREIFF Senior Vice-President



### BERNARD FIELD Corporate Secretary 

## EX EC UTIVE COMMITTEE JEAN-LOUIS BEFFA GIANPAOLO CACC INI PHILIPPE CROUZET BERNARD FIELD Secretary to the Executive Committee 

### LAURENT GUILLOT


## FUN CTIO NAL MANAGEMENT JEAN-CLAUDE LEHMANN V ice-President, Research



### NICOLE GRISONI-BACHELIER V ice-President, External Relations



### LAURENT GUILLOT V ice-President, Corporate Planning



### SONIA SI KORAV (2) V ice-President, Purchasing


## PR ESI DE NTS OF THE DIVISIONS JACQ UES ASCHENBROICH President, Flat Glass Division



### RO BERTO CALIARI President, Reinforcements Division 

### PIERRE-ANDRÉ DE CHALENDAR (3) President, Building Materials Distribution Division



### PETER DACHOWSKI President, Insulation Division



### MARTIN E LLIS President, Building Materials Division


### JÉRÔME FESSARD (4) President, Containers Division



### CLAUDE IMAUVEN President, Pipe Division



### CHRI STIAN STREIFF President, Ceramics & Plastics Division President, Abrasives Division (5)

(1) As from March 1, 2003. (2) As from July 1, 2002. (3) Emile François up to January 31, 2003. (4) Claude Picot up to January 31, 2003. (5) Gilles Colas, President of the Abrasives Division up to May 31, 2002. • STGOBAIN RA02-CH4-5-6/GB 13/06/03 8:53 Page 80**81** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

T he Statutory Auditors of the Company are: - PricewaterhouseCoopers Audit, 32 rue Guersant, F - 75017 Paris,

Fr ance, represented by Mike Moralee and Christian Marcellin, reappointed on June 25, 1998 for a term of six years expiring at the 2004 Annual General Meeting.

- La Société d’Expertise Comptable Economique et Financière

(SECEF), 3 rue de Turique, F - 54000 Nancy, France represented by Jacques Tenette, reappointed on June 29, 2000 for a term of six years expiring at the 2006 Annual General Meeting.

Saint-Gobain is a French public company regulated by articles L 210-1 et seq of the French Commercial Code, with its head office at Les Miroirs, 18, avenue d’Alsace, 92400 Courbevoie, France. It is registered with the Nanterre corporate register under reference 54 20 39 53 2 (activity code APE 741J), Siret number 54 20 39 5 32 00040.

T he Company’s corporate purpose may be summarized as the carrying out and management in France and elsewhere of all industrial, business, financial, plant, equipment and property operations related to industrial and commercial activities, notably through its French and foreign subsidiaries and affiliated companies (Article 3 of the bylaws). The financial year of the company is from January 1 to December 31. The company’s legal term expires on December 31, 2040 unless it is dissolved prior to this date or an extension is obtained.

T he official documents concerning the Company may be consulted at the head office, Les Miroirs, 18 avenue d’Alsace, F - 92400 Courbevoie, France, Financial Communications Department. 

## SP EC IAL CLAUSES IN THE BYLAWS
T hese are summarized below:



### CAPITA L STOCK The bylaws require the disclosure to the Company of each fractional direct or indirect holding of 0.50% of the capital or voting rights or any multiple of this percentage. The same obligation exists when a direct or indirect holding falls below one of these thresholds. Violation of this obligation can be sanctioned by the withdrawal of voting rights exceeding the undeclared fraction, for a period of two years from the date of disclosure of the undeclared holding, if one or more shareholders holding at least 3% of share capital or voting rights so request and this is included in the minutes of the General Meetings (Decisions of the General Meetings of June 23, 1988 and June 15, 1990).

Fu rt hermore, the Company can request information relating to the composition of shareholdings and the owners of its shares in accordance with legislation and regulations in force.



### BOARD OFD IRECTORS T he company has a Board of Directors made up of at least three members and not more than fifteen.
Each Director must own at least two hundred Company shares (8) (Ordinary and Extraordinary General Meetings of June 24, 1999 and June 28, 2001).



### GENERAL MEETINGS Any shareholder may attend a general meeting in person or be represented by proxy, subject to providing proof of identity and evidence of ownership of shares as indicated in the notice of meeting, at least five days before the date of the general meeting and in accordance with legal requirements concerning the attendance of shareholders at a general meeting. However the Board of Directors may decide to shorten or waive this mandatory lead time provided the change is applied to all shareholders equally.
A shareholder may only be represented by his/her spouse or by another shareholder. Legal entities which hold shares may be represented at meetings by their legal representatives or by any other person so designated by the legal representative.

T he voting rights attached to each share belong to the beneficial owner at all shareholders’ general meetings. Each shareholder has the right, without any limitation, to the number of votes attached to or represented by his shares.
However double voting rights are granted in respect of all fully paid up shares registered for two years in the name of the same shareholder. In addition, when the capital is increased by the capitalization of reserves, profits or issue premiums, a right to a double vote is granted on issue to each bonus share distributed free of charge to a shareholder owning shares giving rise to this right (Decision of the General Meeting of February 27, 1987). 

# STATUTORY AUDITORS OF THE COMPANY

(8) Before the four-for-one stock split.



# BYLAWS • STGOBAIN RA02-CH4-5-6/GB 13/06/03 8:53 Page 81**82**

Any share converted into bearer form or whose ownership is transferred loses the right to a double vote. Nevertheless transfers resulting from an inheritance or from the liquidation of the joint estate of a husband and wife or donations inter vivos in respect of a husband, wife or parent entitled to share in the estate of an intestate, do not result in the loss of the right and do not interrupt the two-year period referred to in the previous paragraph. Voting by mail is subject to the conditions and restrictions laid down in legal and regulatory provisions.



### APPRO PRIATION OF NET INCOME An amount of at least 5% of net income, less losses of prior years if applicable, will be appropriated so as to set up the legal reserve required by law. This appropriation ceases to be obligatory when the legal reserve is 10% of the capital. Further appropriations must be made if the reserve falls below 10% of the capital.
Distributable income is comprised of the net income for the year, less losses brought forward from prior years and any amount to be appropriated to reserves as a result of legal or statutory requirements, plus any retained earnings. Out of distributable income, the General Meeting appropriates successively: 1. Amounts judged appropriate by the Board of Directors to set up contingency or extraordinary reserves or to be carried forward to the following year; 2. Fr om any remaining balance, the amount necessary to pay

shareholders a preliminary dividend of 5% on their fully paid up and non-redeemed shares without however conferring a right, if the profit of a year does not permit such a distribution, to claim any such unpaid amounts in future years; 3. Amounts available after such appropriations to be distributed to

shareholders.

T he General Meeting which approves the financial statements for the year has the power to grant to each shareholder, in respect of all or part of a dividend or an interim dividend to be distributed, the choice of payment in cash or in shares.

No new regulated agreements were entered into in 2002.



# REGULATED AGREEMENTS ENTERED INTO DURING THE YEAR • STGOBAIN RA02-CH4-5-6/GB 13/06/03 8:53 Page 82

# VI - RISK MANAGEMENT **83** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



## MARKET RISKS: INTEREST-RATE, FOREIGN CURRENCY AND CREDIT RISKS

LIQUIDITY RISK In 2002, the Group scaled back its net debt to 

### € 7 billion from 

### € 7. 8 billion. It also extended the average life of its borrowings, with long-term debt increasing from 

### € 5.2 billion to 

### € 6.2 billion. US $ 3 00 million worth of bonds reached maturity and the Group carried out two new issues: a 

### € 920 million issue of Océane bonds (convertible into either new or existing shares) in February, maturing on January 1, 2007, plus a US$ 500 million bond issue in May, maturing on June 20, 2007. As of year-end 2002, substantially all of the Group’s long-term debt was composed of bond issues, amounting to 5.3 billion. The remaining am ount comprised private issues, medium-term notes, perpetual loans and finance leases.
At the same date, the Group’s short-term debt totaled 

### € 2.1 billion,

versus 

### € 4.2 billion a year earlier. It mainly consisted of bank overdrafts, treasury notes, euro commercial paper and US commercial paper, and the portion of long-term debt maturing in 2003.

T he reduction in total debt on the one hand and the extension of the average life of borrowings on the other enabled the Group to reduce short-term net debt (debt due in one year less cash and cash equivalents) from 

### € 2.5 billion to below 

### € 800 million.
In addition to the Group’s recourse to US commercial paper, euro commercial paper, treasury notes and medium-term notes, Compagnie de Saint-Gobain has access to confirmed lines of credit (syndicated loans and bilateral lines) totaling 

### € 2.5 billion at December 31, 2002. This represents more than three times the amount of net debt maturing in 2003. None of the lines were drawn down in 2002.
A breakdown of long-and short-term debt is provided by type and maturity in Note 20 to the consolidated financial statements. Details of amounts, currencies, and early repayment terms and conditions of the Group’s financing programs and confirmed credit lines are also discussed in this Note.



### INTEREST-RA TE RISK Interest rate risk relating to the Group’s total net indebtedness is managed by the Treasury Department of Compagnie de Saint-Gobain. Net indebtedness is determined by means of a reporting system in which subsidiaries provide a breakdown of debt between long- and short-term and fixed and variable rate, together with details on interest rates and hedging instruments by line of debt. Subsidiaries hedge risks on debt exclusively with Compagnie de Saint-Gobain, the Group parent company.

The main objective of managing overall interest rate risk on the Group’s consolidated net debt is to fix the cost of the medium-term debt and to optimize annual borrowing costs. The Group’s policy defines which derivative financial instruments can be used to hedge the debt. These instruments may include rate swaps (either in the same currency or cross-currency swaps), options and forward rate agreements. These instruments are traded over-the-counter with counterparties meeting minimum rating standards as defined in the Group’s financial policy.

The weighted average interest rate on total debt after giving effect to hedging instruments (rate swaps and caps) was 4.7% for the year ended December 31, 2002 (5% in 2001 and 5.8% in 2000).
After giving effect to hedging instruments, at December 31, 2002, 77 % of Group debt was at fixed rates of interest and 23% was at variable rates. A 1% rise in interest rates would have a 

### € 15 .8 million impact on net interest expense in 2003.
Net debt at December 31, 2002 after the effect of cross-currency swaps was 55% in EUR, 27% in USD and 16% in GBP, with the remaining amount in other currencies.

De tails concerning interest rates on the Group’s main borrowings and hedging instruments (rate swaps and options) are provided in Note 21 to the consolidated financial statements, as is the Group’s debt structure before and after using said hedging instruments.



### FOREIGN CU RRENCY RISK T he Group’s policy on currency risk consists of hedging commercial transactions carried out by Group entities in currencies other than their functional currencies. Compagnie de Saint-Gobain and its subsidiaries may use options and forward contracts to hedge exposure arising from commercial transactions. Options are set up exclusively with Compagnie de Saint-Gobain, the parent company of the Group, which then takes a reverse position on the market.
Most forward contracts are for periods of around three months. However, forward contracts taken out to hedge firm orders may have terms of up to two years. Subsidiaries are authorized to enter into forward contracts with their banks for periods of less than two years. • STGOBAIN RA02-CH4-5-6/GB 13/06/03 8:53 Page 83**84**

The majority of transactions are hedged, invoice by invoice or order by order, with Saint-Gobain Compensation, the entity set up to manage the Group’s currency risks. Saint-Gobain Compensation hedges these risks solely by means of forward purchases and sales of foreign currencies. This enables companies to hedge exposure arising from commercial transactions as soon as the risk emerges. Saint-Gobain Compensation reverses all its positions with Compagnie de Saint-Gobain and does not therefore have any open positions.

T he exposure of other Group companies to currency risks is hedged with Compagnie de Saint-Gobain as soon as the latter receives orders sent by the subsidiaries or by cash pools of the National Delegations. Exposure may also be hedged with the banks of the subsidiaries concerned. Total unhedged transactions for these companies amounted to 

### € 48 million at December 31, 2002. If the euro dropped by 1 cent against the Group’s trading currencies, the impact would be less than 

### € 1 million, which is not material at the level of the consolidated financial statements.



### EQUITY RISK T he Group is not exposed to equity risk, as it always favors moneymarket funds and/or bonds when purchasing mutual funds or equivalents, and is therefore not exposed to any equity risk on its short-term investments.

T he Group previously held a portfolio of shares in listed companies. All of these shares have been sold, apart from 12.3 million Vivendi Universal shares. These shares are carried in the balance sheet at their historical cost of 

### € 13 .88 per share, representing a total of 

### € 171 million.



## INDUSTRIAL AND ENVIRONMENTAL RISKS Substantially all of the Group’s industrial and environmental risks represent one type of risk, stemming from the storage of certain types of hazardous materials.
Nine Group sites are classified as presenting “major technological risks” within the meaning of European and North American regulations, and are therefore subject to specific legislation that is carefully monitored by the regulatory authorities. In 2002, eight Saint-Gobain sites were classed in the “Seveso” category in Europe, as a result of storage of certain hazardous materials. A site based at Lake Charles in the United States falls under both the Risk Management Program Rule and the Emergency Planning and Community Right to Know Act, as it uses vinyl chloride. Sites classified as “Seveso” in Europe are as follows:



### FR

ANCE Abrasives Division: Conflans Saint-Honorine site: Seveso low threshold (storage of phenolic resin and natural and sodium cryolite aluminium fluoride) Containers Division: Mers-les-Bains site: Seveso low threshold (storage of oxygen and hydrodgen)
Flat Glass Division: Bagneaux-sur-Loing site: Seveso low threshold (storage of arsenic in the form of arsenious anhydrid)



### GERM ANY Containers Division: Neuburg site: Seveso low threshold (storage of liquid petroleum gas (LPG)



### DENMARK Insulation Division: Vamdrup site: Seveso low threshold (storage of phenol and formaldehyde)



### SPAIN Insulation Division: Azuqueca de Henarès site: Seveso low threshold (storage of phenol and formaldehyde)



### F

INLAND Insulation Division: Hyvinkää site: Seveso high threshold (storage of more than 200t of phenol and formaldehyde – 230t and 400t, respectively)



### SWEDEN Insulation Division: Vrena site: Seveso low threshold (storage of liquid petroleum gas – LPG)
Specific risk prevention and safety measures have been put in place at each of these sites.
Once the plants identify the risk of accidents and the potential impact on the environment they take preventive measures relating to the design and construction of storage facilities, as well as conditions of use and maintenance. Crisis plans have been set up and are currently being finalized. In early 2003, the Group launched a system aimed at closely monitoring all of the above sites.

T he Group’s other major industrial facilities are subject to a permits regime and are thus regularly monitored by local regulatory authorities. • STGOBAIN RA02-CH4-5-6/GB 13/06/03 8:53 Page 84**85** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



## LEGAL RISKS

The Group is not subject to any specific regulations which could have an impact on its situation, although companies running industrial sites are generally required to comply with specific national legislation and regulations that vary from country to country. In the case of France, for example, Group sites are subject to laws and regulations on regulated facilities (installations classées). The Group has no significant technical or commercial dependence on any other companies, is not subject to particular confidentiality restrictions, and has the assets it requires to run its operations.
Compagnie de Saint-Gobain is assessed for income tax on its consolidated fiscal income as provided for under article 209 quinquies of the French Tax Code (CGI) as well as the integrated tax (Intégration Fiscale) system as provided for under article 223 A et seq. of the CGI. The tax consolidation agreement in force covers the fiscal years 2001, 2002 and 2003.

The legal risk to which the Group is most exposed is asbestos-related litigation, both in France and – above all – in the United States.

In France, at December 31, 2002, almost 400 lawsuits based on “inexcusable fault” (“faute inexcusable”) had been filed for asbestosrelated occupational diseases against Everite and Saint-Gobain PAM, which in the past had carried out fiber-cement operations. In addition, 63 suits based on inexcusable fault had been filed against seven other French companies in the Group, in particular involving circumstances where equipment containing asbestos had been used to protect against heat from furnaces. At December 31, 2002 compensation due from the first two companies amounted to a total of 

### € 4 million.
Further details of these claims are provided in Note 31 to the consolidated financial statements.

In the United States, the total number of new asbestos-related claims filed - principally against CertainTeed – increased significantly in 20 01 and 2002. Before 2001 approximately 20,000 new claims were filed against CertainTeed per year. The multiplication of class actions, which had previously been rare, drove an increase in new claims to 60,000 in 2001 and approximately 67,000 in 2002. Almost all of the claims against CertainTeed are settled out of court. Some 44,000 such settlements were entered into in 2002, leaving some 107,000 claims outstanding at December 31, 2002, compared with 84,000 a year earlier.

The average individual cost of settlement based on all claims settled decreased to US$1,955 in 2002, from US$2,800 a year earlier. However, in view of the significant increase in the number of new claims filed over the last two years, the overall cost for the Group has also risen considerably. In view of all of these developments and taking into account insurance coverage available, the Group recorded a 

### € 100 million charge in 2002 to make provision for such claims. This amount represents 6% of net income excluding profit on sales of non-current assets and 5% of consolidated free cash flow for 2002. At December 31 , 2002 the Group’s total cover for asbestos-related claims against CertainTeed in the United States amounted to 

### € 426 million, comprised of insurance coverage available at that date and the provision referred to above. This cover represents approximately 4 to 5 years of total compensation payments based on the current rate of new claims arising and average unit cost of settlement.

Further details on asbestos-related claims in the United States is provided in note 31 to the consolidated financial statements.



## IN SURANCE – COVERAGE OF POTENTIAL RISKS Insurance coverage is structured on a Group-wide basis, with the Divisions’ and Delegations’ Insurance Correspondents liaising between the Corporate Insurance Office and operating units. In the case of recurring risks with limited financial consequences, insurance coverage is contracted locally.
Saint-Gobain entities that may be potentially exposed to significant losses may be authorized to contract insurance coverage locally, but are required to comply with Group doctrine, which takes into account conditions in the insurance market. Insurance policies are centrally coordinated and monitored by the Risks and Insurance Department, which defines Group doctrine.

Tw o types of policy are covered by the Group doctrine: property damage policies, which mitigate losses resulting from damage to buildings, assets and inventories; and liability policies, which allow entities to protect themselves, within the limits set by insurers and in as cost-efficient a manner as possible, against the financial consequences of third-party liability claims arising from operations and products.
Property damage is insured in parallel with business interruption. T he Group has named perils policies in every country where it conducts operations, except when local regulations do not permit this type of policy, such as in Brazil, China and India.

Th ird-party liability is covered by two insurance programs, one for the subsidiaries of Saint-Gobain Corporation and the other for all • STGOBAIN RA02-CH4-5-6/GB 13/06/03 8:53 Page 85**86**

non North American subsidiaries. The United States and Canada have named perils coverage. Liability cover for all other countries is structured in such a way that the Company’s named perils policy will cover subsidiaries that have no or insufficient local coverage.
As regards property-related insurance, there are cases when losses arising from natural catastrophes, pollution, information technology viruses and terrorist acts are not covered, or have low coverage.

W ith respect to liability insurance, there are cases when bodily injury or third-party property claims arising from gradual pollution, terrorism, or sub-standard performance of delivered products, are not covered or have low coverage, either because coverage is not available, or because the insurance costs are too high.

It has not been deemed advisable to disclose the breakdown of costs and coverage level for each of the above risks, due to reasons relating to confidentiality and the complex nature of the insurance programs.
Joint ventures and companies not controlled by the Group are not included in the above programs. They arrange insurance cover themselves and have lower coverage levels. • STGOBAIN RA02-CH4-5-6/GB 13/06/03 8:53 Page 86**87** SAINT-GOBAIN **2 002 ANNUAL REPORT**  

# ST A TEMENTS FI NANCIAL

Consolidated financial statements F inancial statements of Compagnie de Saint-Gobain (parent company) • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 87**88** 

# VII - CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS AT DECEMBER 31

A SSETS Notes 2002 2001 2000 (In € millions) 

### Goodwill (3) 5,521 6,065 6,004 Other intangible assets, net (4) 1,914 1,805 1,766 7,435 7,870 7,770 Property, plant and equipment (5) 22,069 23,258 21,938 Less accumulated depreciation (5) (12,687) (12,909) (11,825) 9,382 10,3 49 10,113 Investments in equity investees (6) 114 169 393 Investments, at cost (7) 144 171 178 Non-current marketable securities (8) 175 176 310 Other non-current assets (9) 1,590 943 766 2,023 1,459 1,647 Non-current assets 18,840 19,678 19,530 Inventories (10) 4,664 5,075 4,752 Trade accounts receivable, net (11) 4,264 4,552 4,643 Other accounts receivable (12) 1,010 1,228 1,161 Short-term loans (20) 162 245 139 Marketable securities (8) 469 406 530 C ash and cash equivalents (20) 739 958 666 Current assets 11,308 12,464 11,891 Tota l assets 30,148 32,1 42 31,421

T he accompanying notes are an integral part of the consolidated financial statements. • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 88**89** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

LIABILITIES AND SHAREHOLDERS’ EQUITY Notes 2002 2001 2000 (In € millions) 

### Cap ital stock (at Dec. 31, 2002 made up of 341,010,680 € 4 par value shares; at Dec. 31, 2001: 85,258,628 € 16 par value shares, at Dec. 31, 2000: 85,213,263 € 16par value shares) 1,364 1,364 1,363 Additional paid-in capital and legal reserve 2,264 2,249 2,270 Retained earnings and net income for the year 9,204 8,540 7,760 Cumulative translation adjustments (1,438) (161) (310) Tr easury stock (13) (79) (67) (182) Shareholders’ equity 11,315 11,925 10,901 Minority interests (14) 227 423 823 Net equity of consolidated entities 11,542 12,348 11,724 Non-voting participating securities (15) 391 391 391 P ensions and other post-retirement benefits (16) 2,353 1,836 1,752 Deferred tax liability (17) 696 685 709 Other liabilities (18) 1,084 1,255 1,318 Long-term debt (20) 6,238 5,247 4,999 Shareholders’ equity and non-current liabilities 22,304 21,762 20,893 Trade accounts payable 3,352 3,425 3,378 Other payables and accrued expenses (19) 2,348 2,801 2,597 Current portion of long-term debt (20) 487 991 1,859 Short-term debt and bank overdrafts (20) 1,657 3,163 2,694 Current liabilities 7,844 10,380 10,528 Tota l liabilities and shareholders’ equity 30,148 32,142 31,421

T he accompanying notes are an integral part of the consolidated financial statements. • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 89**90**



# CONSOLIDATED STATEMENTS OF INCOME

T he number of shares at December 31, 2001 and 2000 has been multiplied by four to reflect the four-for-one stock split of June 27, 2002 in order to facilitate comparisons with the figure at December 31, 2002. T he accompanying notes are an integral part of the consolidated financial statements. Notes 2002 2001 2000

(In € millions) 

### Net sales 30,274 30,390 28,815 Cost of sales (22,670) (22,692) (20,669) Gross margin 7,604 7,698 8,146 Selling, general and administrative expenses including research (22) (4,712) (4,774) (5,209) Other operating costs (23) (310) (243) (244) Operating income 2,582 2,681 2,693 Dividend income 22 32 24 Interest and other financial charges, net (24) (504) (603) (612) Non-operating costs (25) (252) (122) (158) Income before profit on sales of non-current assets and taxes 1,848 1,988 1,947 Profit on sales of non-current assets, net (26) 3 84 584 Provision for income taxes (17) (612) (721) (791) Net operating income from consolidated companies before amortization of goodwill 1,239 1,351 1,740 Amortization of goodwill (169) (184) (182) Net operating income from consolidated companies 1,070 1,167 1,558 Share in net results of equity investees (6) 4 7 84 Net income before minority interests 1,074 1,174 1,642 Minority interests in consolidated companies (14) (34) (40) (125) Net income 1, 040 1,134 1,517 Earnings per share (in € ) We ighted average number of shares in issue 336,727,133 334,139,384 332,216,856 Income before tax and minority interests per share 5.01 5.67 7.32 Basic earnings per share 3.09 3.39 4.57 We ighted average number of shares assuming full dilution 354,006,928 335,593,088 333,425,704 Income before tax and minority interests per share (diluted) 4.82 5.65 7.30 Diluted earnings per share 2.98 3.38 4.55 Number of shares in issue at December 31 341,010,680 341,034,512 340,853,052 Income before tax and minority interests per share 4.94 5.56 7.14 Earnings per share 3.05 3.33 4.45 • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 90**91** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



# CONSOLIDATED STATEMENTS OF CASH FLOWS

T he accompanying notes are an integral part of the consolidated financial statements. 2 002 2001 2000

(In € millions) 

### Net income 1,040 1,134 1,517 Minority interests 34 40 125 E xcess of income of equity investees over dividends (1) 7 (46) Depreciation and amortization 1,603 1,636 1,631 Profit on sales of non-current assets (3) (84) (584) Cash flows from operations 2,673 2,733 2,643 (Increase) decrease in inventories 97 (167) (224) (Increase) decrease in trade accounts and other accounts receivable 329 219 40 Increase (decrease) in trade accounts payable, other payables and accrued expenses (63) (92) (73) Changes in income taxes payable and deferred taxes (120) 8 141 Other (50) (159) (115) Net change in working capital 193 (191) (231) Cash flows from operating activities 2,866 2,542 2,412 Purchases of property, plant and equipment (1,431) (1,430) (1,722) Acquisitions of businesses in 2002: (599); in 2001: (764); in 2000: (2,913), net of cash acquired (575) (717) (2,709) Disposals of consolidated investments, net of cash 104 140 943 Disposals of investments at cost 19 379 497 Acquisitions of investments at cost (31) (52) (59) Disposals of tangible and intangible assets 201 141 105 (Increase) decrease in marketable securities (100) 115 67 Other (236) (68) 114 Cash flows from investing activities/divestments (2,049) (1,492) (2,764) Issues of capital stock 164 129 213 Minority interests’ portion in capital stock increases of subsidiaries 15 13 28 Increases in treasury stock (159) (31) (375) Dividends paid (378) (357) (284) Dividends paid to minority shareholders of consolidated subsidiaries (19) (30) (91) (Increase) decrease in short-term loans 222 (16) 61 Increase (decrease) in long-term debt 777 (805) 1,152 Increase (decrease) in bank overdrafts and other short-term debt (1,597) 335 (425) Cash flows from financing activities (975) (762) 279 Net effect of exchange rate changes on cash and cash equivalents (61) 4 10 Increase (decrease) in cash and cash equivalents (219) 292 (63) Cash and cash equivalents at beginning of year 958 666 729 Cash and cash equivalents at end of year 739 958 666 • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 91**92**

* Before the four-for-one stock split At December 31, 2002 the number of shares making up Compagnie de Saint-Gobain’s capital stock totaled 341,010,680. In accordance with the authorizations to increase capital stock granted by the Ordinary and Extraordinary Shareholders’ Meetings of June 28, 2001 and June 6, 2002, the Board of Directors may issue, in one or several stages, up to 190 million new shares with or without preemptive or prioritysubscription rights for Compagnie de Saint-Gobain shareholders (ninth and tenth resolutions of the Meeting of June 28, 2001), as well as 11,296,604 new shares of fered for subscription by members of the Group Savings Plan (eleventh and twelfth resolution of the Meeting of June 28, 2001 and the seventh resolution of the Me eting of June 6, 2002). If these authorizations were used in full by the Board of Directors, the number of shares making up Compagnie de Saint-Gobain’s capital stock would be increased to 542,307,284. Translation adjustments at December 31, 2002 include a net amount of € 61 million (€ 62 million at December 31, 2001 and € 61 million at December 31, 2000) in adjustments arising from the translation of the balance sheets of companies outside the euro zone. These adjustments will betaken to the statement of income in the event that the companies are sold. T he accompanying notes are an integral part of the consolidated financial statements. (Number of shares) (In € millions) Issued Excluding Capital Additional Retained Cumulative Treasury Shareholders’ treasury stock paid-in earnings translation stock equity

stock capital and net adjustments and legal income for reserve the period 

### Balance at December 31, 1999 87,236,750 83,658,800 1,396 2,651 6,468 (543) (434) 9,538 Issues of capital stock - Group savings plan 1,956,224 1,956,224 31 175 206 - Stock option plans 88,854 88,854 1 6 7 Net income for 2000 1,517 1,517 Dividends paid (per share: € 3.60) (284) (284) Translation adjustments 233 233 Tr easury stock purchased (2,494,342) (376) (376) Tr easury stock canceled (4,068,565) (65) (562) 627 0 Tr easury stock sold 6,756 1 1 Change of method (pensions and and postretirement benefit obligations) 59 59 Balance at December 31, 2000 85,213,263 83,216,292 1,363 2,270 7,760 (310) (182) 10,901 Issues of capital stock - Group savings plan 903,150 903,150 14 106 120

- St o ck op ti on pl an s 121,778 121,778 2 7 9 Net income for 2001 1,134 1,134 Dividends paid (per share: € 4.30) (357) (357) Tran slation adjustments 149 149 Tr easury stock purchased (242,048) (37) (37) Tr easury stock canceled (979,563) (15) (134) 149 0 Tr easury stock sold 54,868 3 3 6 Balance at December 31, 2001 85,258,628 84,054,040 1,364 2,249 8,540 (161) (67) 11,925 Stock-split 255,775,884 252,162,120 Issues of capital stock - Group savings plan 4,703,396 4,703,396 19 140 159 - Stock option plans 226,480 226,480 1 4 5 Net income for 2002 1,040 1, 040 Dividends paid (per share: €4.50)* (378) (378) Tran slation adjustments (1,277) (1,277) Tr easury stock purchased (5,403,148) (162) (162) Tr easury stock canceled (4,953,708) (20) (129) 149 0 Tr easury stock sold 107,976 2 1 3 Balance at December 31, 2002 341,010,680 335,850,864 1,364 2,264 9,204 (1,438) (79) 11,315 

# STATEMENTS OF CHANGES IN CONSOLIDATED SHAREHOLDERS’ EQUITY • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 92**93** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



## NOTE 1 – ACCOUNTI NG PRINC IPLES AND POLICIES

BA SIS OF PRESENTATION T he consolidated financial statements of Compagnie de SaintGobain and subsidiaries (together “the Group”) have been prepared in accordance with French generally accepted accounting principles.
Effective January 1, 2000 the Group elected to determine pension and postretirement benefits obligations according to the projected unit credit method in compliance with both French generally accepted accounting principles and U.S. GAAP. The effect of this change in method was a 

### € 59 million increase in consolidated shareholders’ equity at January 1, 2000.

T he preparation of financial statements in conformity with French generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of expense or income during the year. Actual results may differ from those estimates.



### PRINCIPLES OF CONSOLIDATION T he consolidated financial statements include the financial statements of Compagnie de Saint-Gobain and all significant majority-owned subsidiaries, as well as subsidiaries in which the Group holds a controlling interest, either directly or indirectly.
Companies that are jointly owned are proportionately consolidated.
Companies in which the Group exercises directly or indirectly a significant influence are consolidated by the equity method.
Investments in other companies, in which the Group does not exercise significant influence, are stated at cost. A provision is made where necessary to reduce the cost to estimated net realizable value.

T he results of companies acquired or disposed of during the year are included in the consolidated statement of income for the period after the date of acquisition or before the date of disposal, respectively. Significant changes in the Group’s structure for the year ended December 31, 2002 are shown in note 2. A summary list of significant consolidated companies as of December 31, 2002 is shown in note 34.
All significant intercompany accounts and transactions are eliminated in consolidation.



### FOREIGN CU RRENCY TRAN SACTIONS Transactions in foreign currencies are recorded at the exchange rate prevailing on the transaction date. Receivables, payables and bankbalances in foreign currencies are generally translated at the yearend rate and the related exchange differences are recorded in the income statement.



### TRANSLATION OF THE FINANCIAL STATEMENTS OF FOREIGN COMPAN IES Balance sheet items are translated using year-end exchange rates.
Income and expenditure items are translated using the average exchange rate for the year.

The Group’s share of any translation gains and losses less any related tax effect, is included in Shareholders’ Equity under the caption “Cumulative translation adjustments” until such time as the foreign investments to which they relate are sold or liquidated.



### GOODWILL Goodwill represents the excess of the purchase price over the fair value of net assets acquired. Goodwill is amortized on a straight-line basis over its expected useful life for a period not exceeding 40 years.



### OTHER INTANG IB LE ASSETS Other intangible assets include purchased goodwill, patents, trademarks, computer software, and debt issuance costs.

Trademarks, other than retail brands, are amortized on a straight-line basis over a period not exceeding 40 years. Retail brands are not amortized. 

# NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 93**94**

Pa tents and purchased computer software are amortized over their estimated useful lives. Patents are amortized over a period not exceeding 20 years. Purchased software is amortized over a period of 3 to 5 years. Debt issuance costs relating to bonds or other long-term borrowings are capitalized and amortized over the term of the debt.



### P ROP ER TY , PLANT AND EQU IPMENT Property, plant and equipment are stated at cost except for the fixed assets of subsidiaries operating in formerly highly inflationary countries which have been revalued in accordance with the provisions of local laws.
Property, plant and equipment is depreciated on a straight-line basis over the following estimated useful lives:

Investment grants relating to acquisitions of non-current assets are deferred, recorded under “Other payables and accrued expenses” and credited to income over the estimated useful lives of the relevant assets.
Upon retirement or sale, the cost of the assets disposed of and the related accumulated depreciation are written off from the balance sheet and any resulting gains or losses are recognized in the income statement.



### VALUATION OF NON-CURRENT ASSETS T he Group examines on a regular basis the carrying value of noncurrent assets, including goodwill, other intangible assets, and property, plant and equipment. The carrying value of a non-current asset is considered permanently impaired when the estimated undiscounted future cash flows relating to the asset are less than its carrying value. In that event, exceptional depreciation is recorded to write down the carrying value of the asset to fair value. Fair value is generally determined using estimated future cash flows discounted at a rate commensurate with the risk involved.



### LEASES Assets held under leases which transfer to the Group substantially all of the risks and rewards of ownership are capitalized as property, plant and equipment. The capitalized values of the assets are depreciated on a straight-line basis over the useful life of the assets. T he corresponding liability is shown net of related interest in the balance sheet.
Operating lease rentals are expensed in the year in which they are incurred.



### I NVENTORIES Inventories are valued at the lower of cost and market. Cost is generally determined using the weighted-average cost method, and in some cases, the First-In-First-Out method.



### FINANC IAL INSTRUMENTS T he Group uses derivative financial instruments for the purpose of hedging currency and interest rate exposures that exist as part of ongoing business operations.
In order to anticipate future developments in the accounting treatment of financial instruments, the Group amended its accounting policies in 2001 in order to take into account fair value.

T he presentation of the financial statements for the year ended December 31, 2002 is unchanged from prior years.

T he main financial instruments used to hedge foreign exchange risks are forward purchase and sale contracts and options. Hedged receivables and payables are recorded in the balance sheet at the hedging rate. The portion representing the extrinsic (time) value of unrealized gains or losses on currency options used to hedge the above positions is taken to income, and the portion representing intrinsic value is recorded in the balance sheet. Unrealized losses on options which are not classified as hedges are recognized in the income statement, whereas unrealized gains are not taken into account.

The Group uses interest-rate swaps and swaptions (caps and floors) as well as forward rate agreements to hedge its exposure to increases in interest rates. Gains and losses related to interest-rate swaps are recognized on a symmetrical basis with the losses and gains on the hedged items.

T he portion representing the extrinsic (time) value of unrealized gains or losses on interest rate options used to hedge the above positions is taken to income and the portion representing intrinsic value is recorded in the balance sheet. Interest-rate options which are not classified as hedges are recognized in the income statement at market value. 

### Major factories and offices 40 years Other buildings 15 -25 years Production machinery and equipment 5 -16 years V

ehicles 4 years Fu rniture, fixtures, office and computer equipment 4 -16 years • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 94**95** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



### MARKETABLE SECURITIES Marketable securities consist of shares in subsidiaries and affiliates, units in mutual funds and short-term investments. They are recorded at the lower of cost and market.



### CASH AND CASH EQUIVALENTS Th is item consists of cash on hand and balances with banks.



### PENSIONS AND OTHER PO STRETIR EMENT BENEFITS After retirement the Group’s former employees receive pensions in accordance with applicable laws and customs in the respective countries in which the Group operates. There are additional pension obligations in certain Group companies, in France and other countries.
In France, employees receive indemnities on retirement based on past service and other terms in accordance with the respective collective bargaining agreements.

T he Group’s obligations in respect of pensions and retirement indemnities are determined using an actuarial method based on projected end-of-career salaries (the projected unit credit method) taking into account the specific economic conditions applicable in each country. These obligations are covered by retirement funds and provisions recorded in the balance sheet. Effective from January 1, 2000, the method adopted complies with both French generally accepted accounting principles and U.S. GAAP.
In the United States, Spain and Germany, retired employees receive benefits other than pensions, mainly concerning healthcare. The Group’s obligations in this respect are determined using an actuarial method and are covered by a provision recorded in the balance sheet.

In addition, in the United States, certain benefits such as income support and healthcare may be granted to former employees before their retirement. The present value of these obligations is determined using rates applied for pensions and is covered by a provision recorded in the balance sheet.



### NEGATI VE SHAREHOLDERS’ EQUITY W hen shareholders’ equity of a consolidated subsidiary is negative at the end of the financial period, the minorities’ share of shareholders’ equity is expensed by the Group unless the third parties have a specific obligation to contribute their share of losses. If these companies return to profit, the Group’s equity in their earnings is recorded by the majority shareholder up to the amount required to cover losses recorded in prior years. 

### REVENUE RE COGNIT ION Revenue from sales of products or services is recognized when the risks and rewards of ownership are transferred to the customer or following delivery of the service, net of sales taxes and discounts. T he liability for incurred warranty claims is accrued when it is determined that a liability exists and that payment is probable.



### RES EARCH AND DEVELOPMENT COSTS Research and development costs are expensed as incurred and recorded in selling, general and administrative expenses.



### INTERE ST CHARGES All interest charges are expensed as incurred except for charges incurred during the construction of significant non-current assets, which are capitalized and included in the construction cost of the related non-current assets.



### INCOME TAXES Under an agreement with the French tax authorities, Compagnie de Saint-Gobain is assessed for income tax purposes on its consolidated fiscal income. The amounts payable or receivable by Compagnie de Saint-Gobain resulting from the application of the agreement are included in other accounts receivable and other payables.
Deferred tax assets and liabilities are calculated using the liability method, based on temporary differences between the values of assets and liabilities recorded in the financial statements and those used for tax purposes. Tax rates applicable to future periods are used to calculate year-end deferred income tax amounts.
A provision is recorded against deferred tax assets corresponding to tax loss carryforwards and deductible temporary differences when it is more likely than not that the asset will not be realized. Under the worldwide tax regime, the valuation allowance is assessed at the tax group level for companies included in the tax consolidation and at the individual tax entity level for companies not included in the tax consolidation.
No provision is made in respect of earnings of subsidiaries that are not intended to be distributed.
In accordance with section 3150 of CRC regulation 99-02, deferred taxes have not been discounted.
A deferred tax liability is recorded on retail brands valued in the consolidated financial statements, even when they cannot be sold separately from the company being acquired. In view of the Group’s • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 95**96**

expectations with regard to future developments, it has been decided to maintain the method used prior to the adoption of CRC regulation 99-02. The amount of deferred tax assets recorded for retail brands appears in note 17.



### ADVERTISING COSTS Advertising costs are expensed as incurred.



### EARNINGS PER SHARE T he Group discloses earnings per share, based on net income and based on income before tax and minority interests.
Earnings per share are calculated by dividing earnings by the average number of shares in issue during the period, after deduction of treasury stock.
Diluted earnings per share are calculated by including in the average number of shares the conversion of all dilutive share equivalents in issue.

T he Group also discloses earnings per share calculated by dividing earnings by the number of shares in issue at the end of the fiscal year. 

## NOTE 2 - CHANGES IN GROUP STRUCTURE No material companies were fully consolidated for the first time in 2 002. However, the Group purchased all outstanding minority interests in the Lapeyre Group thus raising its stake from 74.68% to 1 00%.
At December 31, 2002 the effect on balance sheet captions of changes in Group structure and in consolidation methods is as follows:

In 2001 the Group issued public tender offers for the minority interests in Saint-Gobain Cristalería for 

### € 231 million, in SaintGobain Vidros for 

### € 79 million, in Saint-Gobain Canalizaçao for 

### € 17 million and in Brasilit for 

### € 18 million.

T he Group’s consolidated financial statements for 2000 included the results of Essilor which was fully consolidated up to June 30, 2 000, then accounted for by the equity method until November 15, 2 000, when the Group disposed of its entire stake in the company. T he consolidated financial statements therefore do not include any results of Essilor after that date. Increase Decrease Total (In € millions) 

### Impact on assets Non-current assets 415 (40) 375 Inventories, trade and other accounts receivable 195 (65) 130 610 (1 05) 505 Impact on liabilities Minority interests (165) 3 (162) Long-term liabilities 77 3 80 Payables 95 (6) 89 Debt and overdrafts* 4 (2) 2 11 (2) 9 Impact of acquisitions, disposals and changes in consolidation methods 599 (103) 496 C ash and cash equivalents (24) (1) (25) Net impact on cash flows 575 (104) 471
(*) Representing the net indebtedness of the Group. • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 96**97** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

If Essilor had been accounted for by the equity method for the full year in 2000, the consolidated statement of income for that year would have been as follows: 

## NOTE 3 – GOODWILL

In 2002, “Acquisitions” includes 

### € 58 million in goodwill recognized on the purchase of minority interests in the Lapeyre Group, which was acquired for 

### € 350million. Movements in “Translation adjustments and impact of disposals” primarily reflect changes in the US dollar exchange rate over the year.
In 2001, changes in goodwill mainly related to the first-time consolidation of several medium-sized companies.
In 2000, changes in goodwill mainly related to the sale of Essilor and to the consolidation for the first time of the Meyer Group – renamed Saint-Gobain Building Distribution – (acquisition price of 

### € 1,783 million and goodwill of 

### € 778 million), the Raab Karcher Group (acquisition price of 

### € 1 95 million and goodwill of 

### € 11 0 m illion), Chemfab (acquisition price of 

### € 1 90 million and goodwill of 

### € 84 million) and Holz Precision (acquisition price of 

### € 1 09 million and goodwill of 

### € 69 million). 2 000 (In € millions) pro forma 

### Net sales 27,837 Cost of sales (20,268) Gross margin 7,569 Selling, general and administrative expenses including research (4,765) Other operating costs (241) Operating income 2,563 Dividend income 24 Interest and other financial charges, net (594) Non-operating costs (157) Income before profit on sales of non-current assets and taxes 1,836 Profit on sales of non-current assets, net 584 Provision for income taxes (758) Net operating income from consolidated companies before amortization of goodwill 1,662 Amortization of goodwill (171) Net operating income from consolidated companies 1,491 Share in net results of equity investees 103 Net income before minority interests 1,594 Minority interests in consolidated companies (77) Net income 1,517 Earnings per share (in € ) We ighted average number of shares in issue 332,216,856 (*) 

### Income before tax and minority interests per share 7.08 Basic earnings per share 4.57 We ighted average number of shares assuming full dilution 333,425,704(*) Income before tax and minority interests per share 7.05 Diluted earnings per share 4.55 Number of shares in issue at December 31 340,853,052 (*) 

### Income before tax and minority interests per share 6.90 Earnings per share 4.45
(*) Number of shares adjusted to reflect the four-for-one stock split of June 27, 2002. 2 002 2001 2000 (In € millions) 

### Net book value at January 1 6,065 6,004 4,981 Acquisitions 178 164 1,623 Tran slation adjustments and impact of disposals (519) 106 (412) Amortization for the year (203) (209) (188) Net book value at December 31 5,521 6,065 6,004 • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 97**98**



## NOTE 4 – OTHER INTANGIBLE ASSETS, NET Changes in other intangible assets are summarized below: Intangible assets break down as follows:

Because their fair value is at least equal to cost, retail brands do not require a provision for impairment in value.
Changes in “Retail brands” in 2002 mainly concern the addition of the Lapeyre brand in an amount of 

### € 1 89 million, based on the allocation of goodwill determined after the purchase of the minority interests in the group. 2 002 2001 2000 (In € millions) 

### Net book value at January 1 1,805 1,766 1,155 Additions and changes in Group structure 290 113 844 Disposals (4) (12) (144) Tran slation adjustments (94) 22 (10) Amortization for the year (83) (84) (79) Net book value at December 31 1,914 1,805 1,766 At December 31 (In € millions) 2 002 2001 2000 

### At cost Purchased goodwill 84 82 74 Patents 171 197 183 Retail brands 1,516 1,376 1,344 Computer software 344 293 227 Other 327 369 355 Tota l at cost 2,442 2,317 2,183 Amortization and provisions for impairment in value Purchased goodwill (43) (41) (36) Patents (124) (134) (119) Computer software (196) (166) (123) Other (165) (171) (139) Tota l amortization and provisions for impairment in value (528) (512) (417) Other intangible assets - net 1,914 1,805 1,766

2 002 At Dec. 31 Changes in Acquisitions Disposals Transfers Translation Depreciation At Dec. 31 20 01 Group adjustments charge 2002 (In € millions) structure 

### At cost: Land 1,290 25 26 (29) 7 (81) - 1,238 Buildings 5,567 43 156 (110) 106 (412) - 5,350 Machinery and equipment 15,539 (74) 509 (591) 623 (1,324) - 14,682 Construction in progress 862 44 740 (11) (736) (100) - 799 Tota l at cost 23,258 38 1,431 (741) 0 (1,917) - 22,069 Depreciation: Land (84) (5) - 2 5 (9) (91) Buildings (2,501) (23) - 79 140 (241) (2,546) Machinery and equipment (10,319) 75 - 521 779 (1,101) (10,045) Construction in progress (5) 0 - 0 0 0 (5) Tota l depreciation (12,909) 47 - 602 0 924 (1,351) (12,687) Net book value 10,349 85 1,431 (139) 0 (993) (1,351) 9,382 

## NOTE 5 – PROPERTY, PLANT AND EQU IPMENT • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 98**99** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

As an industrial group, Saint-Gobain does not have a significant nonoperating property portfolio, except for its head office building.

2001 At Dec. 31 Changes in Acquisitions Disposals Transfers Translation Depreciation At Dec. 31 2 000 Group adjustments charge 2001 (In € millions) structure 

### At cost: Land 1,236 55 41 (50) (8) - 1,290 Buildings 5,199 98 144 (87) 150 63 - 5 567 Machinery and equipment 14,671 154 569 (539) 484 200 - 15,539 Construction in progress 832 (4) 676 (27) (634) 19 - 862 Total atcost 21,938 303 1,430 (703) 0 290 - 23,258 Depreciation: Land (73) - 1 - (12) (84) Buildings (2,279) (23) - 32 (8) (223) (2,501) Machinery and equipment (9,454) (133) - 480 (79) (1,133) (10,319) Construction in progress (19) - 13 1 (5) Tota l depreciation (11,825) (156) - 526 0 (86) (1,368) (12,909) Net book value 10,113 147 1,430 (177) 0 204 (1,368) 10,349

2 000 At Dec. 31 Changes in Acquisitions Disposals Transfers Translation Depreciation At Dec. 31 1 999 Group adjustments charge 2000 (In € millions) structure 

### At cost: Land 970 245 32 (29) 16 2 - 1,236 Buildings 4,442 485 191 (86) 104 63 - 5,199 Machinery and equipment 13,873 (312) 834 (513) 522 267 - 14,671 Construction in progress 970 (166) 665 (23) (642) 28 - 832 Total atcost 20,255 252 1,722 (651) 03 60 - 21,938 Depreciation: Land (61) (7) - 4 - (9) (73) Buildings (2,087) (8) - 49 (19) (214) (2,279) Machinery and equipment (8,848) 224 - 427 (110) (1,147) (9,454) Construction in progress (41) 22 - - 0 - 0 (19) Tota l depreciation (11,037) 231 - 480 0 (129) (1,370) (11,825) Net book value 9,218 483 1,722 (171) 0 231 (1,370) 10,113 • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 99**100**

Property, plant, and equipment include the following acquired under capital leases:

Th e depreciation and amortization charge is as follows:

In 2002, the Group recorded a total charge of 

### € 46 million for the write-down of certain goodwill and assets to net realizable value based on estimated future discounted cash flows, compared with 

### € 1 05 million in 2001 and 

### € 64 million in 2000. 

## NOTE 6 – INVESTMENTS IN EQUITY INVESTEES

T he Group’s share in net income of equity investees (companiesin which the Group exercises significant influence and some nonstrategic companies controlled by the Group) can be analyzed as follows:

Essilor was fully consolidated in the Group’s financial statements until June 30, 2000, and was then accounted for by the equity method up to the date when Compagnie de Saint-Gobain disposed of its entire stake in the company. Essilor contributed 

### € 19 million to consolidated results in 2000.

T he reduction in investments in equity investees in 2001 was primarily due to the proportional consolidation, effective from January 1, 2001, of Hankuk Glass and its subsidiaries which were previously accounted for by the equity method. Hankuk Glass Industries contributed 

### € 34 million to consolidated results in 2000.
No material changes in investments in equity investees occurred in 2002. 

## NOTE 7 – INVESTMENTS AT COST At December 31 (In € millions) 2 002 2001 2000 

### At cost Land and buildings 164 181 173 Machinery and equipment 41 46 47 Tota l assets under capital leases - gross 205 227 220 Depreciation (88) (100) (93) Net book value 117 127 127

2 002 2001 2000 (In € millions) Gross book Net book Gross book Net book Gross book Net book value value value value value value 

### At January 1 233 171 224 178 432 351 Acquisitions 31 31 52 52 59 59 Disposals (10) (7) (10) (7) (40) (25) Provisions for impairment in value for the year - (1) - (20) - (2) Changes in Group structure (44) (48) (33) (32) (235) (212) Tran slation adjustments (4) (2) 8 7 At December 31 206 144 233 171 224 178

T he fair value of these investments approximates their net book value. 2 002 2001 2000 (In € millions) 

### Amortization of other intangible assets (note 4) 83 84 79 Amortization of goodwill 169 184 182 Depreciation of property, plant and equipment* 1,351 1,368 1,370 Tota l depreciation and amortization 1,603 1,636 1,631 *Included in cost of sales 1,174 1,204 1,275 2 002 2001 2000 (In € millions) 

### At January 1 169 393 439 Changes in Group structure (35) (216) (80) Dividends paid (3) (14) (38) Share in net income of equity investees 4 7 84 Tran slation adjustments (21) (1) (12) At December 31 114 169 393 • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 100**101** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



## NOTE 8 – CURRENT AND NON-CURRENT MARKETABLE SECURITIES
Marketable securities include units in SICAV and other mutual funds as well as short-term investments recorded at the lower of cost and market. All of these marketable securities are variable-income. Unrealized gains on marketable securities are not considered as material in the consolidated financial statements.
Marketable securities which cannot be recognized as cash equivalents are considered by the Group as “available for sale”. The breakdown of these marketable securities is shown below: T he average weighted price of Vivendi Universal shares suffered a sharp fall in the month prior to March 20, 2003, the accounts-closing date. As a result, the estimated market value of these shares at that date was 

### € 15 7 million, compared with 

### € 1 90 million at December 31 , 2002.

T he decrease in marketable securities in 2001 reflected the sale of BNP Paribas shares.

Gross book Net book Unrealized estimated value value gains market (In € millions) value (1) 

### At December 31, 2002 Vivendi Universal 171 171 19 190 Other interests 7 4 2 6 Non-current marketable securities 178 175 21 196 Tota l marketable securities 469 469 - 469 At December 31, 2001 Vivendi Universal 171 171 586 757 Other interests 7 5 2 7 Non-current marketable securities 178 176 588 764 Tota l marketable securities 406 406 - 406 At December 31, 2000 BNP Paribas 132 132 191 323 Vivendi Universal 171 171 692 863 Other interests 7 7 9 16 Non-current marketable securities 310 310 892 1,202 Tota l marketable securities 530 530 - 530
(1) Based on stock market prices at December 31. • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 101**102**



## NOTE 9 – OTHER NON-CURRENT ASSETS

“Retirement benefits – Additional minimum liability” and “Pre-paid pension costs” are a result of the adoption in 2000 of US generally accepted accounting principles relating to pensions and other postretirement benefits.

Th e rise in “Retirement benefits – Additional minimum liability” at December 31, 2002 is mainly due to the decrease in the fair value of retirement funds, leading to an increase in the related provisions.
In accordance with French generally accepted accounting principles, the total additional minimum liability has been recorded under “Other non-current assets”. Under US generally accepted accounting principles, part of the commitment – in an amount of 

### € 87 7 million (

### € 12 4 million in 2001 and 

### € 51 million in 2000) – would be recorded as a deduction from shareholders’ equity, net of tax.



## NOTE 10 – INVENTORIES At December 31, 2002, 2001 and 2000, raw materials, work in progress and finished goods as well as provisions for impairment in value of inventories can be analyzed as follows: 

## NOTE 11 – TRADE ACCOUNTS RECEIVABLE

Trade accounts receivable are short-term receivables.

Changes in provisions for doubtful accounts:

In 2002, the total charge related to unrecoverable receivables amounted to 

### € 93 million (2001: 

### € 115 million; 2000: 

### € 84 million).

The Group has a securitization program in place in the United States, which is explained in note 21.


## NOTE 12 – OTHER ACCOUNTS RECEIVABLE All amounts recorded under “Other accounts receivable” are due within one year.

At December 31

(In € millions) 2 002 2001 2000 

### Advances to suppliers 53 88 76 Prepaid payroll taxes 18 26 24 Other prepaid and recoverable taxes 356 348 399 Accrued income 188 194 121 Other receivables 401 578 545 Provisions for impairment in value (6) (6) (4) Other accounts receivable 1,010 1,228 1,161 2 002 2001 2000 (In € millions) 

### At January 1 (405) (349) (300) Movement for the year 4 (27) (2) Changes in Group structure (1) (26) (44) Tran slation adjustments 20 (3) (3) At December 31 (382) (405) (349) At December 31 (In € millions) 2 002 2001 2000 

### Trade accounts receivable 4,646 4,957 4,992 Less provisions for doubtful accounts (382) (405) (349) Net trade accounts receivable 4,264 4,552 4,643

At December 31 (In € millions) 2 002 2001 2000 

### At cost: Raw materials and supplies 1,184 1,376 1,250 Wo rk in progress 352 390 417 Finished goods 3,534 3,728 3,436 Gross inventories 5,070 5,494 5,103 Provisions for impairment in value: Raw materials and supplies (89) (93) (87) Work in progress (16) (14) (22) Finished goods (301) (312) (242) Provisions for impairment in value (406) (419) (351) Net inventories 4,664 5,075 4,752 At December 31 (In € millions) 2 002 2001 2000 

### Cap italized loans and deposits 517 441 313 Retirement benefits – Additional minimum liability 946 130 57 Prepaid pension costs 127 372 396 Other non-current assets 1,590 943 766 • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 102**103** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



## NOTE 13 – TREASURY STOCK

Fu rt her to the four-for-one stock split of June 27, 2002, the number of shares at December 31, 2001 and 2000 has been multiplied by four in order to permit year-on-year comparisons.
Compagnie de Saint-Gobain capital stock held by consolidated Group companies is shown as a separate deduction from shareholders’ equity under “Treasury stock”, at historical cost. Total shares held in treasury stock were 5,159,816 at December 31, 2 002, 4,818,352 at December 31, 2001 and 7,987,884 at December 31, 2000.
In 2002, the Group purchased 5,403,148 Compagnie de SaintGobain shares on the stock market (2001: 968,192 shares; 2000: 9,977,368 shares) and re-sold 107,976 of them (2001: 219,472; 2 000: 27,024).

In addition, 4,953,708 shares were canceled in 2002, further to the 3,918,252 shares canceled in 2001 and 16,274,260 in 2000.
Share buybacks in 2002, 2001 and 2000 were carried out for several different purposes, but specific numbers of shares were not assigned to each objective. Therefore, the shares concerned were recorded as treasury stock. 

## NOTE 14 – MINOR ITY I NT ERESTS

In 2002, the bulk of the decrease in this item reflects the purchase of the outstanding minority interests in the Lapeyre Group during the first half of the year.

T he decrease in this item in 2001 primarily reflected the purchase of almost all of the minority interests in Saint-Gobain Cristalería, Saint-Gobain Vidros, Saint-Gobain Canalizaçao and Brasilit. T he decrease in minority interests in 2000 primarily reflected the deconsolidation of Mexalit and of the Essilor Group, which was fully consolidated up to June 30, 2000.


## NOTE 15 – NON-VOTING PARTICIPATING SECURITIES

T he Group issued 700,000 non-voting participating securities in F rench francs in 1983 and 100,000 non-voting participating securities in ecus in 1984. The non-voting participating securities are not redeemable. Their remuneration is included in financial charges. T hese securities were converted into euros in 1999.
Each security carried a coupon which gave the holder the right to subscribe to a new non-voting participating security until January 1 988 for securities issued in 1983 and until February 1987 for securities issued in 1984. 588,299 securities and 194,633 securities respectively were issued on the exercise of the coupons.

T he remuneration of the 1,288,299 non-voting participating securities issued in 1983, up to a limit equal to 125% of the average rate of interest on bonds, includes a fixed interest element and a variable portion based on the consolidated net income of the Group. The remuneration of the 194,633 non-voting participating securities issued in 1984 comprises a fixed interest element applicable to 60% of the nominal value of the security and equal to 7.5% per annum and a variable amount on the remaining 40% based on the consolidated net income of the previous year, within the limits fixed in the prospectus.
At December 31, 2002, 2001 and 2000, participating securities issued were as follows:

T he remuneration of non-voting participating securities during the period 2000 to 2002 was as follows: 2 002 2001 2000 (In € millions) 

### At January 1 423 823 1,613 Net income for the year 34 40 125 Dividends paid by consolidated subsidiaries (19) (30) (91) Minority interests’ share in capital stock increases of subsidiaries 15 13 28 Purchase of shares in consolidated companies from minorities (155) (346) (11) Changes in Group structure 13 (79) (865) Tran slation adjustments (84) 2 24 At December 31 227 423 823 2 002 2001 2000 (In € millions) 

### Securities issued in 1983 (indexed on average bond rates) 196 196 196 Securities issued in 1984 (indexed on Euribor) 195 195 195 Total 391 391 391

2 002 2001 2000 (In € millions) 

### Securities issued in 1983 12 13 14 Securities issued in 1984 14 14 15 Total 26 27 29 • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 103**104**



## NOTE 16 – PENSIONS AND OTHER POST RETIREMENT BENEFITS
PENSION AND RETIREMENT INDEMNITIES P ension obligations are determined by actuarial valuations using a method based on projected end-of-career salaries (the projected unit credit method). Effective from January 1, 2000, the method adopted complies with both French generally accepted accounting principles and U.S. GAAP. The total liability in respect of pension obligations to retired employees as well as the liability concerning the vested rights of employees has been determined. For retirement indemnities, the commitment based on estimated total service in the Group is determined and provision made for past service using the straight-line method. Assumptions as to mortality, employee turnover and salary projections take into account the economic conditions specific to each country and company. Interest rates used in 2002 to determine the present value of future commitments are generally between 4% and 7.25% depending on the country.
In determining the provision detailed below, the market value of the pension funds is deducted from the total obligation.

At December 31, 2002 France Other European countries North America Rest of the world Net total Pensi on and Plans with Plans with Plans with Plans with Pension and retirement assets in accumulated assets in accumulated retirement indemnities excess of benefits in excess of benefits in indemnities accumulated excess of plan accumulated excess of plan (In € millions) benefits assets benefits assets 

### Projected benefit obligation 420 261 2,766 12 1,498 32 4,989 Plan assets 98 323 1,514 12 1,087 27 3,061 Benefits in excess of (less than) plan assets 322 (62) 1,252 0 411 5 1,928 Deferred variances (56) (39) (716) (4) (402) 3 (1,214) Pension liability (asset) recognized in the balance sheet 266 (101) 536 (4) 9 8 714 Accruals for related benefits 6 247 253 Tota l net obligation 266 (101) 542 (4) 256 8 967 Minimum additional liability (see note 9) 946 Prepaid pension cost (see note 9) 1 27 Contractual termination indemnities 82 Insurance funding 231 Tota l obligations provided 2,353 • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 104**105** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

Deferred variances include actuarial variances, variances arising from modifications to plans and adjustments to opening balances. They are amortized over the average remaining service period or average remaining life expectancy of the relevant beneficiary. At December 31, 2001 France Other European countries North America Rest of the world Net total Pensi on and Plans with Plans with Plans with Plans with Pension and retirement assets in accumulated assets in accumulated retirement indemnities excess of benefits in excess of benefits in indemnities accumulated excess of plan accumulated excess of plan (In € millions) benefits assets benefits assets 

### Projected benefit obligation 419 461 2,518 29 1,553 48 5,028 Plan assets 107 491 1,282 33 1,467 39 3,419 Benefits in excess of (less than) plan assets 312 (30) 1,236 (4) 86 9 1,609 Deferred variances (48) (5) (527) (6) (71) (2) (659) Pension liability (asset) recognized in the balance sheet 264 (35) 709 (10) 15 7 950 Accruals for related benefits 6 297 303 Total net obligation 264 (35) 715 (10) 312 7 1,253 Minimum additional liability (see note 9) 130 Prepaid pension cost (see note 9) 3 72 Contractual termination indemnities 81 Tota l obligations provided 1,836

At December 31, 2000 France Other European countries North America Rest of the world Net total Pensi on and Plans with Plans with Plans with Plans with Pension and retirement assets in accumulated assets in accumulated retirement indemnities excess of benefits in excess of benefits in indemnities accumulated excess of plan accumulated excess of plan (In € millions) benefits assets benefits assets 

### Projected benefit obligation 401 1,690 1,061 1,310 90 48 4,600 Plan assets 105 2,123 56 1,547 7 38 3,876 Benefits in excess of (less than) plan assets 296 (433) 1,005 (237) 83 10 724 Deferred variances (36) 99 (2) 176 (12) 225 Pension liability (asset) recognized in the balance sheet 260 (334) 1,003 (61) 71 10 949 Accruals for related benefits 5 275 280 Tota l net obligation 260 (334) 1,008 (61) 346 10 1,229 Minimum additional liability (see note 9) 57 Prepaid pension cost (see note 9) 396 Contractual termination indemnities 70 Tota l obligations provided 1,752 • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 105**106**

For the French companies in the Group, a pension fund is being g radually built up by contributions to an insurance company. Contributions to the fund amounted to 

### € 22 million in 2002, 

### € 21 million in 2001 and 

### € 23 million in 2000.

For the Saint-Gobain Group, vested rights (obtained by the beneficiaries of the retirement plans) amount to 

### € 4,338 million. T hey represent obligations to pensioners and in certain countries (mainly the United States, Germany and the United Kingdom) the vested rights of employees who are not obliged to remain with the companies until retirement in order to benefit under the plans.

T he pension charge is as follows:



### OTHER POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS Obligations for other post-retirement and post-employment benefits are determined by actuarial valuations. Amounts provided cover the liabilities concerning pensioners and the vested rights of employees.

T he assumptions as to mortality, employee turnover and interest rates used to determine future benefits are those used for the determination of the pension liability.

The charge for other post-retirement and post-employment benefits is as follows: 

### CO NT RACTUAL TERMINATION INDEMNITIES Provisions include contractual termination indemnities payable to employees in certain countries, particularly Italy, on retirement or departure from the company for other reasons. These indemnities are determined based on the calculation methods applicable in the country concerned and are not based on actuarial calculations.



### INSURANCE FUNDING Th is item corresponds to amounts payable in the future to insurance companies under the funded retirement schemes for Group employees in Spain. 

## NOTE 17 – PROVISION FOR IN COME TAXES Compagnie de Saint-Gobain is assessed for income tax purposes on its consolidated fiscal income. The fiscal agreement, which covered the years 1998 to 2000, was renewed on March 4, 2002 for the years 2001 to 2003. As a result of this agreement the Group’s share of the aggregate amount of income taxes paid by Group companies included in the worldwide tax group is taken into account when determining consolidated fiscal income.
Also, under the terms of Article 223 et seq. of the General Tax Code (Code Général des Impôts), Compagnie de Saint-Gobain has opted for the integrated tax (Intégration Fiscale) system in addition to the consolidated tax system described above.

The net income of companies included in the tax group is as follows:

Th is income breaks down as follows: 2 002 2001 2000 (In € millions) 

### Vest ed rights 12 11 10 Interest 22 23 20 Vari ances - 2 2 Total 34 36 32 2 002 2001 2000 (In € millions) 

### Vest ed rights 139 131 117 Interest 304 294 260 Return on funds (294) (295) (258) Vari ances 16 9 10 Total 165 139 129

2 002 2001 2000 (In € millions) 

### Net income of companies included in the tax group 1,070 1,167 1,558 Income tax expense 612 721 791 Income of companies included in tax group before income taxes 1,682 1,888 2,349

2 002 2001 2000 (In € millions) 

### Fr ench companies 656 948 1,360 Non-French companies 1,026 940 989 Income of companies included in tax group before income taxes 1,682 1,888 2,349 • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 106**107** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

T he provision for income tax is as follows:

In 2002, the provision for income tax represents 36% of total Group income before tax (38% in 2001 and 34% in 2000). The effective tax rates are determined as follows: At December 31, 2002 the provision for deferred taxes recorded in the balance sheet can be analyzed as follows:

Th e principal components of the net deferred tax liability are as follows:



## NOTE 18 – OTHER LIABILITIES

T he presentation of the tables below has been changed due to the new rules relating to the presentation of provisions. They are now presented according to whether the related charges are included in operating or non-operating expense, rather than based on their form as in previous years. 2 002 2001 2000 (In € millions) 

### Pensi ons 204 229 171 Retail brands (373) (349) (340) Depreciation (365) (411) (364) Other (162) (154) (176) Tota l net deferred tax liability (696) (685) (709) (In € millions) 

### At January 1, 2002 685 Movement for the year (3) Tran slation adjustments (44) Effect of changes in Group structure and other 58 At December 31, 2002 696

2 002 2001 2000 (Percentages) 

### Current income tax rate 33 33 33 Surcharge on French income tax 1 1 2 Te chnical assistance fees and net capital gains taxed at lower rates (1) (2) (2) Other, including amortization of goodwill 3 6 1 Effective rate 36 38 34 2 002 2001 2000 (In € millions) 

### Current taxes (615) (701) (723)

France (207) (274) (327) Outside France (408) (427) (396) Deferred taxes 3 (20) (68)

Fran ce (21) 3 (38) Outside France 24 (23) (30) Total provision for income tax (612) (721) (791)

2 002 At Jan. 1 Impact on Payments Changes in Translation At Dec. 31 2 002 income net Group adjustments 2002 statement structure and (In € millions) reclassifications 

### Provision for customer warranties 162 42 (42) 11 (13) 160 Provision for major repairs 109 15 (22) (85) (4) 13 Provision for personnel costs 109 23 (17) (13) (10) 92 Provision for other contingencies 261 11 (57) (62) (17) 136 Provisions for operating contingencies and charges 641 91 (138) (149) (44) 401 Provisions for non-operating contingencies and charges 477 173 (133) 104 (59) 562 Provision for unrealized foreign exchange losses 2 (2) Badwill 135 (34) 20 121 Total 1,255 230 (273) (25) (103) 1,084 • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 107**108**



### PROVISIONS FOR OPERATING CONTINGENCIES AND CHARGES Additions to and reversals from these provisions are recorded under operating income and expense.

Provision for customer warranties Th is provision covers the Group’s commitments in relation to warranties granted to customers.
Provision for major repairs In 2002, this provision is intended to cover the costs of demolition and scrapping of assets which require cyclical upgrades, particularly furnaces in our various operations.
Provision for personnel costs Th is provision mainly covers indemnities due to personnel unrelated to reorganization operations. At December 31, 2002 the provision totaled 

### € 92 million and primarily concerned North America (

### € 49 million) as well as Germany and Central Europe (

### € 29 million). Provision for other contingencies At December 31, 2002 provisions for other contingencies amounted to 

### € 13 6 million and essentially concerned France (

### € 39 million), Germany and Central Europe (

### € 24 million), the United Kingdom and Ireland (

### € 19 million) and North America (

### € 21 million).



### PROVISIONS FOR NON-OPERATING CONTINGENCIES AND CHARGES Additions to and reversals from these provisions are recorded under non-operating expense and income.

Asbestos-related risks Th e provision for asbestos-related risks has been set up as a topup to the Group’s insurance cover to provide for the costs of asbestos-related lawsuits issued against the Group, particularly in the United States. The provisions cover the costs of lawsuits currently in progress as well as potential new claims. 2001 At Jan. 1 Impact on Payments Changes in Translation At Dec. 31 20 01 income net Group adjustments 2001 statement structure and (In € millions) reclassifications 

### Provision for customer warranties 170 47 (68) 9 4 162 Provision for major repairs 125 (10) (27) 20 1 109 Provision for personnel costs 157 22 (16) (57) 3 109 Provision for other contingencies 217 48 (80) 75 1 261 Provisions for operating contingencies and charges 669 107 (191) 47 9 641 Provisions for non-operating contingencies and charges 548 46 (166) 35 14 477 Provision for unrealized foreign exchange losses 1 1 2 Badwill 101 (2 5) 59 135 Total 1,318 129 (356) 141 23 1,255

2 000 At Jan. 1 Impact on Payments Changes in Translation At Dec. 31 2 000 income net Group adjustments 2000 statement structure and (In € millions) reclassifications 

### Provision for customer warranties 130 22 (14) 28 4 170 Provision for major repairs 125 4 (33) 29 125 Provision for personnel costs 84 25 (15) 61 2 157 Provision for other contingencies 112 35 (98) 166 2 217 Provisions for operating contingencies and charges 451 86 (160) 284 8 669 Provisions for non-operating contingencies and charges 525 117 (162) 50 18 548 Provision for unrealized foreign exchange losses 2 (2) Badwill 85 (6) 22 101 Total 1,06 1 199 (324) 356 26 1,318 • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 108**109** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

At December 31, 2002, the asbestos-related provision amounted to 

### € 332 million compared with 

### € 20 7 million at December 31, 20 01 and 

### € 197 million at December 31, 2000. A 

### € 1 04 million charge to this provision was recorded in 2002. Insurance settlements receivable for accepted claims and amounts paid in advance totaled 

### € 21 4 million at December 31, 2002 compared with 

### € 21 8 million at December 31, 2001 and 

### € 14 7 million atDecember 31, 2000. These amounts are included in “Other noncurrent assets”.

Asbestos-related risks are described in further detail in note 31.

Environmental risks Th is provision is intended to cover costs for environmental protection measures and site clean-ups. After a net charge to the provision of 

### € 4 million during the year, it totaled 

### € 66 million at December 31, 2 002, compared with 

### € 66 million at December 31, 2001 and 

### € 80 million at December 31, 2000.
Provision for restructuring costs Provisions for restructuring costs concern commitments in relation to the reorganization of the Group’s operations. 

### € 57 million was charged to provisions for restructuring costs in 2002 and at December 31, 2002, they amounted to 

### € 1 49 million (compared with 

### € 1 96 million at December 31, 2001 and 

### € 259 million at December 31, 2000). These provisions primarily concern France (

### € 22 million), Germany and Central Europe (

### € 54 million) and the Benelux countries (

### € 25 million). Restructuring costs are described in note 25.
Provision for risks relating to subsidiaries and affiliates Th is provision is intended to cover financial risks in relation to certain subsidiaries, particularly when the Group intends to divest these companies. After a net charge to the provision of 

### € 8 million during the year, it totaled 

### € 15 million at December 31, 2002, compared with 

### € 8 million at December 31, 2001 and 

### € 12 million at December 31, 2000.



### PR OVISIONS FOR UNREALIZED FOREIGN EXCHANGE LO SSES Changes in provisions for unrealized foreign exchange losses impact net interest and other financial charges. 

### BADWILL Badwill is amortized on a straight-line basis over a period not exceeding 40 years.



## NOTE 19 – OTHE R PAYA BLES AND ACCR UED EXPENSES

At December 31

(In € millions) 2 002 2001 2000 

### Customer deposits 109 79 72 Income tax payable 138 277 292 Payable to suppliers of non-current assets 146 210 229 Grants 31 30 33 Accrued personnel expenses 770 756 703 Accrued taxes other than on income 242 254 237 Other * 912 1 ,195 1,031 Total 2,348 2,801 2,597 * Including € 77 million relating to cross-currency swaps at December 31, 2002

and € 26 1 million at December 31, 2001 (see note 21 ). • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 109**110**



## NOTE 20 – LONG-TERM AND SHORT- T ERM DEBT

BR EAKDOWN OF LONG-TERM AND SHORT-TERM DEBT Long–term and short-term debt consist of the following: Liquidity risk management In 2002, the Group significantly decreased total debt and reduced the portion of short-term debt by extending the life of borrowings. In 2002, US$300 million worth of bonds reached maturity and the Group carried out two new issues: a 

### € 920 million issue of OCÉANES bonds (convertible into either new or existing shares) in February, maturing on January 1, 2007, plus a US$500 million bond issue in May, maturing on June 20, 2007.

Maturities of long- and short-term debt are as follows: At December 31 (In € millions) 2 002 2001 2000 

### Long-term debt:

Bond issues 5,273 4,196 3,565 Private placement notes in euros 443 451 471 Medium Term Notes 170 198 450 Pe rpetual bonds 33 33 33 Other long-term debt including leasing 319 369 480 Total long-term debt 6,238 5,247 4,999 Short-term debt:

Current portion of long-term debt 487 991 1,859 Borrowings due in less than one year (US CP, euro CP and Billets de Trésorerie) 636 1,491 923 Bank overdrafts and other short-term bank borrowings 1,021 1,672 1,771 Tota l short-term debt 2,144 4,154 4,553 Total de bt 8,382 9,401 9,552

Short-term loans (162) (245) (139) To tal marketable securities (469) (406) (530) C ash and cash equivalents (739) (958) (666) Net indebtedness 7,012 7,792 8,217

(1) Including portion of long-term debt due in less than one year. Maturities at December 31 2 002 Bond Private MTN Other Total 2001 2000 (In € millions) iss ues placement notes 

### 2002 - - - - - 698 2003 - - - - - 279 282 2004 275 62 45 69 451 446 417 2005 1,192 90 - 63 1,345 1,372 1,360 2006 572 53 77 22 724 800 2007 1,397 223 48 19 1,687 Repayment beyond 6 years 1,837 15 - 146 1,998 2,317 2,209 Unspecified (including perpetual bonds) 33 33 33 33 Total long-term debt 5,273 443 170 352 6,238 5,247 4,999 Short-term debt (1) 

### 152 13 46 1,933 2, 144 4,1 54 4, 553 Tota l debt 5,425 456 216 2,285 8,382 9,401 9,552 • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 110**111** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

Back-up credit linesCompagnie de Saint-Gobain’s US Commercial Paper, EuroCommercial Paper, Billets de Trésorerie and Medium Term Notes programs are backed by two confirmed syndicated lines of credit of 

### € 600 million and 

### € 1,200 million, expiring in September 2006 and November 2007 respectively, as well as 12 bilateral credit lines totaling 

### € 75 3 million at December 31, 2002.
No drawdowns were made against any of these credit lines in 2002. Commitment fees amounted to 

### € 2.5 million, compared with 

### € 1.9 million in 2001.

T he loan agreements include various convenants which, if violated, would result in the facilities becoming immediately repayable or being withdrawn. These convenants are as follows:

- for four bilateral credit lines representing 

### € 381 million and

the two syndicated credit lines: ratio of net debt to cash flow from operations capped at 4 or 3 and/or interest cover ratio capped at 2. At December 31, 2002, the Group’s ratio of net debt to cash flow from operations was 2.6 and its interest cover ratio was 4.3.

- all bilateral and syndicated credit lines: default on any of the

credit lines or any other borrowings capped at a certain level.

- 

### € 1 43 million bilateral credit line: Material Adverse Change

clause. This clause allows the banking counterparty to withdraw the credit line in the event of a material adverse change in the Group’s business environment. Early repayment risks for bank borrowings All bank borrowings are immediately repayable in the event of: - default on any instalment, - default on any other borrowings in excess of a certain amount.
Certain loan agreements also include covenants relating to shareholders’ equity. The most restrictive of these covenants requires the Group to have shareholders’ equity of at least 

### € 2.9 billion.

Collateral At December 31, 2002 

### € 24 million in Group debt were secured by various non-current assets (real estate and securities).

Interest rate risk Details of the main financial instruments used by the Group are provided below.

Bond issues The 

### € 5,425 million worth of outstanding bonds (short- and long-term) break down as follows at December 31, 2002.

All of the bonds were issued at fixed rates. The term “Variable rate” in the table above refers to fixed rate bonds that have been converted into variable rate debt through the use of swaps.

Maturity 2003 2004 2005 2006 2007 2008 2009 Total (In € millions) 

### EUR Fixed rate 152 500 920 607 1,000 3,179 USD Fixed rate 572 572 Va riable rate 477 477 GBP Fixed rate 461 461 Va riable rate 231 230 461 CHF Fi xed rate 275 275 Total 152 2 75 1,192 572 1,397 8 37 1, 000 5,425 Fixed rate 100% 100% 80% 100% 66% 73% 100% 83% • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 111**112**

In addition, the bond issues in Swiss francs are hedged by crosscurrency swaps (see note 21 dealing with Cross-currency Swaps).
On February 18, 2002, Compagnie de Saint-Gobain issued 4,380,953 “OCEANE” bonds that are convertible into new or existing shares. These bonds have a nominal value of 

### € 21 0 each, and the total issue came to 

### € 920 million. The annual interest rate for these “OCEANE” bonds is 2.625% payable in arrears on January 1 each year.

T he bonds will be redeemed in full on January 1, 2007 in cash at nominal value, i.e. 

### € 21 0 per bond, or they may be repurchased before maturity by Compagnie de Saint-Gobain on the market or in connection with a public buyback offer. The Company may also decide to carry out an early redemption of all outstanding “OCEANE” bonds, subject to certain conditions, which include share price thresholds.
Each “OCEANE” bond may be converted or exchanged for four Compagnie de Saint-Gobain shares. This ratio may, however, be adjusted if the Company carries out certain financial operations.

Th erefore if all of the bonds were converted at the rate initially provided for, the holders would receive a total of 17,523,812 shares, representing 5% of the Company’s capital at December 31, 2002.

Maturity 2003 2004 2005 2006 2007 2008 Total (In € millions) 

### EUR Fixed rate 13 1 15 29 Va riable rate 61 84 53 223 421

NOK Fixed rate 6 6 Total 13 62 90 53 223 15 456 Fixed rate 100% 2% 7% 0% 0% 100% 8%

Maturity 2003 2004 2005 2006 2007 Total (In € millions) 

### EUR Fixed rate 15 37 52 Va riable rate 46 6 8 60 USD Fixed rate 24 48 72 CZK Fixed rate 32 32 Total 46 45 0 77 48 216 Fixed rate 0% 87% - 90% 100% 72% Private placement notes T he 

### € 456 million worth of private placement notes (current- and long-term portions) break down as follows at December 31, 2002.

T he term “Variable rate” in the table above corresponds to private placement notes issued at variable rates and fixed rate notes converted into variable rate debt through the use of swaps.

Medium Term Notes T he 

### € 21 6 million worth of Medium-Term Notes (current- and longterm portions) break down as follows at December 31, 2002. • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 112**113** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

Th e term “Variable rate” in the table above corresponds to Medium Te rm Notes issued at variable rates and fixed rate Notes converted into variable rate debt through the use of swaps.
In addition, Medium Term Note issues in euros have been hedged by cross-currency swaps on a notional amount of 

### € 21 million maturing in 2004 (see note 21 dealing with Cross-Currency Swaps)

.

Pe rpetual bonds In 1985, Compagnie de Saint-Gobain issued 

### € 12 5 million worth of perpetual bonds – 25,000 bonds with a face value of 

### € 5,000 – paying interest at a variable rate indexed against Libor. T hese securities are not redeemable and their remuneration is included in financial charges.
At December 31, 2002 18,496 perpetual bonds had been bought back and canceled. At that date, 6,504 perpetual bonds were outstanding representing a total nominal amount of 

### € 33 million.
Financing programs T he Group has a number of programs available for medium-term and long-term (Medium Term Notes) and short-term (Commercial Pa per and Billets de Trésorerie) financing

Programs Currency Drawdown Authorized Drawn down at Drawn down at Drawn down at period cellings (in millions of currency) at Dec. 31, 2002 at Dec. 31, 2002 at Dec. 31, 2001 at Dec. 31, 2000 

### Medium Term Notes USD 1 to 30 years 1,000 (*) 

### 226 475 716 US co mmercial paper USD up to 12 months 1,000 (*) 

### 29 307 481 Euro commercial paper USD up to 12 months 1,000 (*) 

### 100 1 52 292 Billets de trésorerie EUR up to 12 months 1,500 513 971 92 At December 31, 2002, the situation of these programs was as follows:

Billets de Trésorerie, Euro-Commercial Paper and US-Commercial Paper Billets de Trésorerie, Euro-Commercial Paper and US-Commercial P aper issues generally have a life of 3 or 6 months. Although they are short-term securities issued at fixed rates, in view of their frequent renewal the Group treats them as variable rate debt. Bank overdrafts and other short-term bank borrowings Th is item includes bank overdrafts and intraday borrowings, local short-term bank borrowings taken out by subsidiaries and accrued interest on short-term debt. (*) Equivalent to € 954 million based on the exchange rate at December 31, 2002. • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 113**114**



## NOTE 21 – FINANCIAL INSTRUMENTS
INTERE ST RATE RISK MANAGEMENT Interest rate risk relating to the Group’s total net indebtedness ismanaged by the Treasury Department of Compagnie de SaintGobain. Net indebtedness is determined by means of a monthly reporting system which provides a detailed breakdown of each subsidiary’s debt by type and by interest rate (fixed or variable). In addition, for the preparation of the interim and annual consolidated financial statements, subsidiaries also provide a breakdown of debt between long- and short-term and fixed and variable rate, together with details of interest rates and hedging instruments by line of debt. Subsidiaries hedge risks on debt exclusively with Compagnie de Saint-Gobain, the Group parent company.

T he main objective of managing overall interest rate risk on theGroup’s consolidated net debt is to fix the cost of the mediumterm debt and to optimize annual borrowing costs. The Group’s policy defines which derivative financial instruments can be used to hedge the debt. Derivative financial instruments may include rate swaps, options – including caps, floors and swaptions – and forward rate agreements. These instruments are traded over-the-counter with counterparties meeting minimum rating standards as defined in the Group’s financial policy.

T he average interest rates for material long-term debt items before hedging are as follows:

T he following derivative instruments are used by the Group: Interest rate swaps T he notional amount of interest rate swaps breaks down as follows at December 31, 2002: A verage interest rate on outstanding debt 2002 2001 2000 at December 31



### Bond issues 5.11% 5.74% 5.58% Medium Term Notes 5.01% 3.70% 6.09% Private placement notes 4.30% 4.48% 5.30% Pe rpetual bonds 3.44% 3.68% 5.50%

Fixed rate borrower Variable rate borrower EUR USD GBP Total EUR USD GBP Total (In € millions) 

### 2003 - - - 2004 54 176 230 - 2005 84 84 15 231 246 2006 3 3 45 45 2007 - - 177 477 654 2008 - - 230 230 2009 - - - Total 141 176 - 317 237 477 461 1,175 • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 114**115** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

Cross-Currency Swaps T he Group uses two types of Cross-Currency Swaps: - financing in Swiss francs swapped for euros: the Group’s fixed

rate bonds in Swiss francs have been swapped for variable rate euro-denominated debt.

- euro-denominated debt swapped for foreign currencies to

finance operations in the United States and the United Kingdom. The Group has swapped euro-denominated debt for debt in US dollars and sterling, mainly at fixed rates of interest. Maturities of the Group’s cross-currency swaps are presented below. T he amounts shown correspond to the notional amount of the original euro leg of the swap, in millions of euros.

Options In addition, the Group had options (interest rate caps) on a notional amount of 

### € 90 million which were out of the money at December 31 , 2002.

Th e face value amount of commitments given and received in the form of swaptions and early repayments of borrowings amounted to 

### € 228 million and 

### € 1 99 million respectively.
Group debt structure, after interest rate hedges

T he weighted average interest rate on total debt after giving effect to hedging instruments (rate swaps and caps) was 4.7% for the year ended December 31, 2002 (5% in 2001 and 5.8% in 2000).
After giving effect to in-the-money options and other hedging instruments, at December 31, 2002 77% of Group debt was at fixed rates of interest and 23% was at variable rates. Net debt at December 31, 2002 before and after the effect of crosscurrency swaps was in the following currencies. The difference between the total amount in this table and the total amount of the net debt above is due to the inclusion of accrued interest. received Fixed CHF variable EUR fixed EUR Fixed EUR variable EUR variable EUR paid variable EUR variable USD variable USD Fixed USD fixed USD fixed GBP Total 

### 2003 276 276 2004 246 7 15 30 30 328 2005 297 297 2006 138 138 2007 - 2008 - 2009 49 49 Total 246 7 15 463 327 30 1, 088

Excluding derivatives Including derivatives year-end rate hedging rate (In € millions) 

### Net debt in:
EUR 4,394 3,772 % of total debt 64% 55% USD 1,126 1,833 % of total debt 16% 27% GBP 936 1,095 % of total debt 14% 16% CHF 271 (32) % of total debt 4% 0% Other currencies 158 217 % of total debt 2% 3% Total de bt* 6,886 6,886 * Excluding accrued interest. • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 115**116**

Including the effect of derivatives and at the year-end rate, total debt came to over 

### € 77 million. The difference, which reflects the exchangerate impact of cross-currency swaps (

### € 76 million) and forward currency swaps (

### € 1 million), is recorded under “Other payables and accrued expenses”. Its contra entry is the revaluation difference on assets financed in the target currency (example: assets in dollars for a cross-currency swap to lend euros and borrow dollars).

Fa ir value of derivative instruments T he fair value of derivative financial instruments used by the Group is as follows (excluding accrued interest):

T he negative amount of 

### € 1 40.5 million shown for cross currency swaps represents the cost of replacing these swaps on the market at year-end (including 

### € 76 million recognized under “Other payables and accrued expenses” – see note 19 ). However, the swaps were acquired for hedging purposes and are intended to be retained until maturity. Any exchange loss on the swaps at maturity will be offset by a corresponding gain on the hedged instruments.



### EFFECT OF AN INCREASE IN INTEREST RATES At December 31, 2002, a 1% increase in interest rates would have the following impact on Group interest expense in 2003, assumingthat the total amount of debt remains stable and decreases in fixedrate debt are offset by matching increases in variable-rate debt. 

### MARKETABLE SECURITIES Marketable securities include units in SICAV and other mutual funds recorded at the lower of cost and market. All of these securities have variable remuneration rates.
Financial transactions such as purchases and sales of marketable securities and currency or interest-rate hedging instruments, are carried out with diversified and high-quality counterparties. Credit risk is therefore low. The choice of counterparties as well as the determination of position limits by counterparty is part of a rigorous and selective process.



### FOREIGN CU RRENCY RISK MANAGEMENT Commercial transactions T he Group’s policy with regard to currency risk consists of hedging commercial transactions carried out by Group entities in currencies other than their functional currencies. Compagnie de Saint-Gobain and its subsidiaries may use options and forward contracts to hedge exposure arising from commercial transactions.
Subsidiaries are not authorized to enter into option contracts with external counterparties. Instead, options are set up exclusively with Compagnie de Saint-Gobain, the parent company of the Group, which then takes a reverse position on the market.
Most forward contracts are for periods of around three months. However, forward contracts taken out to hedge firm orders may have terms of up to two years. Subsidiaries are authorized to enter into forward contracts with their banks for periods of less than two years.

T he majority of transactions are hedged, invoice by invoice or order by order, with Saint-Gobain Compensation, the entity set up to manage the Group’s currency risks. Saint-Gobain Compensation hedges these risks solely by means of forward purchases and sales of foreign currencies. This enables companies to hedge exposure arising from commercial transactions as soon as the risk emerges. Saint-Gobain Compensation reverses all its positions with Compagnie de Saint-Gobain and does not therefore have any open positions.

T he exposure of other Group companies to currency risks is hedged with Compagnie de Saint-Gobain as soon as the latter receives orders sent by the subsidiaries or by cash pools of the National Delegations. Exposure may also be hedged with the banks of the subsidiaries concerned. Total unhedged transactions for these companies amounted to 

### € 48 million at December 31, 2002. If the euro dropped by 1 cent against the Group’s trading currencies, Type of instrument Fair value
(In € millions) 

### Interest-rate swaps 56.6 Cross currency swaps (140.5) Purchased caps 0.4 Currency options 0 Energy swaps and futures 1.6

Impact of a 1% increase in interest rates on net interest and other financial charges (In € millions) 

### Impact excluding the effect of derivatives 8.3 Impact including the effect of derivatives 15.8 • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 116**117** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

the impact would be less than 

### € 1 million, which is not material at the level of the consolidated financial statements.

Financial transactions Hedging of financial transactions is managed on a case-by-case basis, for example for acquisitions in foreign currency, repatriation of dividends or capital contributions to subsidiaries. Option-based strategies are generally used in these cases.

The Group had no outstanding foreign currency options at December 31, 2002.



### ENERGY RISK MANAGEMENT T he Group hedges part of its natural gas costs in the United States using fixed-rate borrower/variable-rate lender swaps on the NYMEX and also on the futures market. There were no outstanding swaps at December 31, 2002. Outstanding futures contracts at December 31 , 2002 had a fair value of 

### € 1.4 million.
In addition, the Group has launched a hedging program to cover heating oil costs of some of its European subsidiaries. The hedges consist exclusively of fixed-rate borrower/variable-rate lender swaps based on various Platt’s references. At December 31, 2002, the nominal value of these swaps was 

### € 1.7 million and their fair value was not material.



### EQUITY RISK MANAGEMENT T he Group is not exposed to equity risk, as it always favors moneymarket funds and/or bonds when purchasing mutual funds or equivalents and is therefore not exposed to any equity risk on its short-term investments.

T he Group previously held a portfolio of shares in listed companies. All of these shares have been sold, apart from 12.3 million Vivendi Universal shares. These shares are carried in the balance sheet at their historical cost of 

### € 13 .88 per share, representing a total of 

### € 171 million.



### CO MPLEX COMMITMENTS Asset financing T he Group has set up a US$400 million receivables securitization program through its US subsidiary, CertainTeed Receivables Corporation, expiring in July 2006. Under this program, receivablesof the US subsidiaries are sold to a bank at daily intervals, on a norecourse basis. The bank then refinances the receivables through commercial paper issues. The amount received by the subsidiaries corresponds to a variable percentage of the face value of the receivables, determined mainly by reference to the interest rate on the bank’s commercial paper issues.

T he difference between the face value of the sold receivables and the proceeds received from the bank is treated as interest expense. In 2002, the amount recorded as interest expense came to 

### € 8.8 million (2001: 

### € 18 .7 million).

The sold receivables are recorded as off-balance sheet commitments in the amount of 

### € 3 85 million at December 31, 2002 (2001: 

### € 433 million).

T he main events which could cause the program to be terminated are a change in Compagnie de Saint-Gobain’s rating to below investment grade or default on any amounts due to the bank under the program.
Compagnie de Saint-Gobain has guaranteed the commitments of CertainTeed Receivables Corporation towards the bank under the program, in the amount of US$400 million.



## NOTE 22 – RESEARCH AND DEVELOPMENT AND ADVERTISING COSTS Selling, general and administrative expenses include research and development costs of 

### € 31 2 million, 

### € 320 million and 

### € 30 0 m illion for the years ended December 31, 2002, 2001 and 20 00, respectively.
Advertising costs amounted to 

### € 2 09 million in 2002, 

### € 222 million in 2001 and 

### € 2 46 million in 2000



## NOTE 23 – OTHER OPERATING EXPENSES AND IN COME

2 002 2001 2000 (In € millions) 

### P ension and other post-retirement benefit costs (see note 16) (199) (175) (161) Amortization of other intangible assets (76) (72) (65) Employee profit-sharing (134) (126) (118) Income from miscellaneous sales and other income and expenses 99 130 100 To

ta l other operating costs, net (310) (243) (244) • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 117**118**



## NOTE 24 – INTEREST AND OTHER FINANCIAL C HARGES, NET

To tal interest capitalized amounted to 

### € 2 million, 

### € 0.2 million, and 

### € 7 million for the years ended December 31, 2002, 2001, and 2 000 respectively. 

## NOTE 25 – NON-OPERATING EXPENSES AND IN COME Non-operating expenses and income include additions to and reversals from provisions for claims and litigation and environmental provisions, as well as reorganization costs arising on the disposal of loss-making activities and measures in favor of employees affected by downsizing plans.

In 2002, provisions for contingencies primarily included the asbestosrelated charge explained in notes 18 and 31. Reorganization costs mainly related to Flat Glass (Cristaleria de Hortaleza), Insulation (including the costs relating to the Europe-wide reorganization of Saint-Gobain Isover’s research centers), and Ceramics & Plastics (Saint-Gobain Céramiques Avancées Desmarquest).
In 2001, reorganization costs mainly related to Flat Glass (SaintGobain Glass France), Insulation and Reinforcements (Saint-Gobain Isover G + H), Pipe (Saint-Gobain PAM) and Ceramics & Abrasives (Saint-Gobain Ceramic Materials Canada, Saint-Gobain Ceramics & Plastics, Saint-Gobain Performance Plastics and Bay State).
In 2000, reorganization costs mainly related to Flat Glass (Saint-Gobain Cristalería, Saint-Gobain Glass Benelux, Saint-Gobain Glass France), Pipe (Saint-Gobain PAM, Saint-Gobain Gussrohr) and Containers (Vicasa).



## NOTE 26 – PROFIT ON SALES OF NON-CURRENT ASSETS In 2002, capital gains made on the disposal of certain non-strategic Group assets were almost totally offset by capital losses and asset write-downs.
In 2001, net profit on sales of non-current assets mainly concerned capital gains on the disposal of the Group’s entire stake in BNP Paribas, less asset write-downs and capital losses recorded by the Lapeyre Group.
In 2000, net profit on sales of non-current assets mainly related to the sale of shares in Vivendi and the Group’s entire interest in Essilor.



## NOTE 27 – NET INCOME EXCLUDING PROFIT ON SALE OF NON-CURRENT ASSETS

Fo r 2001 and 2000, the number of shares and earnings per share excluding capital gains have both been adjusted to reflect the impact of the four-for-one stock split of June 27, 2002.
Net income for the year amounted to 

### € 1,040 million in 2002, compared with 

### € 1,134 million in 2001 and 

### € 1,517 million in 2000.
Net income excluding profit on sales of non-current assets amounted to 

### € 1,051 million in 2002, versus 

### € 1,057 million in 2001 and 

### € 1,026 million in 2000. Based on the 341,010,680 shares outstanding at December 31, 2002 (2001: 341,034,512; 2 000: 340,853,052), earnings per share (EPS) excluding capital gains amounted to 

### € 3.08 in 2002 (2001: 

### € 3.10, 2000: 

### € 3.01).

The difference between net income and net income excluding profit on sales of non-current assets reflects the combined impact of 

### € 3 m illion in capital gains on sales of assets in 2002 (2001: 

### € 84 million; 2000: 

### € 5 84 million), the related tax effect (2002: 

### € 15 million; 2001: 

### € 32 million; 2000: 

### € 1 05 million) and minority interests related to the assets (2002: 

### € 1 million; 2001: 

### € 25 million; 2 000: 

### € 12 million). 2 002 2001 2000 (In € millions) 

### Remuneration of non-voting participating securities (see note 15) (26) (27) (29) Interest expense (446) (542) (577) Other financial charges (103) (170) (156) Interest income 69 108 88 Other financial income 18 41 66 Net (losses) gains on foreign exchange (16) (13) (4)
To

ta l interest and other financial charges, net (504) (603) (612)

2 002 2001 2000 (In € millions) 

### Provisions for contingencies (116) (13) (15) Reorganization costs Fran ce (53) (26) (37) Other European countries (60) (56) (109) North America (15) (24) (6) Rest of the world (3) (10) (8) Other (5) 7 17 Tota l non-operating expenses and income (252) (122) (158) • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 118**119** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



## NOTE 28 – STOCK-BASED PLANS
STOCK OPTION PLANS ON COMPAGNIE DE SAINT-GOBAIN S HARES Compagnie de Saint-Gobain has incentive stock option plans available to certain employees, and a Group Savings Plan (“PEG”), or employee stock purchase plan.

T he stock option plans allow the Board of Directors to grant options which enable the holder to obtain Saint-Gobain shares at a price based on the average share price for the 20-day period preceding the date of grant. Discounts of 10% and 5% on this average price were granted in 1997 and 1998 respectively. Such discounts were discontinued in 1999.
Options vest over a period of two, three, four or five years with full vesting occurring at the end of the vesting period. Options must be exercised within eight or ten years from the date of grant and all rights to options are forfeited if the employee terminates employment with the Group.
Since 1997, these plans no longer involve subscription options on new shares but purchase options on existing shares held in treasury stock for this purpose. Fu rt her to the four-for-one stock split of June 27, 2002, the number of options at December 31, 2001 and 2000 have been multiplied by four in order to permit year-on-year comparisons.
Movements relating to stock options outstanding in 2000, 2001 and 2 002 are listed below:
Shares Average exercise price (in euros) 

### Options outstanding at December 31, 1999 5,965,776 29.74 Options granted 2,716,500 37.69 Options exercised (370,016) 19.77 Options forfeited (13,836) 15.53 Options outstanding at December 31, 2000 8,298,424 32.81 Options granted 3,774,800 40.22 Options exercised (701,592) 22.25 Options forfeited (83,092) 36.63 Options outstanding at December 31, 2001 11,288,540 35.92 Options granted 3,785,500 23.53 Options exercised (334,456) 23.15 Options forfeited (164,520) 39.87 Options outstanding at December 31, 2002 14,575,064 32.95 • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 119

### G ROUP SAVINGS PLAN (P EG) OF COMPAG NIE DE SAINT-GOBAIN Fo r 2001 and 2000, the figures relating to the number of shares and the average price have both been adjusted to reflect the impact of the four-for-one stock split of June 27, 2002.

T he PEG employee stock purchase plan is open to all Group employees in France and in most other European countries who have completed a minimum of three months’ service with the Group. The plan offers shares to eligible employees at a 20% discount on the average price quoted for the shares for the 20-day period preceding the date of the meeting of the Board of Directors at which the Plan is set.
Employees can invest for a five or ten-year term. Over this period, employees may not sell their shares, barring exceptional circumstances.
Under the PEG, the Group issued 4,703,396, 3,612,600 and 7, 824,896 shares to employees in 2002, 2001, and 2000, respectively, at an average price per share of 

### € 33 .88 in 2002, 

### € 33 .25 in 2001 and 

### € 26 .50 in 2000. 

### STOCK OPTION PLAN ON LAPEYRE SHARES T

ransactions during 2000, 2001, and 2002 relating to stock options granted by Lapeyre are listed below:

At December 31, 2000 and 2001, 72,000 and 42,900 options were exercisable at exercise prices ranging from 

### € 31.16 to 

### € 32.0 1. **120**

At December 31, 2000, 2001 and 2002, 2,089,264, 2,130,560 and 3,413,064 options were exercisable at exercise prices ranging from 

### € 22. 88 to 

### € 31.27.
At December 31, 2002, 2,775,444 options were available for grant under the authorization given by the General Meeting of June 28, 2001. T he following table summarizes information about stock options outstanding at December 31, 2002:

Shares Average exercise price

(in euros) 

### Options outstanding at December 31, 1999 105,450 31.33 Options exercised (33,450) 31.70 Options outstanding at Dec em ber 31 , 2 000 72, 000 3 1.16 Options exercised (29,100) 29.89 Options outstanding at December 31, 2001 42,900 32.01 Options exercised (42,900) 32.01 Options outstanding at December 31, 2002 0 N/A Date of Options exercisable Options not exercisable Total options Type grant outstanding of options Exercise Number Average remaining Exercise Number Number

price of options contractual life price of options of options (in euros) in months (in euros) 

### 19 95 17.53 164,600 11 164,600 Subscription 1 996 21. 42 505,980 23 505,980 Subscription 19 97 28.47 904,904 35 904,904 Purchase 1 998 29.54 669,880 47 29.54 540,800 1,210,680 Purchase 1 999 40 .63 1,167,700 83 40.63 503,200 1,670,900 Purchase 2000 37.69 95 37.69 2,637,700 2,637,700 Purchase 2001 40.22 107 40.22 3,694,800 3,694,800 Purchase 2002 23.53 119 23.53 3,785,500 3,785,500 Purchase Total - 3,413, 064 - - 11,162,000 14,575,064 - • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 120**121** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



## NOTE 29 – CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS Contractual obligations and commercial commitments are described in the note below, except for off-balance sheet commitments related to debt and financial instruments which are explained in notes 20 and 21.



### CO MMITMENTS UNDER CAPITAL LEASES Non-current assets acquired under capital leases are capitalized in the consolidated financial statements and the related liability is recorded in the balance sheet.



### € 12 4 million of minimum future lease payments due under capital leases correspond to land and buildings. Total commitments under capital leases at December 31, 2002 are on a par with 2001.

Obligations under operating leases T he Group leases equipment and office, manufacturing and warehouse space under various non-cancelable operating leases. Lease terms generally range from 1 to 9 years. Certain contracts contain renewal options for various periods of time and contain clauses for payment of real estate taxes and insurance. In most cases, management expects that in the normal course of business, leases will be renewed or replaced by other leases. Net rental expense was 

### € 3 86 million in 2002 (2001: 

### € 3 48 million; 2 000: 

### € 31 5 million), corresponding to rental expenses of 

### € 411 million (2001: 

### € 37 3 million; 2000: 

### € 329 million) less 

### € 25 million of subletting revenue (2001: 

### € 25 million; 2000: 

### € 14 million).

Fu ture minimum commitments under operating leases are as follows: Capital leases Future lease 

### payment (In € millions) 

### due within one year 20 between one and five years 62 beyond five years 49 Total 131 Less estimated executory costs included in capital leases - Tota l minimum future lease payments 131 Less interest costs (46) Present value of net minimum lease payments 85

Total Payments due within one year betw een one and five years beyond five years (In € millions) 

### Operating leases Rental expense 1,845 339 880 626 Subletting revenue (128) (19) (57) (52) Total 1,717 320 823 574 • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 121**122**

Other contractual obligations Non-cancelable purchase commitments include commitments to purchase raw materials and services, as well as non-cancelable orders for fixed assets. T he Group has also received guarantees in an amount of 

### € 60 million.



## NOTE 30 – WORKFORCE AND PE RSONNEL EXPENSES AVERAGE HEADCOUNT AND CORRESPONDING PERSONNEL EXPENSES REMUNERATION OF DIRECTORS AND CORPORATE OFFICERS T he total direct and indirect remuneration received by Corporate Officers from Group companies in France and abroad amounted to 

### € 13 million in 2002, 

### € 12 .9 million in 2001 and 

### € 12 .6 million in 2000. The gross variable portion included in these remuneration amounts came to 

### € 4.6 million in 2002, 

### € 4.7 million in 2001 and 

### € 5.2 million in 2000.
Attendance fees paid to Directors amounted to 

### € 0.5 million in 2002 (2001: 

### € 0.5 million; 2000: 

### € 0.3 million). Tota l Amount of commitments due within one year bet ween one and five years beyond five years (In € millions) 

### Discounted bills 12 12 Security for borrowings 16 14 2 Other commitments given 122 52 15 55 Total 150 78 17 55

Personnel expenses (In € millions) 2 002 2001 2000 

### Remuneration (including social security contributions) 6,465 6,519 6,416 T he Group held 

### € 31 million of receivables secured by guarantees at December 31, 2002. The majority of these are insured or guaranteed receivables related to Pipe export contracts.

A

verage number of employees 2 002 2001 2000 

### Fu lly consolidated companies Managers 15,954 15,852 15,083 Supervisors 63,319 62,164 56,375 Other employees 90,368 93,159 96,019 Total 1 69,641 171,175 167,477 Proportionately consolidated companies Managers 32 38 25 Supervisors 531 200 213 Other employees 1,052 763 459 Sub-total 1,6 15 1,001 697 Total 171,256 172,176 168,174 

### CO MMERCIAL COMMITENTS Total Payments due within one year bet ween one and five years beyond five years (In € millions) 

### Non-cancelable purchase commitments 345 227 89 29 • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 122**123** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



## NOTE 31 – LITIGATION In France, at December 31, 2002, 397 lawsuits based on “inexcusable fault” (“faute inexcusable”) had been filed by formeremployees (or persons claiming through them) of Everite and SaintGobain PAM (“the employers”), which in the past had carried on fiber-cement operations, for asbestos-related occupational diseases, with the aim of obtaining supplementary compensation over and above the assumption of occupational diseases compensation by the French Social Security.
At the end of 2002, 123 of these 397 lawsuits had been heard by the Court of Appeal which issued rulings holding the employers liable on the grounds of “inexcusable fault” in all of the cases. These rulings were all appealed to the Cour de Cassation (the French final court of appeal) by the company concerned. 15 of these appeals, lodged by Everite, were heard by the Cour de Cassation and dismissed on February 28, 2002.
However, in 89 of the 123 appeal court rulings against the employers on the grounds of inexcusable fault, the Social Security authorities were ordered to pay the compensation for the victims for procedural reasons (statute of limitations, liability issues (“inopposabilité”)). 51 of these rulings were confirmed by the Cour de Cassation on November 26 and December 12, 2002.
At December 31, 2002, compensation payable by Everite and SaintGobain PAM, for the 44 cases (since the beginning) where they had been required to assume the burden of compensation, amounted to a total of 

### € 4 million, which has been expensed.

In addition, at December 31, 2002, 63 suits based on inexcusable fault had been filed by current or former employees of seven French companies in the Group, in particular involving circumstances where equipment containing asbestos had been used to protect against heat from ovens. In all of the rulings issued by end-2002, the employees’ claims were dismissed. A final ruling has been handed down in 3 of these cases and the 9 others have been appealed to the Cour de Cassation by the employees concerned. Six of these cases have now been heard by the Cour de Cassation, which dismissed the appeals on December 12, 2002, ruling that the employer was not liable for “inexcusable fault”.

A fund has also been created in France known as the FIVA. It is intended to fully compensate the loss of persons officially recognized as having contracted occupational diseases caused by asbestos, as well as of all persons who have been exposed to asbestos on French territory. A decree dated October 23, 2001 sets out the conditions relating to the operation of the fund, the compensation procedure applicable and claims of subrogation made by the fund itself. Any person who accepts an offer of compensation from the fund will be barred from taking legal action to obtain other compensation on the same grounds, including any claim for “inexcusable fault” against an employer. However, once the applicant has accepted an offer of compensation, the fund must make a subrogated claim against any employer considered to be responsible for the loss concerned.
On January 27, 2003 the fund published guidelines in the form of a compensation scale. At December 31, 2002, as far as the Group is aware, no current or former employees of the Group’s French companies had applied for compensation from the fund. However, four former employees have indicated that they intend to discontinue their “inexcusable fault” lawsuits already commenced, in order to bring their claims before the fund.
In the United States, three Group companies that once manufactured products containing asbestos such as fiber-cement pipes, roofing products or specialized insulation, are facing legal action from persons other than the employees or former employees of the companies. The claims are based on alleged exposure to the products although in the vast majority of cases the claimants cannot demonstrate any specific exposure to one or more products, or any specific illness or physical disability. The majority of these claims are made simultaneously against many other non-Group entities which have been manufacturers, distributors, installers or users of products containing asbestos.
CertainTeed, the main US subsidiary involved in these cases, was for a long period a member of the Center for Claims Resolution, an organization which grouped together defendants facing the same type of claims and handled the defense of all such claims, and allocated court awards, negotiated out of court settlements and defense costsamong the organization members on the basis of a pre-agreed prorata formula. Since February 14, 2001 the organization no longer represents its members in this way, and CertainTeed now assumes directly the defense of claims made against it, which increased significantly in 2001 with a total of 60,000 new cases.

T his trend continued in 2002, with some 67,000 new claims filed against CertainTeed during the year. The vast majority of these new claims are “mass” actions which can involve hundreds or even thousands of plaintiffs making claims for damages against dozens of companies operating in different economic sectors, without providing evidence of any specific exposure to any product allegedly • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 123**124**

manufactured by CertainTeed, or of any specific illness or physical disability. Only around 5% of these new lawsuits involve a serious illness, cancer or mesothelioma.
Almost all of the claims against CertainTeed are settled out of court. Some 44,000 such settlements were entered into in 2002. Taking into account the 84,000 outstanding cases at the end of 2001 and the new cases having arisen during 2002, some 107,000 claims were outstanding at December 31, 2002.

T he average individual cost of settlement based on all claims settled decreased to US$1,955 in 2002, from US$2,800 a year earlier. Total compensation paid for these cases – including claims settled in 20 01 but paid out in 2002, and those fully settled and paid in 2002 – amounted to US$103 million in 2002 (versus US$53 million in 20 01 ). US$96 million of this amount has been or will be covered by insurance.
In view of all of these developments, the Group recorded a 

### € 10 0 m illion charge in 2002 to make provision for such claims which may arise or subsist in the future, including 

### € 50 million recorded in the first half of the year. At December 31, 2002 the Group’s total cover for asbestos-related claims against CertainTeed in the United States amounted to 

### € 426 million, comprised of insurance coverage available at that date and the provision existing at that date referred to above. This cover represents approximately 4 to 5 years of total compensation payments based on the corresponding figure for 2002.
In Brazil, Brasilit and Eterbras offer an agreed amount of compensation to their former employees for asbestos-related occupational diseases, as well as permanent medical assistance. Only a few disputes were outstanding at December 31, 2002, which do not gi ve rise to any significant risks for the subsidiaries concerned.



## NOTE 32 – RELATED-PARTY TRANSACTIONS
T he main balances and transactions with companies accounted for by the equity method are as follows: 2 002 2001 2000 (In € millions) 

### Assets Financial receivables 11 9 1 Inventories 2 7 Other receivables 21 13 14 C ash and cash equivalents 7 15 20 Provisions for impairment in value (2) (2) (2) Liabilities Short-term debt 6 5 18 C ash advances 4 2 8 Expenses Purchases 28 63 121 Income Sales 61 64 79 

## NOTE 33 – SEGMENT AND GEOGRAPHIC INFORMA T ION In its various businesses, the Saint-Gobain Group is a major worldwide player in the manufacturing and distribution of materials. Its operations break down into three main business sectors made up of divisions.
Segment information is presented as follows: Glass • Flat Glass • Insulation & Reinforcements • Containers
High-Performance Materials • Ceramics & Plastics and Abrasives • Essilor (until June 30, 2000)
Housing Products • Building Materials • Building Materials Distribution • Pipe

The Group has operations in more than 48 countries. Its principal markets are in Europe (mainly in France, where its head office is located) and in North America. Management uses several different indicators to measure the operational performance of each division and to make resource-allocation decisions. These indicators are based on the data used to prepare the consolidated financial statements. Sales between divisions are generally carried out based on the same conditions as sales to external customers and are eliminated in consolidation. The accounting principles applied by the divisions are the same as those described in note 1. • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 124**125** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



### SEGMENT INFORMATION BY SECTOR AND BY DIVISION

* “Other” represents intercompany eliminations in relation to sales, and the holding company activity for the other captions.

(In € millions) SECTOR



### External sales 4,406 3,147 4,072 3,592 2,880 10,951 1,226 30,274 Internal sales 17 182 4 45 194 2 118 (562) Net sales 4,423 3,329 4,076 3,637 3,074 10,953 1,344 (562) 30,274 Operating income 495 351 479 244 335 534 135 9 2,582 Depreciation and amortization (excluding goodwill) (328) (240) (293) (189) (131) (183) (61) (9) (1,434) Amortization of goodwill 1 (6) (21) (66) (22) (46) (10) 1 (169) Net goodwill 274 309 642 1,642 736 1,654 257 7 5,521 To tal assets 4,658 3,075 3,689 4,632 2,562 8,620 1,396 1,516 30,148 Equity method investees 3 5 8 Purchases of property, plant and equipment 377 198 294 160 135 227 39 1 1,431 Equity in earnings (losses) of equity investees (4) 4 2 2 4 GLASS HIGHPERFORMANCE

MATERIALS HOUSING PRODUCTS

Flat Glass In sulation andReinforcements Containers Ceramics & Plastics and Abrasives Building Materials Building Materials Distribution Pipe 

### Y

ear ended December 31, 2002 Other* TOTAL

* “Other” represents intercompany eliminations in relation to sales, and the holding company activity for the other captions.

(In € millions) SECTOR



### External sales 4,452 3,118 4,067 3,970 3,000 10,520 1,263 30,390 Internal sales 26 156 3 48 184 1 134 (552) Net sales 4,478 3,274 4,070 4,018 3,184 10,521 1,397 (552) 30,390 Operating income 551 402 404 392 294 475 146 17 2,681 Depreciation and amortization (excluding goodwill) (320) (243) (298) (195) (137) (185) (68) (6) (1,452) Amortization of goodwill (6) (9) (23) (70) (25) (44) (8) 1 (184) Net goodwill 293 326 780 1,987 782 1,609 282 6 6,065 To tal assets 5,133 3,597 4,151 5,501 2,714 8,485 1,510 1,051 32,142 Equity method investees 1 3 6 1 10 21 Purchases of property, plant and equipment 361 229 237 173 134 252 43 1 1,430 Equity in earnings (losses) of equity investees 2 (6) 6 2 1 2 7 GLASS HIGHPERFORMANCE

MATERIALS HOUSING PRODUCTS

Flat Glass In sulation andReinforcements Containers Ceramics & Plastics and Abrasives Building Materials Building Materials Distribution Pipe 

### Y

ear ended December 31, 2001 Other* TOTAL Th e Pipe Division’s distribution operations have been transferred, as from January 1, 2002, to the Building Materials Distribution Division. T he segment information by Sector and by Division for 2001 and 2 000 has been adjusted to take into account this transfer on a pro forma basis. • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 125**126**

Information reported in 2000 concerning the “Essilor” column covers the period from January 1, 2000 to June 30, 2000, the time during which Essilor was fully consolidated. Results reported while the company was accounted for by the equity method from July 1, 2000 to the date Essilor shares were sold, appear under equity in earnings (losses) of equity investees in the “Other” column. (In € millions)



### External sales 4,144 3,172 3,903 4,059 978 2,906 8,382 1,271 28,815 Internal sales 23 82 3 36 161 1 121 (427) Net sales 4,167 3,254 3,906 4,095 978 3,067 8,383 1,392 (427) 28,815 Operating income 430 423 374 538 130 252 415 113 18 2,693 Depreciation and amortization (excluding goodwill) (322) (224) (307) (184) (46) (133) (157) (71) (5) (1,449) Amortization of goodwill (7) (10) (16) (60) (13) (30) (40) (5) (1) (182) Net goodwill 297 322 769 1,908 835 1,580 286 7 6,004 To tal assets 4,788 3,347 4,198 5,527 2,728 8,241 1,554 1,038 31,421 Equity method investees 1 (2) 8 7 Purchases of property, plant and equipment 425 258 278 205 84 172 244 52 4 1,722 Equity in earnings of equity investees 33 1 9 2 8 9 2 20 84 GLASS SECTORHIGHPERFORMANCE

MATERIALS HOUSING PRODUCTS

Flat Glass In sulation andReinforcements Containers Ceramics & Plastics and Abrasives Essilor Bu ilding Materials Building Materials Distribution Pipe 

### Y

ear ended December 31, 2000 Other* TOTAL

* “Other” represents intercompany eliminations in relation to sales, and the holding company activity for the other captions. • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 126**127** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

Selected information related to the Group’s operations by geographical area is as follows:

T he geographical breakdown of external sales for 2002, 2001 and 2000 is as follows: Franc e O ther European North Rest of the Internal TOTAL (In € millions) Countries America world sales 

### 2 002 Net sales 9,439 13,068 6,785 2,195 (1,213) 30,274 Non-current assets 4,358 7,566 5,130 1,786 18, 840 2001 Net sales 9,095 12,944 7,180 2,293 (1,122) 30,390 Non-current assets 4,073 7,461 5,946 2,198 19,678 2 000 Net sales 8,731 11,452 7,452 2,239 (1,059) 28,815 Non-current assets 4,099 7,334 5 ,903 2,194 19,530

Franc e O ther European North Rest of the TOTAL (In € millions) Countries America world 

### 2 002 External sales 8,083 12,847 6,555 2,789 30,274 2001 External sales 7,741 12,749 7,034 2,866 30,3 90 2 000 External sales 7,494 11,249 7,249 2,823 28,815 • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 127**128** 

## NOTE 34 – PRINCIPAL FULLY CO NSOLIDATED COMPANIES

Percent held directly (In € millions) and indirectly 

### At December 31, 2002 GLASS SECTOR Flat Glass S aint-Gobain Glass France France 100.00% S aint-Gobain Sekurit France France 100.00% S aint-Gobain Sekurit Deutschland GmbH & CO Kg Germany 99.84% S aint-Gobain Glass Deutschland GmbH Germany 99.84% Cebrace Cristal Plano Ltda Brazil 50.00% S aint-Gobain Cristaleria SA Spain 99.59% Solaglas Ltd United Kingdom 99.95% S aint-Gobain Glass Italia Italy 100.00% S aint-Gobain Sekurit Italia Italy 100.00% S aint-Gobain Vidros Brazil 100.00% Hankuk Sekurit Limited South Korea 70.57% Insulation and Reinforcements S aint-Gobain Isover France 100.00% S aint-Gobain Vetrotex France France 100.00% S aint-Gobain Isover G+H AG Germany 99.88% S aint-Gobain Vetrotex Italia SpA Italy 100.00% CertainTeed Corporation United States 100.00% S aint-Gobain Vetrotex America Inc. United States 100.00% S aint-Gobain Ecophon Group Sweden 99.30% Containers S aint-Gobain Desjonquères France 99.99% S aint-Gobain Emballage France 100.00% S aint-Gobain Oberland AG Germany 96.67% S aint-Gobain Vicasa SA Spain 99.50% S aint-Gobain Containers Inc. United States 100.00% S aint-Gobain Calmar Inc. United States 100.00% S aint-Gobain Vetri SpA Italy 99.98% HI G H-PERFORMANCE MATERIALS SECTOR Ceramics & Plastics and Abrasives S aint-Gobain Abrasifs France 99.92% Société Européenne des Produits Réfractaires France 100.00% S aint-Gobain Abrasives Inc. United States 100.00% S aint-Gobain Ceramics & Plastics Inc. United States 100.00% S aint-Gobain Performance Plastics Corp. United States 100.00% S aint-Gobain Abrasivi Italy 99.92% SE PR Italia Italy 100.00% S aint-Gobain Abrasivos Brasil Brazil 100.00% HOUSING PRODUCTS SECTOR Building Materials S aint-Gobain Weber France 99.99% S aint-Gobain Stradal France 100.00% S aint-Gobain Terreal France 99.86% CertainTeed Corporation United States 100.00% Brasilit Brazil 100.00% Building Materials Distribution Distribution Sanitaire Chauffage France 100.00% Lapeyre France 100.00% Po int.P France 100.00% R aab Karcher GmbH Germany 100.00% S aint-Gobain Rohrsysteme GmbH Germany 100.00% S aint-Gobain Building Distribution Ltd United Kingdom 99.95% S aint-Gobain Pipe Systems Plc United Kingdom 99.95% R aab Karcher BV Netherlands 100.00% Pipe S aint-Gobain PAM SA France 100.00% S aint-Gobain Gussrohr KG Germany 100.00% S aint-Gobain Pipelines Plc United Kingdom 99.95% S aint-Gobain Canalizacion SA Spain 99.92% S aint-Gobain Condotte SpA Italy 100.00% S aint-Gobain Canalizaçao SA Brazil 100.00% 

### Principal proportionally consolidated company at December 31, 2002 GLASS SECTOR Flat Glass Hankuk Glass Industries South Korea 41.29% • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 128**129** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

To the shareholders,
In compliance with the assignment entrusted to us by your Annual General Meeting, we have audited the accompanying consolidated financial statements of Compagnie de Saint-Gobain, expressed in euros, for the years ended December 31, 2002, 2001 and 2000.

These consolidated financial statements have been approved by the Board of Directors. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the professional standards applied in France. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements give a true and fair view of Compagnie de Saint-Gobain and its subsidiaries’ financial position and their assets and liabilities as of December 31, 2002, 2001 and 2000 and of the results of their operations for the years then ended in accordance with French accounting principles and regulations.

W ithout qualifying the opinion expressed above, we draw your attention to note 1 to the consolidated financial statements, which describes the impact on the accounts of a change in the method of accounting for retirement and postretirement benefit obligations, implemented during the year ended December 31, 2000.

We have also reviewed the information given in the Group’s management report. We have no comments as to its fair presentation and its conformity with the consolidated financial statements.

Pa ris, March 20, 2003 

# STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2002

T he Statutory Auditors

PricewaterhouseCoopers Audit S.E.C.E.F.

Mike Moralee Christian Marcellin Jacques Tenette • STGOBAIN RA02-CH7/GB 13/06/03 9:52 Page 129**130**



## STATEMENTS OF INCOME ANALYSIS OF THE STATEMENTS OF INCOME

1 - INCOME FROM INVESTMENTS IN SUBSIDIARIES AND AFFILIATES

2 - NET INCOME FROM MARKETABLE SECURITIES

3 - INTEREST EXPENSE 

# COMPAGNIE DE SAINT-GOBAIN (Parent Company) 

# VIII - FINANCIAL STATEMENTS OF COMPAGNIE DESAINT-GOBAIN (Parent Company)

2 002 2001 2000 (In € thousands) 

### Income from investments in subsidiairies and affiliates 932,447 1,173,715 672,598 Net income from marketable securities (1) 

### 9,927 20,139 24,061 Interest expense (1) 

### (451,048) (597,309) (570,736) Other financial expense (1,959) (1,494) (4,193) Net financial income (note 2) 489,367 595,051 121,730 Other operating income (expense) (20) 7,456 (5,831) Income before tax and exceptional items 489,347 602,507 115,899 Exceptional items (note 3) 76 ,173 475,345 945,176 Income tax (note 4) 30,396 15,020 (46,464) Net income 595,916 1,092,872 1,014,611 (1) To present financial income and expense more clearly, financial income from off- balance sheet instruments is deducted from expenses on the hedged item. This presentation method had the effect of reducing expenses by € 122,335 thousand in 2002, € 147 ,863 thousand in 2001 and € 158,728 t housand in 2 000. 2 002 2001 2000 (In € thousands) 

### Income from investments 500,867 587,988 157,960 Income from related receivables and loans 431,580 585,727 514,638 Total 932,447 1,173,715 672,598

2 002 2001 2000 (In € thousands) 

### Interest income (1) 

### 9,350 18,615 20,677 Net income from sales of marketable securities 577 1,524 3,384 Total 9,927 20,1 39 24,061

2 002 2001 2000 (In € thousands) 

### Non-voting participating securities 26,272 27,432 29,221 Other interest expense (1) 

### 424,776 569,877 541,515 Tota l 4 51 ,048 597,309 570,736(1) To present financial income and expense more clearly, financial income from offbalance sheet instruments is deducted from expenses on the hedged item. This presentation method had the effect of reducing expenses by € 122,335 thousand in 2002, € 147 ,863 thousand in 2001 and € 158,728 t housand in 2 000. • STGOBAIN RA02-CH8/GB 13/06/03 9:57 Page 130**131** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



### 4 - OTHER FINANCIAL INCOME (EXPENSE)

5 - OTHER OPERATING INCOME (EXPENSE) 6 - EXCEPTIONAL ITEMS

2 002 2001 2000 (In € thousands) 

### Income from non-current assets 68 143 83 Amortization and provisions (2,149) (1,786) (2,870) E xchange gains (losses), net 122 149 (1,406) Total (1,959) (1,494) (4,193)

2 002 2001 2000 (In € thousands) 

### Other operating income:

- Group (consolidated companies) 152,258 144,634 136,718 - Outside the Group 5,342 5,309 8,317 Tota l 1 57,600 149,943 145,035 Other operating expense:

- Personnel expenses (49,185) (48,129) (40,722) - Other (108,447) (94,495) (109,571) Total (157,632) (142,624) (150,293) Share in profits/(losses) of joint ventures 12 137 (573) Net (20) 7,456 (5,831) 2 002 2001 2000 (In € thousands) 

### Exceptional income:

- From revenue transactions 24,145 6,713 50,137 - From capital transactions 364,082 3,063,714 2,836,863 - Write-back of provisions 105,464 15,413 732 Tota l 493,691 3,085,840 2,887,732 Exceptional expenses:

- On revenue transactions 10,004 7,173 7,567 - On capital transactions 364,340 2,557,668 1,914,807 - Depreciation, amortization and provisions 43,174 45,654 20,182 Tota l 4 17 ,5 18 2,610,495 1,942,556 Net exceptional income 76,173 475,345 945,176 • STGOBAIN RA02-CH8/GB 13/06/03 9:57 Page 131**132**



# BALANCE SHEETS AT DECEMBER 31

A SSETS 2 002 2001 2000 G ROSS DEPRECIATION NET AMORTI ZAT ION AND In € thousands PROVIS IONS 

### NON-CURRENTA SSETS Intangible assets (note 5)

- Goodwill (1) 

### 567 (431) 1 36 15 9 181 - Other intangible assets 33,075 (21,188) 11,887 15,611 9,708 - In progress 961 961 792 6,958 Property and equipment (note 6)

- Land 620 620 620 620 - Buildings 487 (235) 252 262 273 - Other 10,338 (7,627) 2,711 3,025 3,405 - In progress 0 4 - Financial investments (2) 

### (note 7)

- Investments in subsidiaries and affiliates 7,895,809 (5,610) 7,890,199 7,805,066 7,338,746 - Investment-related receivables 5,539,962 5,539,962 6,381,207 6,298,655 - Other investment securities 216,158 (68,474) 147,684 179,667 100,368 - Loans 1,542,190 1,542,190 892,510 770,312 - Other financial investments 1,080 1,080 1,166 1,062 TOTAL I 15,241,247 (1 03,565) 15,137,682 15,280,089 14,530,288

CU RRENT ASSETS (note 8)

- Other receivables (3) 

### 96,702 96,702 49,376 159,442 - Marketable securities 76,943 76,943 2,040 73,061 - Cash and cash equivalents 1,303,929 1,303,929 2,006,256 2,686,665

ACCR UALS - Prepayments (3) 

### 3,306 3,306 8,059 18,102 TOTA L II 1,480,880 - 1,480,880 2,065,731 2,937,270 - Deferred charges TOTAL III 10, 5 64 10,564 2,235 2,868 T ranslation adjustments - assets TOTAL IV - - - - - TOTAL 16,732,691 (1 03,565) 16,629,126 17,348,055 17,470,426 (1) including leasehold rights 

### - - - (2) of which due within one year 

### 3,891,338 3,482,724 4,064,129 (3) of which due in over one year 

### 942 1 ,112 5,206 • STGOBAIN RA02-CH8/GB 13/06/03 9:57 Page 132**133** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

LIABILITIES AND SHAREHOLDERS’ EQUITY 2 002 2001 2000 In € thousands 

### S HAREHOLDERS’ EQUITY (note 9)

- Capital stock 1,364,043 1,364,138 1,363,412 - Additional paid-in capital 2,128,276 2,113,148 2,133,617 - Reserve for revaluation of assets 56,516 56,213 56,213 - Reserves:

Legal reserve (a) 

### 1 36,404 136,414 136,341 Untaxed reserves 2,548,798 2,273,498 1,601,019 Other reserves 106,415 106,415 106,415 - Unappropriated retained earnings 865,882 426,674 441,402 - Net income for the year 595,916 1,092,872 1,014,611 - Untaxed provisions (note 11) 6,807 6,625 6,568 TOTA L I 7,809,057 7,575,997 6,859,598

OTHER EQUITY (note 10)

Non-voting participating securities TOT AL I a 391,034 391,034 391,034

PR OVISIONS FOR CONTINGENCIES AND CHARGES (note 11)

- Provisions for contingencies 343,215 446,214 431,362 - Provisions for charges 10,020 9,588 9,061 TOTA L II 353,235 455,802 440,423

DEBT AN D PAYABLES (1) 

### (note 12)

- Other bonds 1,255,867 309,099 301,894 - Bank borrowings (2) 

### 716, 522 760,266 1,703,986 - Other short- and long-term debt 6,007,077 7,544,234 7,460,958 - Taxes and social charges payable 11,864 37,582 118,781 - Other payables 84,470 274,041 192,091 Accruals (1) 

### Defferred income 1,661 TOTAL III 8,075,800 8,925,222 9,779,371 Translation adjustments - liabilities TOTAL IV - - - TOTAL 16,629,126 17,348,055 17,470,426 (a) of which reserve for long-term capital gains 

### 14 ,225 14,225 14,225 (1) due in over one year 

### 6,054,189 4,918,454 5,266,308

due within one year 

### 2,021,611 4,006,768 4,513,063 (2) of which short-term bank loans and overdrafts 

### 234,419 282,363 357,882 • STGOBAIN RA02-CH8/GB 13/06/03 9:57 Page 133**134**



# STATEMENTS OF CASH FLOWS

2 002 2001 2000 In € thousands 

### Net income 5 95,916 1,092,872 1,014,611 Depreciation and amortization 8,682 6,934 7,088 Changes in provisions (61,658) 30,242 19,349 Profit on sales of non-current assets, net 257 (506,046) (921,902)
Cash flows from operations 543,197 624,002 119,146 (Increase) decrease in other receivables (53,051) 118,955 19,906 Increase (decrease) in taxes and social charges payable (25,718) (81,199) 95,045 Increase (decrease) in other payables (189,571) 80,289 (106,109)
Net change in working capital (268,340) 118,045 8,842 Cash flows from operating activities 274,857 742,047 127,988 Acquisitions of intangible assets (1,923) (3,642) (8,119) Purchases of property and equipment (750) (868) (1,727) Disposals of property and equipment and intangible assets 79 38 79 Acquisition of investments in subsidiaries and affiliates and other investment securities (444,389) (3,014,621) (1,636,699) Purchases of treasury stock (162,051) (252,924) (376,173) Disposals of investments in subsidiaries and affiliates and other investment securities 364,003 3,063,676 2,836,784 (Increase) decrease in investment-related receivables 841,245 (82,552) (2,909,334) (Increase) decrease in long-term loans (649,680) (121,467) 241,618 (Increase) decrease in other financial investments 86 (104) 124
Cash flows from investing activities/divestments (53,380) (412,464) (1,853,447) Issues of capital stock 163,596 129,086 212,964 Dividends paid (378,364) (356,860) (300,916) Increase (decrease) in unappropriated retained earnings - - 13,184 Increase (decrease) in reserves for revaluation of assets - - - Increase (decrease) in other equity - - - Increase (decrease) in short– and long-term debt 586,068 (468,797) 2,309,553 Increase (decrease) in bank overdrafts and other short-term debt (1,220,201) (384,442) 471,386 Decrease (increase) in marketable securities (74,903) 71,021 16,492
Cash flows from financing activities (923,804) (1,009,992) 2,722,663
Increase (decrease) in cash and cash equivalents (702,327) (680,409) 997,204 Ca sh and cash equivalents at beginning of year 2,006,256 2,686,665 1,689,461 Ca sh and cash equivalents at end of year 1,303,929 2,006,256 2,686,665 • STGOBAIN RA02-CH8/GB 13/06/03 9:57 Page 134**135** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

T he financial statements cover the twelve month period from January 1 to December 31, 2002. T he following notes form an integral part of the annual financial statements. T hese financial statements were approved by the Board of Directors on March 20, 2003. 

## NOTE 1: ACCOUNTING PRINCIPLES AND MET HODS
Th e financial statements of Compagnie de Saint-Gobain have been drawn up in accordance with French generally accepted accounting principles.

The presentation of the statement of income has been adapted to the activity of Compagnie de Saint-Gobain which is a holding company.

T he principle of consistent application of accounting principles from the previous year has been complied with.

The financial statements of the German branch are included in those of Compagnie de Saint-Gobain’s head office.



### INTANGIB LE ASSETS Assigned goodwill not covered by any form of legal protection is amortized over twenty-five years. Other intangible assets are amortized over periods of between three and five years.



### PROPERTY AND EQUIPMENT Property and equipment are stated at cost (purchase price plus related costs, excluding expenses incurred on acquisition), except for assets acquired prior to December 31, 1976, which have been revalued.
Depreciation is based on the estimated useful life of assets using the straight-line or reducing-balance method. The most commonly used useful lives are as follows: 

### FINANCIAL INVESTMENTS, INVESTMENTS IN SUBSIDIARIES AND AFFILIATES AND OTHER INVESTMENT SECURITIES The gross value of these items represents cost excluding expenses.

The book value of investments in holding companies is assessed based on revalued net assets. Provisions for impairment in value are generally recorded or written back based on the average of the values obtained between revalued net assets of the company concerned and capitalized average net cash flows. Increases and write-backs of provisions against investment securities are included in exceptional items.



### MARKETABLE SECURITIES Marketable securities mainly include units in SICAV and other mutual funds recorded at the lower of cost and market.



### RECEIV ABLES Receivables are carried at their nominal value. A provision for impairment in value is recorded when their fair value falls below net book value.



### FOREIGN CU RRENCY TRAN SACTIONS Tr ansactions in foreign currencies are recorded at the exchange rate prevailing on the transaction date. Receivables and payables which are specifically hedged are recorded in the balance sheet at the hedging rate. Other receivables, payables and bank balances in foreign currencies, as well as the instruments used to hedge them, are converted at the year-end rate and the related exchange differences are recorded in the balance sheet under “Translation adjustments”. Provisions are booked for exceptional unrealized exchange losses which are not hedged.



### FINANC IAL INSTRUMENTS Compagnie de Saint-Gobain manages, mainly on behalf of its subsidiaries, the hedging of foreign exchange and interest rate risks resulting from the Group’s international activities.
Liquidity risk, which is also managed by Compagnie de Saint-Gobain, is not material.
Market risks exclusively concern investments held for strategic purposes.
In order to anticipate future developments in the accounting treatment of financial instruments, the Company amended its accounting policies in 2001 in order to take into account fair value. 

# NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS

- Buildings 40 years Straight-line - Improvements and additions 12 years Straight-line - Installations and fittings 5 or 12 years Straight-line - Office furniture 10 years Straight-line - Office equipment 5 years Straight-line - Vehicles 4 years Straight-line - Computer equipment 3 years Straight-line or reducing-balance • STGOBAIN RA02-CH8/GB 13/06/03 9:57 Page 135**136**

T he presentation of the financial statements for the year ended December 31, 2002 is unchanged from prior years.

The main financial instruments used to hedge foreign exchange risks are forward purchase and sale contracts and options. Hedged receivables and payables are recorded in the balance sheet at the hedging rate.

T he portion representing the extrinsic (time) value of unrealized gains or losses on currency options used to hedge the above positions is taken to income, and the portion representing intrinsic value is recorded in the balance sheet. Unrealized losses on options which are not classified as hedges are recognized in the income statement, whereas unrealized gains are not taken into account.
Compagnie de Saint-Gobain uses interest-rate swaps and swaptions (caps and floors) as well as forward rate agreements to hedge its exposure to increases in interest rates.
Income and expenses related to interest-rate swaps are recognized on a symmetrical basis with the expenses and income on the hedged items.

T he portion representing the extrinsic (time) value of unrealized gains or losses on interest rate options used to hedge the above positions is taken to income and the portion representing intrinsic value is recorded in the balance sheet. Interest-rate options which are not classified as hedges are recognized in the income statement at market value.



### CONSOLIDATED TAX AGR EEMENTS Compagnie de Saint-Gobain is assessed for income tax on its consolidated fiscal income as provided for under article 209 quinquies of the French Tax Code (CGI) as well as the integrated tax (Intégration Fiscale) system as provided for under article 223 A et seq. of the CGI. The tax consolidation agreement in force covers the fiscal years 2001, 2002 and 2003.

T he tax charge of Compagnie de Saint-Gobain includes its own tax liability as well as that resulting from the consolidated fiscal income of its tax group.
A provision is booked for the income tax benefit to be transferred by Compagnie de Saint-Gobain to loss-making subsidiaries in the tax group when the subsidiaries concerned return to profit. Movements in this provision are recorded under exceptional items. 

## NOTE 2: NET FINANCIAL INCOME Net financial income decreased by 

### € 1 06 million in 2002, due to the combined impact of:

- a 

### € 24 1 million reduction in income from investments in

subsidiaries and affiliates;

- a 

### € 13 6 million decrease in interest expense, net of interest

income;

- a 

### € 1 million increase in the amortization charge and additions to

provisions. 

## NOTE 3: EXCEPTIONAL ITEMS Exceptional income mainly corresponds to income from revenue transactions in an amount of 

### € 24 million, proceeds from asset disposals or contributions of 

### € 3 64 million, and write-backs of provisions for contingencies and charges and impairment in value of 

### € 1 05 million (including 

### € 1 04 million written back from the provision for potential tax liabilities).
Exceptional expenses mainly correspond to expenses on revenue transactions of 

### € 10 million (including 

### € 1.4 million paid to employees under incentive schemes), assets sold or contributed representing a net book value of 

### € 3 64 million, and amortization, depreciation and provision charges of 

### € 43 million. 

## NOTE 4: INCOME TAX Under the consolidated tax regime and the integrated tax systems, the income tax benefit attributable to Compagnie de Saint-Gobain is estimated at 

### € 30 million for the year ended December 31, 2002, as follows:

- 

### € 48 million tax benefit for 2002;

- 

### € 18 million tax charge due to an adjustment to the provision

booked at December 31, 2001 for the fiscal year 2001;
Compagnie de Saint-Gobain is required to credit to a special longterm capital gains reserve, income taxed at the reduced rate of 19% recorded by the companies included in the integrated tax system. An amount of 

### € 34 million will be added to the reserve in 2003, in respect of 2002 income. • STGOBAIN RA02-CH8/GB 13/06/03 9:57 Page 136**137** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



## NOTE 5: INTANGIBLE ASSETS Intangible assets represent goodwill and other intangible assets which are amortized over periods of between three and five years.



## NOTE 6: PROPERTY AND EQUIPMENT

NOTE 7: FINANCIAL INVESTMENTS Non-current assets Amortization Gross Increase Decrease Gross Accumulated Increase Decrease Accumulated

at at at at beginning end beginning end In € thousands of year of year of year of year 

### - Goodwill 567 567 408 23 431 - Other intangible assets 31,321 1,754 33,075 15,710 5,478 21,188 - In progress 792 169 961 - - 32,680 1,923 - 34,603 16,118 5,501 - 21,619

Non-current assets Depreciation Gross Increase Decrease Gross Accumulated Increase Decrease Accumulated

at at at at beginning end beginning end In € thousands of year of year of year of year 

### - Land 620 620 - - - Buildings 487 487 225 10 235 - Other 11,470 754 (1,886) 10,338 8,445 1,022 (1,840) 7,627 - In progress 4 (4) 0 - - 12,581 750 (1,886) 11,445 8,670 1,032 (1,840) 7,862

Non-current assets Gross Increase Decrease Gross In € thousands at beginning of year at end of year 

### - Investments in subsidiaries and affiliates 7,811,078 444,389 (359,658) 7,895,809 - Investment-related receivables 6,381,207 2,188,464 (3,029,709) 5,539,962 - Other investment securities 207,314 162,051 (153,207) 216,158 - Loans 892,510 1,535,369 (885,689) 1,542,190 - Other financial investments 1,166 161 (247) 1,080 15,2 93,275 4,330,434 (4,428,510) 15,195,199 • STGOBAIN RA02-CH8/GB 13/06/03 9:57 Page 137**138**



### C HAN GES IN INVESTMENTS IN SUBSIDIARIES AND AFFILIATES:

C HANGES IN OTHER INVESTMENT SECURITIES:

OTHER FINA NCIAL I NVESTMENTS: Increase Decrease In € thousands 

### Buyout of Lapeyre minority interests 348,403 C apital stock increase of Partidis 94,000 Purchase of Saint-Gobain Cristaleria shares 1,284 Purchase of Saint-Gobain Vetrotex Deutschland Gmbh shares 702 Sa le of Lapeyre shares to Partidis (348,403) Disposal of Saint-Gobain Isover Argentina shares (6,715) Disposal of CIAM (3,040) Liquidation of Parsid (1,006) Disposal of Saint-Gobain Deutsche Glass shares (218) Disposal of Saint-Gobain K K shares (174) Disposal of Saint-Gobain Abrasives Germany shares (102) 444,389 (359,658)

Increase Decrease In € thousands 

### Purchase of treasury stock on the market 162,051 C ancellation of treasury stock (148,572) Sales of treasury stock (4,635) Other sales of shares

- 1 62,051 (153,207)

Gross Maturity In € thousands Within one year Over one year 

### Investment-related receivables 5,539,962 2,351,800 3,188,162 Loans (1) 

### 1, 5 42,190 1,539,538 2,652 Other 1,080 1,080 7,083,232 3,891,338 3,191, 894 (1) Loans granted during the year 

### 1, 535,369

Loans repaid during the year 

### 885,689 • STGOBAIN RA02-CH8/GB 13/06/03 9:57 Page 138**139** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



## NOTE 8: CURRENT ASSETS MATURITY OF RECEIVABLES:



## NOTE 9: SHAREHOLDERS’ EQUITY C HANGES IN SHAREHOLDERS’ EQUITY:

M OVEMENTS IN CAPITAL STOCK: Amounts In € thousands 

### Shareholders’ equity before appropriation of net income for 2001 7,575,997 Distribution in 2002 of the dividend relating to 2001 (378,364) Employee share issue (capital and premiums) 163,596 Reduction in capital stock by the cancellation of 4,953,708 shares (capital and premiums) (148,572) Other movements – revaluation surplus and untaxed provisions 484 Net income for 2002 5 95,916 Shareholders’ equity before appropriation of net income for 2002 7,809,057

Par value of shares at January 1, 2002: € 16 Number of shares Amounts Par value of shares at December 31, 2002: € 4 (in € thousands) 

### C apital stock at beginning of year 85,258,628 1,364,138 Four-for-one stock split 255,775,884 Shares issued under the Group Savings Plan 4,703,396 18,814 Shares issued on exercise of stock options granted in 1995 and 1996 226,480 906 Ca ncellation of shares (4,953,708) (19,815) Capital stock at year-end 341,010,680 1,364,043
Share issue premiums increased by 

### € 15 million as a result of the share issues and cancellations mentioned above, after taking into account related expenses and the adjustment to the legal reserve, which was on a par with last year’s amount.

The reserve for the revaluation of assets remained unchanged at 

### € 56 million. Fo llowing the adoption of the resolutions at the Shareholders’ Meeting of June 6, 2002 concerning the appropriation of 2001 net income and the adjustment of the dividend paid for that year, retained earnings increased by 

### € 439 million and the long-term capital gains reserve rose by 

### € 27 5 million.
Lastly, 2002 net income contracted by 

### € 497 million compared with 2001. Current assets contracted by 

### € 5 85 million in 2002 to 

### € 1,481 million. This decrease reflects the combined impact of a 

### € 7 02 million reduction in cash and cash equivalents, a 

### € 5 million decrease in prepayments, a 

### € 47 million rise in other receivables and a 

### € 75 million increase in marketable securities.

Gross Maturity In € thousands Within one year Over one year 

### Other receivables 96,702 96,702 - Prepayments 3,306 2,364 942 1 00,008 99,066 942 • STGOBAIN RA02-CH8/GB 13/06/03 9:57 Page 139**140**



### STOCK OPTION PLANS: Compagnie de Saint-Gobain has incentive stock option plans available to certain employees, and a Group Savings Plan (“PEG”), or employee stock purchase plan.

T he stock option plans allow the Board of Directors to grant options which allow the holder to obtain Saint-Gobain shares at a price based on the average share price for the 20-day period preceding the date of grant. Discounts of 10% and 5% on this average price were granted in 1997 and 1998 respectively. Such discounts were discontinued in 1999. Options vest over a period of two, three, four or five years with full vesting occurring at the end of the vesting period. Options must be exercised within eight or ten years from the date of grant and all rights to options are forfeited if the employee terminates employment with the Group.
Since 1997, these plans no longer involve subscription options on new shares but purchase options on existing shares held in treasury stock for this purpose.
Data relating to stock options outstanding in 2000, 2001 and 2002 are listed below:

At December 31, 2000, 2001 and 2002, 2,089,264, 2,130,560 and 3,413,064 options were exercisable at exercise prices ranging from 

### € 22. 88 to 

### € 31.27. At December 31, 2002, 2,775,444 options were available for grant under the authorization given by the General Meeting of June 28, 2001. Shares Average (€ 4 par value) exercise price (in euros) 

### Options outstanding at January 1, 2000 5,965,776 29.74 Options granted 2,716,500 37.69 Options exercised (370,016) 19.77 Options forfeited (13,836) 15.53
Options outstanding at December 31, 2000 8,298,424 32.81 Options granted 3,774,800 40.22 Options exercised (701,592) 22.25 Options forfeited (83,092) 36.63
Options outstanding at December 31, 2001 11,288,540 35.92 Options granted 3,785,500 23.53 Options exercised (334,456) 23.15 Options forfeited (164,520) 20.39
Options outstanding at December 31, 2002 14,575,064 33.10 • STGOBAIN RA02-CH8/GB 13/06/03 9:57 Page 140**141** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

T he following table summarizes information about stock options outstanding at December 31, 2002:



### G ROUP SAVINGS PLAN (PEG) OF COMPAG NIE DE SA INT-GOBAIN T he PEG employee stock purchase plan is open to all employees in France and in most European countries who have completed a minimum of three months’ service with the Group. The plan offers shares to eligible employees at a 20% discount from the average price quoted for the shares for the 20-day period preceding the date of the meeting of the Board of Directors at which the Plan is set.
Employees can invest for a five or ten-year term. Over this period, employees may not sell their shares, barring exceptional circumstances.
Under the PEG, the Group issued 4,703,396, 3,612,600 and 7, 824,896 shares with a par value of 

### € 4 to employees in 2002, 20 01 , and 2000, respectively, at an average price per share of 

### € 33 .88 in 2002, 

### € 33 .25 in 2001 and 

### € 26 .50 in 2000. Date of grant Options exercisable Options not exercisable Total options Type outstanding of options **Exercise Number Weighted average Exercise Number Number**

**price of options remaining contractual price of opti**  **ons of options** (in euros) **life (in months)** (in euros) 

### 19 95 17.53 164,600 11 164,600 Subscription 1 99621.42 505,980 23 505,980 Subscription 19 9728.47 904,904 35 904,904 Purchase 1 99829.54 669,880 47 29.54 540,800 1,210,680 Purchase 1 999 40.63 1,167,700 83 40.63 503,200 1,670,900 Purchase 2000 37.69 0 95 37.69 2,637,700 2,637,700 Purchase 2001 40.22 0 107 40.22 3,694,800 3,694,800 Purchase 2002 23.53 0 119 23.53 3,785,500 3,785,500 Purchase

Tota l - 3,413,064 - - 11,162,000 14,575,064

Other equity (

### € 39 1 million) corresponds to non-voting participating securities in French francs and ecus issued between 1983 and 1 988, which were converted into euros in 1999. 

## NOTE 10: OTHER EQUITY • STGOBAIN RA02-CH8/GB 13/06/03 9:57 Page 141**142**



## NOTE 11: PROVISIONS

NOTE 12: DEBT AND PAYABLES
To tal debt and payables decreased by 

### € 849 million to 

### € 8,076 million in 2002, mainly due to reductions in debt (

### € 634 million), taxes and social charges payable (

### € 26 million) and other payables (

### € 1 89 million).



### MATURITIES OF DEBT AND PAYABLES: Opening Increase Decrease At year-end balance In € thousands 

### UNTAXED PR OVISIONS - Reinvested capital gains 6,427 6,427 - Other 198 266 (84) 380 6,625 266 (84) 6,807 PR OVISIONS FOR CONTIN GENCIES - For potential tax liabilities (1) 

### 445,833 (103,633) 342,200 - For exchange losses 0 0 - Other 381 634 1,015 446,214 634 (103,633) 343,215 PR OVISIONS FOR CHARGES - Other 9,588 506 (74) 10,020 9,588 506 (74) 10,020 PROVISIONS FOR IMPAIRMENT IN VALUE - Financial investments 33,659 42,401 (1,976) 74,084 - Marketable securities 0 0 33,659 42,401 (1,976) 74,084 (1) In connection with the integrated tax system and consolidated tax regime, € 1 04 million was written back from the provision for potential tax liabilities to reflect an adjustment in the level of risk of subsidiaries returning to profit.

Gross Maturity In € thousands Within one year Over one year 

### Bonds (1) 1,255,867 27,940 1,227,927 Bank borrowings (1) (2) 716,522 261,064 455,458 Other short- and long-term debt (1) – (3) 6,007,077 1,636,273 4,370,804 Ta xes and social charges payable 11,864 11,864 - Other payables (3) 84,470 84,470 - Deferred income - - - To tal debt and payables (4) 8,075,800 2,021,611 6,054,189 (1) Issued during the year 1,977,017 Repaid during the year 2,611,150 (2) of which: - two years or less at inception 234,419 - over two years at inception 482,103 (3) Of which due to partners - (4) Of which debt due in over 5 years 1,866,948 • STGOBAIN RA02-CH8/GB 13/06/03 9:57 Page 142**143** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



### LONG-TERM AND SHORT-TERM DEBT

Long-term and short-term debt can be analyzed as follows by currency: 2 002 2001 2000 In € thousands 

### LONG-TERM PORTION OF LONG-TERM DEBT Due between January 1 and December 31:

- 2002

- - 615,040 - 2003 - 2 79 ,789 210,293 - 2004 54 6,053 381,498 372,861 - 2005 1, 277,132 1,318,486 1,300,082 - 2006 699 ,813 776,394 98,252 - 2007 1, 66 4,243 279,469 - - 2008 846,206 - - Due between 6 and 10 years 986,250 1,848,185 1,881,035 Due beyond 10 years

-- - Unspecified 34,493 34,634 34,706 To tal long-term portion of long-term debt 6,054,190 4,918,455 4,512,269 Short-term portion of long-term debt 225,781 847,633 1,652,616 TOTA L LONG-TERM DEBT (INCLUDING SHORT-TERM PORTION) 6,279,971 5,766,088 6,164,885 OTHER SHORT-TERM DEBT Tr easury notes (in euros) 235,500 971,000 92,000 Tr easury notes (in US dollars) 76,285 - - Euro Commercial Paper (in euros) 201,300 - - Euro Commercial Paper (in pounds sterling) - 172,555 152,860 Euro Commercial Paper (in US dollars) 123,009 347,782 161,204 USCommercial Paper (in US dollars) - - 516,926 Borrowings from Group entities 810,563 1,053,198 1,998,615 Bank overdrafts and other short-term borrowings 234,419 282,363 357,882 Other 18,419 20,613 22,466 TOTA L OTHER SHORT-TERM DEBT 1,699,495 2,847,511 3,301,953 TOTA L LONG- AND SHORT-TERM DEBT 7,979,466 8,613,599 9,466,838

2 002 2001 2000 In € thousands 

### Euros 3,829,414 2,997,675 4,380,145 US do llars 1 ,16 0,482 1,472,092 770,961 Swiss francs 282,177 276,373 269,061 P ounds sterling 954,094 1,019,948 744,718 Czech koruna 47,576 - - Norwegian krone 6,228 - - Total 6,279,971 5,766,088 6,164,885 • STGOBAIN RA02-CH8/GB 13/06/03 9:57 Page 143**144**

On February 18, 2002, Compagnie de Saint-Gobain issued 4,380,953 “OCEANE” bonds that are convertible into new or existing shares. These bonds have a nominal value of 

### € 21 0 each, and the total issue came to 

### € 920 million. The annual interest rate for these “OCEANE” bonds is 2.625% payable in arrears on January 1 each year.

T he bonds will be redeemed in full on January 1, 2007 in cash at nominal value, i.e. 

### € 21 0 per bond, or they may be repurchased before maturity by Compagnie de Saint-Gobain on the market or in connection with a public buyback offer. The Company may also decide to carry out an early redemption of all outstanding “OCEANE” bonds, subject to certain conditions, which include share price thresholds.
Each “OCEANE”” bond may be converted or exchanged for four Compagnie de Saint-Gobain shares. This ratio may, however, be adjusted if the Company carries out certain financial operations.

Therefore if all of the bonds were converted at the rate initially provided for, the holders would receive a total of 17,523,812 shares, representing 5% of the Company’s capital at December 31, 2002.

Net amount concerning Net amount Rel ated Companies in which Other in the balance companies Compagnie de Saint-Gobain sheet In € thousands has a direct holding 

### Investments in subsidiaries and affiliates 7,714,987 175,212 7,890,199 Investment-related receivables 5,537,709 2,253 5,539,962 Other investment securities 147,198 486 147,684 Loans 1,028,624 210,516 303,050 1,542,190 Other receivables 19,318 31 77,353 96,702 C ash and cash equivalents 1,208,940 46,172 48,817 1,303,929 Bonds 1, 255,867 1,255,867 Bank borrowings 71 6,522 716,522 Other borrowings 4,900,371 232,176 874,530 6,007,077 Other payables 4,386 2 80,082 84,470 

## NOTE 13: INFORMATION CONCE RNING RELATED COMPANIES AND INVESTMENTS • STGOBAIN RA02-CH8/GB 13/06/03 9:57 Page 144**145** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



## NOTE 14: INVESTMENT PORTFOLIO

Country Net book % interest Number of In € thousands value shares 

### Spafi France 2,726,540 100.00 116,289,805 Partidis France 2,065,919 100.00 78,262,892 Sa int-Gobain Matériaux de Construction France 738,712 100.00 21,325,936 Sa int-Gobain Cristaleria Spain 211,220 23.91 3,659,866 Ve rt ec France 491,039 100.00 8,008,999 R aab Karcher Gmbh Germany 194,609 100.00 100,000,000 Cie de Saint-Gobain (treasury stock) France 147,198 1.51 5,159,816 Vivendi Universal France 168,004 1.15 12,314, 927 Sa int-Gobain Glass Benelux SA Belgium 160,880 88.69 1,667,698 Sa int-Gobain Isover G+H AB Germany 153,669 99.88 3,196,296 International Saint-Gobain Switzerland 153,409 96.50 221,950 Sa int-Gobain Vetrotex Deutschland Gmbh Germany 153,669 100.00 45,000,000 Sa int-Gobain Vidros SA Brazil 118,069 54.46 115,072,390 São Lourenço Brazil 109,559 99.91 3,617,581 Sa int-Gobain Glass Deutschland Gmbh Germany 86,660 60.00 119,999,970 Sa int-Gobain Autoglas Gmbh Germany 72,833 60.00 120,000,000 Sa int-Gobain Emballage France 61,553 20.52 331,964 Sa int-Gobain Schleifmittel-Beteiligungen Gmbh Germany 61,151 100.00 20,000,000 SEPR Fran ce 56,571 25.73 407,600 Société Financière des Miroirs France 45,735 100.00 2,999,994 Sa int-Gobain PAM France 30,732 8.10 360,255 Sa int-Gobain Nederland Netherlands 13,621 100.00 66,100 Va lfix Finanz A.G. Switzerland 8,838 100.00 11,400

Va rious real-estate companies 3,428 Various French companies 848 Va rious non-French companies 3,417 8,037,883 ANALYSIS: Investments in subsidiaries and affiliates 7,890,199 Other investment securities 147,684 8,037,883

Stock market price at December 31, 2002 (in € thousands) 

### Vivendi Universal 189,527 

## NOTE 15: STOCK MARKET VALUE OF INVESTMENTS HELD IN FRENCH COMPANIES • STGOBAIN RA02-CH8/GB 13/06/03 9:57 Page 145**146**

Capital Reserves % Book value of Loans and Guarantees 2002 2002 net Dividends In thousands of euros stock interest capital held advances given by sales income/ received by or other currency granted by the (loss) the Company Gross Net the Company Company in 2002 1 - SUBSIDIARIES (At least 50% of the capital held by Compagnie de Saint-Gobain) Spafi 1 8, avenue d’Alsace EUR EUR EUR F - 92400 Courbevoie 1,860,637 1,297,295 100.00 2,726,540 2,726,540 46,039 - 191,204 162,806 Partidis 1 8, avenue d’Alsace EUR EUR EUR EUR F - 92400 Courbevoie 1,193,509 (13,021) 100.00 2,065,919 2,065,919 1,604,970 4,731 (4,741) Saint-Gobain Matériaux de Construction 1 8, avenue d’Alsace EUR EUR EUR EUR F - 92400 Courbevoie 325,221 3,218 100.00 738,712 738,712 1,156 6,852 72,666 31,136 V ertec 1 8, avenue d’Alsace EUR EUR EUR F - 92400 Courbevoie 128,144 365,020 100.00 491,039 491,039 - 182,691 176,198 Raab Karcher Baustoffe Gmbh Hanauer Landstrasse, 150 EUR EUR EUR D- 6031 4 Frankfurt am Main 100,000 94,600 100.00 194,609 194,609 179,803 - (44,019) Saint-Gobain Glass Benelux SA Rue des Glaces Nationales, 169 EUR EUR EUR EUR B-5060 Sambreville 70,900 89,902 88.69 160,880 160,880 152,825 8,970 8,872 Saint-Gobain Isover G+H AG 1 Burgermeister-Grünzweig Strasse EUR EUR EUR EUR EUR D- 67059 Ludwigshafen 82,000 11,291 99.88 153,669 153,669 306,571 17,959 Saint-G obain V etrotex Deutschland Gmbh Bicheroux Strasse 61 EUR EUR EUR EUR D -52134 Herzogenrath 23,008 132,936 100.00 153,669 153,669 80,261 22,795 International Saint-Gobain 1 0, rue Saint-Pierre CHF CHF CHF C H-1700 Fribourg 230,000 118,614 96.50 153,409 153,409 - 83,308 27,823 Saint-Gobain Vidros SA 482, avenida Santa Marina Agua Branca BRL BRL BRL BRL 05036-903 São Paulo-SP (Brazil) 420,000 248,924 54.46 118,069 118,069 783,713 114,258 8,646 São Lourenço Administradora 482, avenida Santa Marina Agua Branca BRL BRL BRL 05036-903 São Paulo-SP (Brazil) 1 75,654 129,623 99.91 109,559 109,559 - 49,823 7,300 Saint-Gobain Glass Deutschland Gmbh Viktoria - Allee 3-5 EUR EUR EUR EUR D -52066 Aachen 102,258 82,899 60.00 86,660 86,660 335,990 24,007 Saint-Gobain Autoglas Gmbh Viktoria - Allee 3-5 EUR EUR EUR D -52066 Aachen 102,258 19,130 60.00 72,833 72,833 - 11,841 Saint-Gobain Schleifmittel -Beteiligungen Gmbh Viktoria - Allee 3-5 EUR EUR EUR D -52066 Aachen 10,226 50,925 100.00 61,151 61,151 - (16,929) Société Financière des Miroirs 1 8, avenue d’Alsace EUR EUR EUR F - 92400 Courbevoie 45,750 1,376 100.00 45,735 45,735 - 974 1,290 

## NOTE 16: INFORMATION ON DIRECT HOLDINGS OF THE PARENT COMPANY WH ER E BOOK VALUE EXCEEDS 1% OF CAPITAL • STGOBAIN RA02-CH8/GB 13/06/03 9:57 Page 146**147** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

Capital Reserves % Book value Loans and Guarantees 2002 2002 net Dividends in thousands of euros stock interest of capital held advances given sales income/ received by granted by by the (loss) the Company Gross Net the Company Company in 2002 2 - INVESTMENTS (10 to 50% of the capital held by Compagnie de Saint-Gobain)
Saint-Gobain Cristaleria Edificio Ederra Centro Azca Paseo de la Castellana 77 EUR EUR EUR EUR E - 28046 Madrid 91,988 399,634 23.91 211,220 211,220 188,521 453,233 88,450 10,577 Saint-Gobain Emballage 1 8, avenue d’Alsace EUR EUR EUR EUR F - 92400 Courbevoie 42,069 320,627 20.52 61,553 61,553 46,170 607,918 250,449 25,103 SEPR 1 8, avenue d’Alsace EUR EUR EUR EUR F - 92400 Courbevoie 76,033 13,614 25.73 56,571 56,571 111,425 235,537 10,342 6,489 OTHERS Subsidiaries over 50%-owned - Total French companies 3,899 3,899 209,343 834 - Total foreign companies 25,962 25,000 542,295 4,230,294 2,638 Holdings of between 10 and 50% - Total French companies - - - - - Total foreign companies 5,296 648 - 89 Other 415, 013 346,53 9 63,535 24,181 Tota l 8,111,967 8,037, 883 2,993,257 4,230,294 493,982

Commitments relating to financial instruments concerning foreign currency risks are as follows: Commitments given Amount (in € thousands) 

### Guarantees (1) 4,301,771 Pe nsions (2) 38,417 Other commitments given:

concerning joint ventures 5,194 TOTAL 4,3 45,382 Including : (1) consolidated companies 4,230,294

Commitments received Amount (in € thousands) 

### Other commitments received:

Debt waivers with a clawback clause 3,720 TOTAL 3,720 Including: Other investments 3,720 Amount (in thousands of currency) 

### Equivalent in euros of forward purchases and sales of foreign exchange EUR 173,370 Options purchased - Options sold - Currency swaps EUR 503,479 

## NOTE 17: FINANCIAL COMMITMENTS EXCLUDIN G LEASES

(2) The amount in respect of pensions includes commitments for retirement indemnities and supplementary in-house funding. Pension obligations are determined by actuarial valuations using a method based on projected end-of-career salaries (the projected unit credit method). • STGOBAIN RA02-CH8/GB 13/06/03 9:57 Page 147**148**



## NOTE 18: LEASE COMMITMENTS Amount



### In € thousands Swaps – borrowers at fixed rates/variable rate EUR 317,081 Swaps – lenders at fixed rates/variable rate EUR 1,357,079 Swaps – variable rate/variable rate EUR 22,914 Swaps – fixed rate/fixed rate EUR - Cross-currency swaps – borrowers at fixed rates/variable rate EUR 444,768 Cross-currency swaps – lenders at fixed rates/variable rate EUR 287,721 Cross-currency swaps – variable rate/variable rate EUR 6,647 Cross-currency swaps – fixed rate/fixed rate EUR 476,781 Caps purchased / (sold), net EU R (27,500) Swaps on raw materials - borrowers EUR 1,684 Swaps on raw materials - lenders EUR 1, 684 Commitments relating to financial instruments concerning interest rate risks are as follows:

T he face value amount of commitments given and received in the form of swaptions and early repayments of borrowings amounted to 

### € 229 million and 

### € 1 99 million respectively.



## NOTE 1 9: EMPLOYEES
WEIGHTED AVERAGE NUMBER OF EMPLOYEES:

Head office In € thousands 

### Cost 80,798 Depreciation: - Accumulated at beginning of year 7,199 - Charge for the year 1,464 Total 8,663 Installments paid: - Accumulated at beginning of year 44,284 - Paid during the year 9,168 Total 5 3,452 Installments to be paid: - within one year 8,976 - between one and five years 35,902 - beyond five years 9,748 Total 54,626 Residual values: - within one year - - between one and five years - - beyond five years 12,120 Total 12,120 Excluding the German branch 2002 2001 2000


### Managers 166 167 165 Supervisors 67 71 73 Other employees 7 11 11 Total 240 249 249 of which fixed term contracts 4 7 8



### REMUNERATION OF DIRECTORS AND CORPORATE OFFICERS: T he total direct and indirect remuneration received by Corporate Officers from Group companies in France and abroad amounted to 

### € 13 million in 2002, 

### € 12 .9 million in 2001 and 

### € 12 .6 million in 2 000. The gross variable portion included in these remuneration amounts came to 

### € 4.6 million in 2002, 

### € 4.7 million in 2001 and 

### € 5.2 million in 2000.
Attendance fees paid to Directors amounted to 

### € 0.5 million in 2 002 (2001: 

### € 0.5 million; 2000: 

### € 0.3 million). • STGOBAIN RA02-CH8/GB 13/06/03 9:57 Page 148**149** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



## NOTE 20: LITIGATION In France, at December 31, 2002, 397 lawsuits based on “inexcusable fault” (“faute inexcusable”) had been filed by formeremployees (or persons claiming through them) of Everite and SaintGobain PAM (“the employers”), which in the past had carried on fiber-cement operations, for asbestos-related occupational diseases, with the aim of obtaining supplementary compensation over and above the assumption of occupational diseases compensation by the French Social Security.
At the end of 2002, 123 of these 397 lawsuits had been heard by the Court of Appeal which issued rulings holding the employers liable on the grounds of “inexcusable fault” in all of the cases. These rulings were all appealed to the Cour de Cassation (the French final court of appeal) by the company concerned. 15 of these appeals, lodged by Everite, were heard by the Cour de Cassation and dismissed on February 28, 2002.
However, in 89 of the 123 appeal court rulings against the employers on the grounds of inexcusable fault, the Social Security authorities were ordered to pay the compensation for the victims for procedural reasons (statute of limitations, liability issues (“inopposabilité”)). 51 of these rulings were confirmed by the Cour de Cassation on November 26 and December 12, 2002.
At December 31, 2002, compensation payable by Everite and SaintGobain PAM, for the 44 cases (since the beginning) where they had been required to assume the burden of compensation, amounted to a total of 

### € 4 million, which has been expensed.

In addition, at December 31, 2002, 63 suits based on inexcusable fault had been filed by current or former employees of seven Fr ench companies in the Group, in particular involving circumstances where equipment containing asbestos had been used to protect against heat from ovens. In all of the rulings issued by end-2002, the employees’ claims were dismissed. A final ruling has been handed down in 3 of these cases and the 9 others have been appealed to the Cour de Cassation by the employees concerned. Six of these cases have now been heard by the Cour de Cassation, which dismissed the appeals on December 12, 2 002, ruling that the employer was not liable for “inexcusable fault”.

A fund has also been created in France known as the FIVA. It is intended to fully compensate the loss of persons officially recognized as having contracted occupational diseases caused by asbestos, as well as of all persons who have been exposed to asbestos on French territory. A decree dated October 23, 2001 sets out the conditions relating to the operation of the fund, the compensation procedure applicable and claims of subrogation made by the fund itself. Any person who accepts an offer of compensation from the fund will be barred from taking legal action to obtain other compensation on the same grounds, including any claim for “inexcusable fault” against an employer. However, once the applicant has accepted an offer of compensation, the fund must make a subrogated claim against any employer considered to be responsible for the loss concerned.
On January 27, 2003 the fund published guidelines in the form of a compensation scale. At December 31, 2002, as far as the Group is aware, no current or former employees of the Group’s French companies had applied for compensation from the fund. However, four former employees have indicated that they intend to discontinue their “inexcusable fault” lawsuits already commenced, in order to bring their claims before the fund.
In the United States, three Group companies that once manufactured products containing asbestos such as fiber-cement pipes, roofing products or specialized insulation, are facing legal action from persons other than the employees or former employees of the companies. The claims are based on alleged exposure to the products although in the vast majority of cases the claimants cannot demonstrate any specific exposure to one or more products, or any specific illness or physical disability. The majority of these claims are made simultaneously against many other non-Group entities which have been manufacturers, distributors, installers or users of products containing asbestos.
CertainTeed, the main US subsidiary involved in these cases, was for a long period a member of the Center for Claims Resolution, an organization which grouped together defendants facing the same type of claims and handled the defense of all such claims; and allocated court awards, negotiated out of court settlements and defense costs among the organization members on the basis of a pre-agreed pro-rata formula. Since February 1, 2001 the organization no longer represents its members in this way, and CertainTeed now assumes directly the defense of claims made against it, which increased significantly in 2001 with a total of 60,000 new cases. • STGOBAIN RA02-CH8/GB 13/06/03 9:57 Page 149**150**

Th is trend continued in 2002, with some 67,000 new claims filed against CertainTeed during the year. The vast majority of these new claims are “mass” actions which can involve hundreds or even thousands of plaintiffs making claims for damages against dozens of companies operating in different economic sectors, without providing evidence of any specific exposure to any product allegedly manufactured by CertainTeed, or of any specific illness or physical disability. Only around 5% of these new lawsuits involve a serious illness, cancer or mesothelioma.
Almost all of the claims against CertainTeed are settled out of court. Some 44,000 such settlements were entered into in 2002. Taking into account the 84,000 outstanding cases at the end of 2001 and the new cases having arisen during 2002, some 107,000 claims were outstanding at December 31, 2002.

T he average individual cost of settlement based on all claims settled decreased to $1,955 in 2002, from $2,800 a year earlier. Total compensation paid for these cases - including claims settled in 2001 but paid out in 2002, and those fully settled and paid in 2002 - amounted to $103 million in 2002 (versus $53 million in 2001). $96 million of this amount has been or will be covered by insurance.
In view of all of these developments, the Group recorded a 

### € 100 million charge in 2002 to make provision for such claims which may arise or subsist in the future, including 

### € 50 million recorded in the first half of the year. At December 31, 2002 the Group’s total cover for asbestos-related claims against CertainTeed in the United States amounted to 

### € 426 million, comprised of insurance coverage available at that date and the provision existing at that date referred to above. This cover represents approximately 4 to 5 years of total compensation payments based on the corresponding figure for 2 002.
In Brazil, Brasilit and Eterbras offer an agreed amount of compensation to their former employees for asbestos-related occupational diseases, as well as permanent medical assistance. Only a few disputes were outstanding at December 31, 2002, which do not give rise to any significant risks for the subsidiaries concerned. 

## NOTE 2 1: SUBSEQUENT EVENTS No material events have occurred since the accounts-closing date.



## NOTE 22: RECO MMENDED APPROPRIATION OF INCOME

In € thousands 

### SOURCES Unappropriated retained earnings at Dec. 31, 2002 (1) 865,882 Net income for the year 595,916 APPRO PRIATIONS Appropriation to reserves:

Untaxed reserves: Long-term capital gains reserve (2) (7,706) Dividends (3) 379,511 Unappropriated retained earnings 1,089,993 TOTAL 1,461,798 1,46 1,798 (1) Reflects a € 118 thousand adjustment due to the 26,150 treasury shares sold between March 28, 2002, the date of the Board meeting approving the financial statements, and June 24, 2002 when payment of the dividend began. (2) Representing the net impact of the appropriation of a provisional amount of € 34 ,068 thousand for 2002 less a € 41 , 774 thousand adjustment to the provisional appropriation to long-term capital gains reserves made in 2001, resulting in a total deduction of € 7 ,7 06 thousand from the reserve. (3) On the basis of 341,010,680 shares, less 5,159,816 treasury shares, i.e. 335 ,850,864 dividend-earning shares. • STGOBAIN RA02-CH8/GB 13/06/03 9:57 Page 150**151** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



### FIVE- YEAR FINANCIAL SUMMARY

2002 2001 2 000 1999 1998 In € thousands 

### 1 - Capital stock at year-end Ca pital stock 1,364,043 1,364,138 1,363,412 1,395,788 1,376,550 Number of common shares outstanding 341,010,680 85,258,628 85,213,263 87,236,750 90,295,788 2 – Operations and results for the year Sales e xcluding taxes (1) 156,150 149,431 138,313 113.,942 106,618 Earnings before tax, depreciation and provisi ons 507,093 1,115,028 1,08 7,460 600,175 706,362 Income tax 30,396 15,020 (46,464) (36,209) (85,228) Net income after tax, depreciation and provisions 595,916 1,092,872 1,014,611 573,860 593,887 Dividend distribution (2) 379,511 (3) 378,246 (4) 356,860 (5) 300,916 (6) 268,403 3 - Earnings per share (in € ) Earnings per share before tax, depreciation and provisions 1.49 13.08 12.76 6.88 7.82 Earnings per share after tax, depreciation and provisions 1.75 12.82 11.91 6.58 6.58 Net dividend per share 1.13 4.50 4.30 3;60 3.20 4 - Personnel (7) A

verage number of employees during the year 240 249 249 239 234 To tal payroll cost for the year 25,094 24,389 20,525 19,066 18,769 To tal benefits for the year 13,850 12,956 11,330 9.139 8.338 (1) Represents royalties and other services. (2) On the basis of 341,010,680 shares, less 5,159,816 treasury shares at March 20, 2003, i.e. 335,850,864 dividend-earning sha res. (3) Reflects a € 118 thousand adjustment due to the 26,150 treasury shares sold between March 28, 2002, the date of the Board meeting approving the financial statements, and June 24, 2002 when payment of the dividend began. (4) Reflects a € 451 thousand adjustment due to the 104,854 treasury shares acquired between March 29, 2001, the date of the Board meeting appro ving the financial statements, and July 2, 2001 when payment of the dividend began. (5) Reflects a € 3,889 thousand adjustment due to the 1,080,200 treasury shares acquired between March 30, 2000, the date of the Board meeting a pproving the financial statements, and July 3, 2000 when payment of the dividend began. (6) Reflects a € 13 ,184 thousand adjustment due to the 4,120,000 treasury shares acquired between March 25, 1999, the date of the Board meeting approving the financial statements, and June 29, 1999 when payment of the dividend began. (7) Personnel figures exclude the German branch. • STGOBAIN RA02-CH8/GB 13/06/03 9:57 Page 151**152**

T ranslated from the original French language report

To the shareholders,
In compliance with the assignment entrusted to us by your Annual General Meeting, we hereby report to you, for the year ended December 31, 2002 on: - the audit of the accompanying financial statements of Compagnie

de Saint-Gobain, expressed in euros, - the specific verifications and information required by the law.

T hese financial statements have been approved by the Board of Directors. Our responsibility is to express an opinion on these financial statements based on our audit.



### 1. O PINION ON THE FINA NCI AL STATEMENTS We conducted our audit in accordance with the professional standards applied in France. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements give a true and fair view of the Company's financial position and its assets and liabilities as of December 31, 2002 and of the results of its operations for the year then ended in accordance with French accounting principles and regulations.



### 2. SPECIFIC VE RIFICATIONS AND INFORMATION We have also performed the specific verifications required by the law, in accordance with the professional standards applied in France.

We have no comments as to the fair presentation and the conformity with the financial statements of the information given in the management report of the Board of Directors and in the documents addressed to the shareholders with respect to the financial position and the financial statements.
In accordance with the law, we have verified that the management report contains the appropriate disclosures as to the acquisition of shares and controlling interests, together with the identity of the principal shareholders and cross-shareholdings.

P aris, March 20, 2003

T he Statutory Auditors

PricewaterhouseCoopers Audit S.E.C.E.F.

Mike MORALEE Christian MARCELLIN Jacques TENETTE 

# STATUTORY AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2002 • STGOBAIN RA02-CH8/GB 13/06/03 9:57 Page 152**153** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



## SAINT-GOBAIN GLASS FRANCE

1 00% owned by Vertec. Manufacturing and processing of flat glass. Float glass plants in Aniche (Nord) and Chantereine (Oise), northern France. 2 002 sales: € 2 49.8 million. Th is figure includes Eurofloat, a float glass plant serving the Europ ean market, in Salaise-sur-Sanne (Isère, southeastern France). Employees: 1,016. 

### Subsidiaries and holdings • Saint-Gobain Sekurit France - France, Saint-Gobain Glass

Exprover - Belgium. See company profiles. • Saint-Gobain Produits Industriels (SGAI), M. O. Pays de Loire,

Comptoir des Glaces et Produits Verriers, M. O. Atlantique (holds 100% of Atlantique Miroiterie Service), Les Vitrages de Saint-Gobain Normandie, M. O. Semiver-Climaver, M. O. Charentes-Limousin, M. O. Armorique, Miroiterie du Rhin, Société Verrière Française (SVF), Sovedys, Sivaq, Centre Est V itrage (CEV), Charles André, Soprover, Société Verrière de l’Atlantique (SVA), Le Vitrage du Midi (LVM), Glassver, Gobba V itrage, Auvergne Isolation, Vitrages Isolants d’Auvergne, Alp’Verre, Courbu, Verreries d’Aurys (100%), Pierre Pradel, (73.9%), Wehr Miroiterie (100%), Emaillerie Alsacienne (100%), Technifer (100%), Techniverre (100%) - France. Distribution and processing of flat glass products for the building industry. Sales of the processing subsidiaries: € 426.9 million. Employees: 3,272. • Eurokera (50%). Keraglass (plant in Bagneaux-sur-Loing,

Seine-et-Marne, Paris area) - France (50%). Production and sale of glass ceramic cooktops. Eurokera North America – USA (50%), Borgna Veder (100%) which holds 100% of Saint-Gobain Euroveder Italia - Italy. Tempered glass for home appliances. Sales: € 12 3.2 million. Employees: 481. 

# FRANCE (a) Corresponding to services relating to the implementation of Enterprise Resource Planning systems carried out by the network’s consulting entity, prior to its disposal on September 30, 2002. PricewaterhouseCoopers SECEF
Amount % Amount % (in € millions) 

### Audit • Statutory audit and contractual audits Fran ce 2.9 13% 0.3 100% Outside France 8.0 36% - - Total 10.9 49% 0.3 100% • Other engagements 1.1 5% - - Sub-total 12.0 54% 0.3 100% Other services • Legal and tax advisory services Fran ce - - - Outside France 1.7 8% - - Total 1 .7 8%

- - • Information technology (a) 

### Fran ce 0.1 0% - - Outside France 8.4 38% - - Total 8.5 38%

- - • Internal audit - - - - • Other 0.1 0% - - Sub-total 10.3 46%

- - TOTAL 22.3 1 00% 0.3 100%



# IX - INFORMATION ON SUBSIDIARIES FEES PAID BY THE GROUP TO THE STATUTORY AUDITORS AND MEMBERS OF THEIR NETWORKS IN 2002 • STGOBAIN RA02-CH9/GB 13/06/03 9:59 Page 153**154**



## SAINT-GOBAIN VETROTEX FRANCE

1 00% owned by Spafi. Manufactures and sells fiberglass for reinforcements. Plant in Chambéry (Savoie, southeastern France). 2 002 sales: € 114 .5 million. Employees: 545. 

### Subsidiaries and holdings • Saint-Gobain Vetrotex International - France (84.4%).

Research and Development center, export sales. Headquarters in Chambéry (Savoie, southeastern France). Holds: Saint-Gobain Vetrotex Renforcement - France (100%); Saint-Gobain Vetrotex Glasmat - France (100%); Saint-Gobain Vetrotex Reinforcement GmbH - Germany (100%); Sync oglas - Belgium (99.9%); Verigex - Italy (100%); Vetrotex Svenska AB - Sweden (100%); Vetrotex Ltd - United Kingdom (100%); Vetrotex Reinforcement Bohemia - Czech Republic (100%). Distribution companies. Saint-Gobain Vetrotex Korea Ltd - South Korea (98.6%). See company profile . Saint-Gobain Vetrotex Thailand - T hailand (100%). NSG Vetrotex KK - Japan (60%). Sales: 3.4 billion yen. Employees: 277. Saint-Gobain Recherche (8.2%) - France (see under Saint-Gobain Glass France).Hangzhou Saint-Gobain Vetrotex - China (82.9%). SaintGobain Vetrotex India - India (100%). Saint-Gobain RF Pty Ltd - Australia (85.7%).
• Saint-Gobain Lorcet - France (100%). Manufactures glass

cloths.


## PART IDIS

1 00%-owned by Compagnie de Saint-Gobain. Distribution of building materials. 2 002 sales: € 5.61 billion. Employees (including subsidiaries): 28,273. 

### Subsidiaries and holdings • Saint-Gobain Plc - United Kingdom (74.7%). See company

profile

. • Po int.P (100%) - France. Building materials distribution through

11 regional companies (Brittany, Central France, Eastern France, Pa ris region, Loire region, Southern France, Northern France, Normandy, PACA, BMRA, South-West France). 3 national companies (CEDEO, SFIC, Asturienne). La Plateforme du Bâtiment banner (14 retail outlets in France). SG Point. P España + La Plateforme España. 1,336 retail outlets (1,304 in France, 17 in Spain, plus 14 La Plateforme du Bâtiment outlets in France, 1 in Spain). Sales: € 4,180.5 million. Employees: 18,625. • Lapeyre - France and international (100%). Distribution of

home improvement products under the following banners: Lapeyre-La Maison, K par K, Gimm, Atlantique, Menuiseries Françaises, Oxxo, Les Zelles, Okfens (Poland) and Te lhanorte (Brazil). 2002 sales: € 1,416.1 million. Employees: 9,323. • La Plateforme Polska - Poland (100%). Sales: 42.8 million

zloty. Employees: 144. • La Plataforma Para La Construcción - Mexico (100%).

Employees: 94 • Sovis - France (100%). Tempered glass for home

appliances, industrial and scientific optics, radiation-proof glass. Plants in Jouarre (Seine-et-Marne, Paris area) and Château-Thierry (Aisne, northern France). Sales: € 22 million. Employees: 209. • Verreries de Saint-Just - France (100%). Decorative glass.

Plant at Saint-Just-Saint-Rambert (Loire, central France). Employees: 99. • Saint-Gobain Sully Produits Spéciaux - France (100%).

Flat glass for trains and the aeronautics industry. Plant in Sully-sur-Loire (Loiret, central France). Employees: 466. • Samin (29.4%). See Saint-Gobain Emballage

. • Saint-Gobain Glass Logistics - France (100%). Transport. • Saint-Gobain Recherche - France (32.7%). The remainder

of capital stock is held by the Group’s other French glass companies. Headquarters in Aubervilliers (Seine-Saint-Denis, Paris area).


## SAINT-GOBAIN SEKURIT FRANCE

1 00%-owned by Saint-Gobain Glass France. Processing for the automobile industry. Plants in Aniche (Nord) and Chantereine (Oise), northern France. 2002 sales: € 257 million. Employees: 1,212. T hese figures include those of Saint-Gobain Sekurit France and Société Verrière d’Encapsulation. Holds. • Saint-Gobain Autover - France (100%). Distribution

and processing of flat glass for the automobile industry. Sales: € 19 .2 million. Employees: 82.

• Société Verrière d’Encapsulation - France (100%).

Encapsulation of glass for the auto industry. Saint-Gobain Sekurit Glass India (85.8%) - India.


## SAINT-GOBA IN ISOVER

1 00%-owned by Spafi. Production and processing of glass wool and rock wool insulation products. Plants in Orange (Vaucluse, southeastern France), Chalon-sur-Saône (Saône-et-Loire, eastern France), Saint-Étienne-du-Rouvray (Seine- Maritime, northwest France), Rantigny (Oise, northern France). 2 002 sales: € 225 .8 million. Employees: 889. 

### Subsidiaries and holdings

• Saint-Gobain Vetrotex France - France. See company profile

. • Saint-Gobain Eurocoustic - France (51%). Production of

rock wool insulation products. Plant in Genouillac (Creuse, central France). Sales: € 32 .6 million. Employees: 152.
• Saint-Gobain Ecophon SA - France (50%). Acoustic ceilings. • Saint-Gobain Recherche - France (32.7%). See

Saint-Gobain Glass France • Samin - France (19.6%). See Saint-Gobain Emballage

. • Saint-Gobain Beijing Isover Glasswool - China (29.5%).

Employees: 149. • CSR Guandong Glasswool - China (15%). • STGOBAIN RA02-CH9/GB 13/06/03 9:59 Page 154**155** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



## SAINT-GOBAIN EMBALLAGE Owned 20.5% by Compagnie de Saint-Gobain and 79.5% by Vertec. Manufactures glass containers (industrial bottles and jars). Plants in Chalon-sur-Saône (Saône-et-Loire), Cognac (Charente), Lagnieu (Ain), Oiry (Marne), Saint-Romain-le-Puy (Loire), Vauxrot (Aisne). 2 002 sales: € 5 93.5 million. Employees: 2,101. 

### Subsidiaries and holdings • Saint-Gobain Desjonquères - France. Saint-Gobain Oberland

AG - Germany, Saint-Gobain Vetri - Italy. See company profiles

. • Saint-Gobain Recherche - France (24.6%). see SaintGobain Glass France • VOA Verrerie d’Albi - France (98.8%). Glass containers

(bottles). Plant in Albi (Tarn). Sales: € 66 million. Employees: 301. • Samin - France (51%). Operates quarries. Employees: 173. • Saga Decor - France (51%). Decoration of bottles and jars.

Sales: € 19 .1 million. Employees: 235. • Établissements René Salomon - France (100%).

Distribution of bottles. • Vetreria Etrusca SRL - Italy (24%). Glass containers.


## SA IN T- GOBAIN DESJONQUÈRES

1 00% owned by Saint-Gobain Emballage. Manufactures small glass bottles used primarily in the perfume and pharmaceutical industries. Plants in Mers-les-Bains (Somme, northern France) and Sucy-en-Brie (Val-de-Marne, Pari s area). 2 002 sales: € 3 99.2 million. Employees: 1,880. 

### Subsidiaries and holdings • SGD Kipfenberg GmbH - Germany (100%). Small glass

bottles. Plant in Kipfenberg. Sales: € 47 million. Employees: 200. Holds Saint-Gobain Calmar GmbH (99%) - Germany. See company profile.
• Saint-Gobain VG Emballage - France (100%). Distribution

of glass and plastic containers and fittings. Sales: € 33.5 mi llion. Employees: 76. • Verreries de l’Orne - France (100%). Decoration of glass

containers. Employees: 285. Holds Verreries de la Somme (100%). Employees: 210. • Saint-Gobain Desjonquères Manufacturing - USA (100%).

Pe rf ume flasks. Plant in Covington. Sales: $39.5 million. Employees: 166. • Saint-Gobain Desjonquères Inc. - USA (100%), SGD UK -

United Kingdom (100%), SGD Italia - Italy (95%). Distribution companies.


## SEP R - SOCIÉTÉ EUROPÉENNE DE S PRODUITS RÉFRACTAIRES Owned 25.7% by Compagnie de Saint-Gobain, 62.7% by Ve rt ec, 11.6% by Spafi. 

## SAINT-GOBAIN MATÉRIAUX DE CONSTRUCTION

1 00%-owned by Compagnie de Saint-Gobain. Holding company. Holds: • Saint-Gobain Weber - France (100%). Produces industrial

mortars in 20 countries. Holds: 100% of Weber & Broutin France; 100% of Saint-Gobain Weber Cemarska (Spain); 1 00% of Saint-Gobain Weber Romania (Roumania); 50% of Saint-Gobain Quartzolit - Brazil. Produces tile glues. Plants in Jandira (São Paulo), Santa Luzia (Minas Gerais), Abreu and Lima (Pernambuco) and Viamao (Rio Grande do Sul). Sales (including subsidiaries): € 7 42 million. Employees (including subsidiaries): 3,376. • Saint-Gobain Terreal - France (99.9%). Produces terracotta

tiles. Nineteen plants and subsidiaries in France, Italy, Spain and Malaysia. Sales (including subsidiaries): € 328 .3 million. Employees (including subsidiaries): 2,156.
• Saint-Gobain Stradal - France (100%). Produces industrial

cements through twenty-five production plants in France. Sales: € 1 40.5 million. Employees: 980. Has holdings in: Tuyaux et Agglomérés Vendéens - France (49%); Egyptian Concrete Pipe Company - Egypt (30%). Produces concrete pipes. • Novatech KG - Germany (100%). Plant in Kolbermoor.

Produces cement-glass composites for roofing and wall facings. Sales: € 7. 3 million. Employees: 63.


## SAINT-GOBAIN PAM Owned 8.1% by Compagnie de Saint-Gobain and 91.9% by Spafi. Ductile cast- iron pipes and hydraulic connectors for water-supply, i rri gati on and wastewater networks. Cast-iron products for the building industry. Plants in eastern France, in Pont-à-Mousson, Blénod, Foug, Liverdun, Toul (Meurthe-et-Moselle), Bayard (Haute-Marne). 2 002 sales: € 683.9 million. Employees: 2,953. 

### Subsidiaries and holdings • Halbergerhütte GmbH - Germany; Saint-Gobain

Canalización - Spain; Saint-Gobain Plc - United Kingdom; Saint-Gobain Condotte SpA - Italy; Saint-Gobain Canalização - Brazil. See company profiles

. • Saint-Gobain Seva - France (100%). Industrial equipment,

glass molds, fiberglass plates for insulation, door fittings. Plant in Chalon-sur-Saône (Saône-et-Loire, eastern France). Sales: € 54 .2 million. Employees: 384. • SADIP - Saudi Arabia (20%). Produces ductile cast-iron

pipes. • Also has holdings in: Saint-Gobain Pipe Systems Belgium -

Belgium (99.9%); Saint-Gobain Pipe System BV - Netherlands (100%); Saint-Gobain Condutas - Portugal (99.5%); Saint-Gobain Trubni Systemy - Czech Republic (100%); Saint-Gobain Pipe Systems OY - Finland (100%); Saint-Gobain Pipelines Co Ltd - China (47.3%). Ductile cast-iron pipes. Plant in Manshaan. Sales: 160 million yuan. Employees: 440. Saint-Gobain Canalización Argentina - Argentina (100%). • STGOBAIN RA02-CH9/GB 13/06/03 9:59 Page 155**156**



### Manufactures fused-cast refractory products used mainly for glass furnaces and various special products (pellets, grains and ceramic powders). Plant in Le Pontet (Vaucluse, southeastern France). 2 002 sales: € 222 million. Employees: 1,287. 

### Subsidiaries and holdings • Saint-Gobain Performance Plastics Europe (France),

Saint-Gobain Quartz SA - France, SEPR Keramik GmbH & Co KG - Germany, SEPR Italia - Italy, Saint-Gobain Ceramic Material A/S - Norway. See company profiles. • Savoie Réfractaires - France (100%). Manufactures special

refractories.Plants in Vénissieux (Rhône, Lyon area) and Provins (Seineet-Marne, Paris area). Employees: 226. • Saint-Gobain Céramiques Avancées Desmarquest - France

(100%). Manufactures fine ceramics for industrial uses, taps, medical applications and thermal and electrical insulation. Plants in Montreuil (Seine-Saint-Denis), Evreux (Eure) Courtenay (Loiret), Etrechy (Essonne) and Moissy Cramayel (Seine-et-Marne). Sales: € 35 .8 million. Employees: 450.
• Saint-Gobain Cristaux & Détecteurs - France (100%).

Manufactures optical crystals and synthetic monocrystals forchemical analysis. Plants in Saint-Pierre-lès-Nemours (Seineet-Marne, Paris area) and Gières (Isère, southeastern France). Sales: € 26 .4 million. Empl oyees: 152. • Saint-Gobain Matériaux Céramiques - France (100%).

Produces seeded gel. Plant in Courtenay (Loiret, south of Pa ris area). Employees: 29. • Saint-Gobain Centre de Recherche et d’Etudes

Européennes - France (35%), the remainder being held by other companies of the Ceramics & Plastics division. Center in Cavaillon (Vaucluse, southeastern France). • Valoref SA -France (100%). Recycling.
• Saint-Gobain Ceramicas Industriales - Spain (100%).

Manufactures technical ceramics and distributes highperformance plastics. Plant in Castellbisbal. Employees: 76. • Beijing SEPR - China (65.9%). Manufactures fused-cast

refractory products. Plant in Beijing. Employees: 168. • SEPR Refractories India Ltd – India (100%).

Manufactures fused-cast refractory products. Plant in Pa lakkad. Employees : 150. • SG Ceramics Materials Pty Australia - Australia (100%).

Manufactures ceramic materials. Plant in Brisbane.


## SAINT-GOBAIN PERFOR MA NCE PLASTICS EU ROPE

1 00% owned by SEPR. Holding company.Holds: 100% of Saint-Gobain Performance Plastics Asti, SaintGobain Performance Plastics Gessil and Saint-Gobain Pe rformance Plastics Verneret - France; 100% of Norton Fluorplast Nederland BV - Netherlands; 100% of Saint-Gobain Pe rformance Plastics Chaineux and 100% of Saint-Gobain PPL Gembloux and Saint-Gobain PPL Kontich - Belgium. Manufactures and sells high-performance plastics. Sales of subsidiaries: € 82.4 million. Employees of subsidiaries: 613. • 100% of Saint-Gobain Crystals and Detectors KK Japan. • 90% of Saint-Gobain Ceramics Materials KK - Japan.

Manufactures ceramic pellets and powders. Plant in Osaka. Sales: JPY 4.4 billion. Employees: 93. 

## SAINT-GOBAIN QUARTZ

1 00% owned by SEPR. Manufactures silica parts for the chemical industry, silica crucibles and reactor tubes for the semi-conductor industry, silica wool and yarn for the space industry, Micaver insulatingmaterials, piezoelectric ceramics. Plant in Saint-Pierre-lèsNemours (Seine-et-Marne, Paris area). 2 002 sales: € 19 .2 million. Employees: 208. 

### Subsidiaries and holdings • Saint-Gobain Quartz Pte - Singapore (100%). Manufactures

tubes for the semi-conductor industry. • Saint-Gobain Quartz SA (Suisse) - Switzerland (100%).

Processing of quartz parts.


## SAINT-GOBAIN ABRASIFS SA (FRANCE) 99.6% owned by Spafi. Manufactures bonded abrasives, grinding wheels and superabrasives. Plants in Conflans-Sainte-Honorine (Yvelines), La Courneuve and Bobigny (Seine-Saint-Denis), Amboise (Indre-et-Loire) and Lisieux (Calvados). 2 002 sales: € 171 .6 million. Employees: 1,093. 

### Subsidiaries and holdings • Saint-Gobain Abrasivos SA - Spain, Saint-Gobain Abrasives

SA - Luxembourg, Saint-Gobain Abrasivi SpA - Italy, SaintGobain Abrasives - Poland, Saint-Gobain Abrasives Pty Ltd. - South Africa. See company profiles

. • Saint-Gobain Diamant Winter SA - France (100%).

Produces diamond-tipped tools for stone-cutting. Plant in Saulx-les-Chartreux (Essonne, Paris area). • Pabsa - Colombia (100%). Manufactures coated abrasives

and grinding wheels. Plant in Mosquera. Sales: 19.6 million Colombian pesos. Employees: 90. • Saint-Gobain Abrasivos - Venezuela (100%). Manufactures

coated abrasives and grinding wheels. Plants in Maracay and Los Teques. Sales: 5 billion bolivars. Employees: 70. • Saint-Gobain Abrasives AB - Sweden (100%). Abrasives.

Sales: SKR 170.8 million. Employees: 47. • Saint-Gobain Abrasives Nederland - Netherlands (100%).

Holds 100% of Saint-Gobain Abrasives BV. Manufactures thin grinding wheels and bonded abrasives. Plants in Eibergen and Vaals (Netherlands). Sales: € 1 00.4 million. Employees: 468. • Saint-Gobain Abrasives NV - Belgium (100%). Employees: 22.• Saint-Gobain Abrasives Shanghai (68% + 32% by SaintGobain China Invest. CY) - China. Produces abrasive grinding wheels. Plant in Shanghai. • STGOBAIN RA02-CH9/GB 13/06/03 9:59 Page 156**157** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



### Employees: 393. • Saint-Gobain Abrasives Australia (100%) - Australia.

Produces abrasive grinding wheels and coated abrasives. Plants in Lidcombe and Campbellifield. • PT Norton Hamplas (50%) - Indonesia. Plant in Surabaya.


## SPAFI

1 00% owned by Compagnie de Saint-Gobain. Holding company. Holds: Saint-Gobain Isover, Saint-Gobain Vetrotex France, Saint-Gobain PAM, SEPR, Saint-Gobain Abrasifs (France), SGPPI - France, Saint-Gobain Plc - United Kingdom, Saint-Gobain Corporation - USA, Saint-Gobain T

echnical Fabrics Canada Ltd, Saint-Gobain Abrasivos and Saint-Gobain Calmar Brazil - Brazil. See company profiles.


## SG PPI
1 00% owned by Spafi. Holding company. Holds: • Saint-Gobain Glass Benelux - Belgium; Saint-Gobain

Cristalería - Spain; Brasilit SA - Brazil; Grindwell Norton Ltd - India. See company profiles. • Saint-Gobain China Invest Cy Ltd - China (100%). Holding

company. • Saint-Gobain Sekurit Thailand - Thailand (22.5%). Flat glass

processing for the auto industry. Employees: 408. • Verinvest Oy - Finland (17.3%). See Saint-Gobain Glass

Nordic A/S.


## VERTEC

1 00% owned by Compagnie de Saint-Gobain.Holding company. Holds: Saint-Gobain Glass France, SaintGobain Emballage, SEPR - France; Saint-Gobain Glass Italia - Italy. See company profiles.



## SAINT-GOBAIN DEUTSCHLAND

1 00%-owned by Compagnie de Saint-Gobain. Holding company. Holds: • Saint-Gobain Glass Deutschland GmbH, Saint-Gobain Isover

G+ H AG, Saint-Gobain Vetrotex Deutschland GmbH, SGT Schleifmittel GmbH, Raab Karcher GmbH - Germany. See company profiles

. • 60% of Saint-Gobain Autoglas GmbH - Germany. Holds

1 00% of Saint-Gobain Sekurit Deutschland GmbH and SaintGobain Sekurit Deutschland Verw/ Beteil GmbH - Germany.


## SAINT-GOBAIN GLASS DEUTSCHLAND GMBH Owned 60% by Saint-Gobain Deutschland and 40% by Glaceries de Saint-Roch Germania. Manufacturing and processing of flat glass. Plants in Stolberg (float and processing), Herzogenrath (float), Cologne-Porz and Torgau (float and low-emission laminated glass) and Mannheim (cast glass). 2 002 sales: € 3 46.4 million. Employees: 1,274. T hese figures include those of Saint-Gobain Glass Deutschland GmbH, Flachglas Torgau GmbH (100%-owned) and Verbundglas Torgau GmbH (also 100% owned). 

### Subsidiaries and holdings

• Saint-Gobain Deutsche Glass GmbH, Saint-Gobain Sekurit

Deutschland KG - Germany, Saint-Gobain Exprover - Belgium, Saint-Gobain Glass Polska - Poland which holds 100% of Saint-Gobain Euroveder Polska - Poland, Saint-Gobain Glass Nordic A/S - Denmark. See company profiles. • Nitrasklo AS (40%), Venisklo Spal (100%) - Slovakia.

Processing and distribution of flat glass for the building industry.
• In ternationale Maatschappij Voor Het Beheer van

Glasmaatschappijen BV (SGT) - Netherlands (100%). Holding company. Holds Eckelt Glas GmbH Austria (95.5% + 4 .5% by Saint-Gobain Glass Deutschland GmbH). Flat glass processing. Sales: € 58 .8 million. Employees: 349. • Saint-Gobain Glass India Ltd (66.3%) - India.

Employees: 290.


## SAINT-GOBAIN GLASS DE UTSCHE GMBH

1 00% owned by Saint-Gobain Glass Deutschland GmbH. A holding company controlling various subsidiaries in distribution and processing of flat glass for the building industry. Consolidated sales for 2002 of the VGG group amounted to € 220 .5 million. T he group employs 2,123 persons.


## SAINT-GOBAIN SEKURIT DEUTSCHLAND BETEILIGUNGEN GMBH

1 00% owned by Saint-Gobain Autoglas GmbH. Company managing Saint-Gobain Sekurit Deutschland KG and holding other equity interests. 

### Subsidiaries and holdings • Saint-Gobain Sekurit Benelux - Belgium, Saint-Gobain

Sekurit Scandinavia - Sweden. See company profiles. • Autoglas Hansa Vertriebsgesellschaft GmbH - Germany

(100%). Employees: 134. Holds: Renz Autoglas GmbH (100%), AGH Rheinemain (100%), Freudenberger Autoglas - Germany (100%); Autover Bilglas A/S - Norway (100%), Autover Oy - Finland (100%); Autoglas Direktglas AB - Sweden (80%), Autover Benelux NV (100%); Walter Kigler - Austria (85%). Distribution of replacement automobile flat glass. • Saint-Gobain Sekurit Glas-Union GmbH - Germany (100%).

Sale of automobile glass. • SG Sekurit Finland Oy - Finland (100%). Faba Autoglas

Tec hnik GmbH - Germany (100%). Processing of automobile glass. 

# GERMANY € 1 = DEM 1.96 

# CENTRAL AND EASTERN EUROPE • STGOBAIN RA02-CH9/GB 13/06/03 9:59 Page 157**158**



### Plant in Herzogenrath. 2 002 sales: € 80.3 million. Employees: 550. Holds: • 99.7% of SG Vertex AS - Czech Republic.

Sales: 6.1 billion Czech korunas. Employees: 1,395. Holds Saint-Gobain Velimat Polska SP ZOO (100%). See company profiles

. • 10.2% of Saint-Gobain Vetrotex International - France.

See Saint-Gobain Vetrotex France . 100% of Saint-Gobain Vetrotex Glasvlies - Germany. 

## HALBERGERHÜTTE GMBH

1 00% owned by Saint-Gobain PAM. Holding company. 

### Subsidiaries and holdings • Saint-Gobain Plc - United Kingdom, Saint-Gobain Condotte

SpA - Italy. See company profiles

. • Saint-Gobain GussRohr KG - Germany (100%). Ductile

cast-iron pipes. Plants in Saarbrücken-Brebach (Saar) and Gelsenkirchen (Ruhr). Sales: € 15 4.9 million. Employees: 688. • SG H ES GmbH - Germany (100%). Sale of piping systems

for the building industry. Sales: € 47 .8 million. Employees: 47. • Saint-Gobain Slevarna (100%) - Foundry in the Czech

Republic. Employees: 90.


## SAINT-GOBAIN O BERLAND AG 96.7% owned by Saint-Gobain Emballage. Company listed on the Frankfurt, Munich and Stuttgart Stock Exchanges. Manufactures glass containers (bottles, industrial jars and glass blocks). Plants in Bad Wurzach (Baden-Würtemberg), Neuburg (Bavaria), Essen (Nordrhein Westfalen) and Wirges (Rheinland). 2 002 sales: € 336 .1 million. Employees: 1,754. 

### Subsidiaries and holdings • Ruhrglas - Germany (100%). Holds 100% of GPS Glas

Produktions Service. Produces machines for the glass containers industry. Sales: € 18 million. Employees: 72. • Westerwald - Germany (100%). Holding company. • GGA Gesellschaft für Glasrecycling - Germany (26.4%).

Collection and redistribution of glass container cullet.
• Zhanjiang Saint-Hua-Glass - China (35%). Glass

containers (bottles). Sales: 100 million yuan. Employees: 468. 

## SA IN T- GO BA IN C ALMAR GMBH Owned 99% by SGD Kipfenberg +1% by Saint-Gobain Calmar Inc. Manufactures plastic pumps. Plant in Hemer. 2 002 sales: € 67 .7 million. Employees: 525. Holds: 50% of Calmar Poland, 5% of Saint-Gobain Calmar Ltd - United Kingdom. Distribution companies. • Saint-Gobain Sekurit CR Spol SRO. - Czech Republic

(100%). Produces laminated glass for the auto industry. Employees: 330. • Saint-Gobain Sekurit Hanglas Polska - Poland (87.8%),

Produces automobile glass. Employees: 674.• Saint-Gobain Sekurit (Shanghai) - China (100%), SaintGobain Sekurit Japan - Japan (100%).


## SAINT-GOBAIN SEKURIT DEUTSCHLAND KG Owned 99% by SG Sekurit Deutsch. Verw. GmbH and 1% by Saint-Gobain Glass Deutschland GmbH. Manufactures flat glass products for the automobile industry. Plants in Stolberg (laminated glass) and Herzogenrath (coated glass). 2 002 sales: € 3 66.4 million. Employees: 2,095. T hese figures include those of SG Sekurit Modulartechnik. 

### Subsidiaries and holdings • Saint-Gobain Sekurit Nutzfahrzeugglas GmbH (SSGN KG)

- Germany (100%). Manufactures flat glass for utility vehicules. Plant in Cologne-Porz. Sales: € 40.9 million. Employees: 301.
• Saint-Gobain Sekurit Modulartechnik - Germany (100%).

Extrusion of laminated and coated flat glass. Plant in Würselen. • FABA Autoglas Technik - Germany (94%). • Sekurit Richard Fritz Autoglas Umspritzung (51%).


## SAINT-GOBAIN IS OVER G + H AG 99.9% owned by Saint-Gobain Deutschland. Manufactures and sells mineral fibers and foams for thermal, refrigeration and acoustic insulation as well as for fireproofing under the trademark G + H Isover. Plants in Bergisch-Gladbach (Nordrhein-Westfalen), Ladenburg (Baden-Würtemberg), Spire (Rheinland - Palatinat) and Lübz (Mecklenburg Vorpommern). 2 002 sales: € 3 06.6 million. Employees: 1,282. 

### Subsidiaries and holdings • Saint-Gobain Isover SA - Switzerland, Saint-Gobain Isover

Benelux - Netherlands, Saint-Gobain Isover A/S - Denmark. See company profiles.
• Saint-Gobain Isover Austria AG - Austria (99.8%).

Manufactures and sells insulating materials. Plant in Stockerau. Sales: € 53 .4 million. Employees: 251. Holds: 74.3% of Saint-Gobain Orsil (+ 25.8% held by Saint-Gobain Isover G+ H AG) - Czech Republic. Manufactures rock wool insulating materials. Plant in Castolovice. Sales: 1,095.2 million Czech korunas. Employees: 251. • G + H Fuersorge GmbH + Superglass Dammstoffe GmbH

- Germany (100%). Distribution of insulating materials.


## SAINT-GOBAIN VETROTEX DEUTSC HLAND GMBH

1 00% owned by Saint-Gobain Deutschland. Manufactures and sells fiberglass for reinforcements. • STGOBAIN RA02-CH9/GB 13/06/03 9:59 Page 158**159** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



## SAINT-GOBA IN GLASS BENELUX SA Owned: 88.7% by Compagnie de Saint-Gobain and 10.9% by SGPPI. Manufacturing and processing of flat glass. Plants in Sambreville (2 float lines). 2 002 sales: € 15 1.2 million. Employees: 562. 

### Subsidiaries and holdings • Saint-Gobain Exprover - Belgium, Saint-Gobain Plc - United

Kingdom, Sas Van Gent Glasfabriek- Netherlands, SaintGobain Glass Nordic A/S - Denmark. See company profiles

. • Saint-Roch Germania - Germany (100%). Holding

company. Holds: 40% of Saint-Gobain Glass Deutschland GmbH - Germany. See company profiles. 40% of SaintGobain Autoglas GmbH - Germany. See Saint-Gobain D eutschland. • B & G Glas Group (99.7%), Frankenglas (100%),

Boermans NV Group (99.9%), Burniat Glass SA (100%), Glorieux SA (100%),Wagener Jowaco (100%) holds Hanin SA (77.6% + 22.3% by Saint-Gobain Glass Benelux SA), Te chniver SA (100%), Wagener Group (100%), Climaglass NV (99.9%), Conforglass (99.9%), Mirover NV (99.2%), Romato (99.9%) - Belgium. Sales of subsidiaries: € 85 million. Employees of subsidiaries: 719. • Koninklijke Saint-Gobain Glass NV - Netherlands (100%).

Holding company for subsidiaries selling and processing glass products for the building industry.


## SAINT-GOBAIN GLASS EXPROVER Owned 39% by Saint-Gobain Glass Deutschland GmbH + 27 % by Saint-Gobain Glass Benelux + 18% by Saint-Gobain Glass France + 8% by Saint-Gobain Glass Italia + 8% by Saint-Gobain Cristalería. Export company of the Flat Glass Division. Promotes and coordinates all exports of flat glass products manufactured by the Group outside areas where there are plants. Holds: Saint-Gobain Hellas - Greece (100%). Saint-Gobain Glass Exprover North America - USA (100%).


## SAINT-GOBAIN SEKURIT BENELUX SA

1 00% owned by Saint-Gobain Sekurit Deutschland Beteiligung GmbH. Flat glass processing for the auto industry. Plant in Sambreville. 2 002 sales: € 89.8 million. Employees: 441. Holds: Saint-Gobain Sekurit Thailand - Thailand (72.5%). See SGPPI. Autover International BV - Netherlands (100%). Distribution of replacement automobile flat glass. Autover Distribution SA - Belgium (100%). 

## SEPR KERAMIK GMBH & CO KG

1 00% owned by SEPR. Holding company. Holds: • Norton Beteiligungs - Germany (100%). Holding company.

Holds Saint-Gobain Performance Plastics Pampus GmbH -Germany (100%). Manufactures and sells highperformance plastics for the medical and automobile industries and for other industrial equipment. Plant in W illich. Sales: € 51 .3 million. Employees: 319. Holds SaintGobain Advanced Ceramics Lauf GmbH - Germany (100%). Manufactures and sells advanced ceramics. Plant in Lauf. Sales: € 17 million. Employees: 200.
• Saint-Gobain Industriekeramik Düsseldorf - Germany

(100%). Produces refractory products. Plant in Düsseldorf. Sales: € 17 .1 million. Employees: 96. • Saint-Gobain Advanced Ceramics Mönchengladbach

- Germany (100%) Manufactures and sells advanced ceramics. Plant in Mönchengladbach. Sales: € 9.8 million. Employees: 85. • Saint-Gobain Quartz GmbH (100%) - Germany. Plant in

Wi esbaden.
• Saint-Gobain Industriekeramik Roedental - Germany

(100%) . Produces high-performance refractory products. Plant in Roedental. Sales: € 44.4 million. Employees: 455. • Saint-Gobain Performance Plastics Cologne - Germany.

Sales : € 14 .1 million. Employees : 40 • Saint-Gobain Ceramic Materials Kuppenheim - Germany

(100%). Silicon carbide processing. Plant in Kuppenheim. Sales : € 11 .1 million. Employees: 31.


## SAINT-GOBAIN SCH L EIFMITTEL - BETEILIGUNGEN GMBH

1 00% owned by Saint-Gobain Deutschland. Holds: Production facilities: • 100% of Saint-Gobain Diamond Products GmbH and

of Saint-Gobain Winter Diamantwerkzeuge. Produces superabrasive tools for the mechanical and stone-cutting industries. Plants in Norderstedt. Employees: 627. • 100% of Saint-Gobain Abrasives GmbH. Manufactures and sells grinding wheels and super-abrasives. Plants in Gerolzhofen and Wesseling. Employees: 467. • 100% of Saint-Gobain Diamant Winter Epe - Greece.

Employees: 132. • 100% of Diamant Winter Italia - Italy. Employees: 47. • 100% of Diamant Winter South Africa - South Africa.

Sales units: • 100% of Diamantes Winter - Spain. • 90% of Saint-Gobain Diamant Winter Ltd - India.

Employees: 170. 

## RAAB KARCHER GMBH

1 00% owned by Saint-Gobain Deutschland. Distribution of building materials in Germany, in the Netherlands and in Eastern Europe. 2 002 sales: € 2.48 billion (including subsidiaries). Employees: 8,048 (including subsidiaries). 

# BENELUX € 1 = BEF 40.34 € 1 = NLG 2.20 • STGOBAIN RA02-CH9/GB 13/06/03 9:59 Page 159**160**



## GLASFABRIEK SAS VAN GENT BV

1 00% owned by Saint-Gobain Glass Benelux. Manufactures reflecting glass, enameled glass and tempered glass. Plant in Sas Van Gent (Netherlands). 2 002 sales: € 19 .7 million. Employees: 144.


## SAINT-GOBAIN ISOVER BENELUX

1 00% owned by Saint-Gobain Isover G+ H AG. Production and sale of insulating products. Plant in Etten-Leur (Netherlands). 2 002 sales: € 85.3 million. Employees: 352. 

### Subsidiaries and holdings • Saint-Gobain Isover Benelux NV - Belgium (99.8%).

Distribution. • Saint-Gobain Cultilène BV - Netherlands (100%). Processes

and sells glass wool and rock wool products for hydroponic (soil-less) cultivation. Sales: € 18 .6 million. Employees: 61. • Saint-Gobain Ecophon BV - Netherlands (30%).


## SAINT-GOBAIN D IAMOND P RODUCTS SA (LUX EMBOU RG)

1 00% owned by Saint-Gobain Abrasifs (France). Produces and sells diamond-tipped tools, disks and drills, as well as machines for cutting asphalt in the construction and civil engineering industries. Plant in Bascharage (Luxembourg). 2 002 sales: € 41 .6 million. Employees: 147. Holds: 99.9% of Saint-Gobain Diamond Products - Belgium. Produces diamond-tipped tools. Plant in Mechelen. Sales: € 3.8 million. Employees: 34.


## SAINT-GOBAIN NEDERLAND
1 00% owned by Compagnie de Saint-Gobain. Finance company. 

## SAINT-GOBAIN C RISTALERIA SA Owned 23.9% by Compagnie de Saint-Gobain + 66.6% by International Saint-Gobain + 4.9% by Saint-Gobain Vicasa + 1.9% by SGPPI. Manufactures and processes flat glass for the building and automobile industries, as well as insulating materials (glass wool and rock wool). Plants in Arbós (float line), Avilès (float line), Madrid (Hortaleza), Renedo de Piélagos. Insulating material plant in Azuqueca de Henares. Consolidated sales for 2002 : € 448.6 million. Employees: 1,802. 

### Subsidiaries and holdings

• Saint-Gobain Vicasa, La Veneciana, Saint-Gobain Canalizacion,

Saint-Gobain Vetrotex España - Spain; Saint-Gobain Glass Po rt ugal - Portugal; Saint-Gobain Glass Exprover - Belgium;Saint-Gobain Sekurit Mexico, Saint-Gobain Glass Mexico, SaintGobain Vetrotex America Xicoh - Mexico; Saint-Gobain de Colombia, PAM Colombia SA - Colombia. See company profiles

. • Autover Iberica - Spain (100%). Distribution of replacement

automobile flat glass. Employees: 35. • Wanner y Vinyas (100%) - Spain. Thermal and acoustic

insulation. Sales: € 45.2 million. Employees: 350. • Industrias del Cuarzo Incusa (100%). Sand quarry.

Employees: 40. • Vislam (5%), Inmobiliaria Cristalvex (100%). • La Veneciana Norte (5%), La Veneciana Levante (5%), La

Ve neciana Bética (5%), La Veneciana Canarias (5%). • Procustic - Spain (100%). Processing and distribution of

acoustic insulation products. • Cristalería de Hortaleza - Spain (100%). Employees : 135. • Iberisol - Portugal (65.2% + 22.3% by Wanner y Vinyas).

Distribution of insulating products. • Vidrieria Argentina (VASA) - Argentina (49%). Manufactures

flat glass for the building industry. • Cristalería Andina - Panama (100%). • Holding Concorde SA - Colombia (51%)


## LA VENECIANA

1 00% owned by Saint-Gobain Cristalería. Sale, processing and installation of flat glass products and mirrors. 2 002 consolidated sales: € 13 3.2 million. Employees (including subsidiaries): 936. 

### Subsidiaries and holdings • Portaglass SL (100%), La Veneciana Norte (95%),

La Veneciana Levante (95%), La Veneciana Bética (95%), La Veneciana Canarias (95%), La Veneciana Balear SA (100%), Cristalería Industrial (95%), Vidrios de Seguridad Laminados Vislam (95%). 

# SPAIN € 1 = ESP 166.39 

# PORTUGAL € 1 = PTE 200.48 • STGOBAIN RA02-CH9/GB 13/06/03 9:59 Page 160**161** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



## SAINT-GOBAIN A BRASIVOS (SPAIN)

1 00% owned by Saint-Gobain Abrasifs (France). Produces abrasive grinding wheels. Plants in Pamplona and Montmelo. 2 002 sales: € 39 .4 million. Employees: 268. Holds: 100% of Saint-Gobain Abrasivos Ltd - Portugal. Distributes abrasive products. Plant in Porto.


## SAINT-GOBAIN GLASS PORTUGAL

1 00% owned by Saint-Gobain Cristalería. Manufactures and processes flat glass for buildings and home appliances. Plant (float line) in Santa Iria de Azoia (Portugal). 2 002 sales: € 58 .1 million. Employees: 158. Holds: • SSGP Vidro Automovel - Portugal. See company profile

. • 100% of Covipor - CIA Vidreira Do Norte, and 100% of

Covilis - Portugal. Processing of glass products for the building industry. Employees: 169.


## SSGP VIDR O AUTOMOVEL

1 00% owned by Saint-Gobain Glass Portugal. Flat glass processing for the auto industry. Plant in Santa Iria de Azoia (Portugal). 2 002 sales: € 60.2 million. Employees: 284. Holds: 59.7% of Autoverlusa - Portugal. Distribution of replacement flat glass parts for the auto industry.


## SA IN T- GOBAIN MONDEGO

1 00% owned by Saint-Gobain Vicasa. Manufactures glass containers (industrial bottles and jars). Plant in Figueira da Foz (Portugal). 2 002 sales: € 51 .3 million. Employees: 259. 

## SAINT-GOBAIN VETROTEX ESPAÑA

1 00% owned by Saint-Gobain Cristalería. Manufactures and sells fiberglass for reinforcements. Plant in Alcalá de Henares. 2 002 sales: € 74 .5 million. Employees: 360. Holds: • 0.1% of Saint-Gobain Vetrotex International - France. See

Saint-Gobain Vetrotex France . 100% of CemFil International - United Kingdom. Distribution of CemFil glass fibers for reinforcing concrete. 100% of Vetrotex Distribucion Norte, Vetrotex CemFil and Tevesa - Spain. • 40% of Beijing Saint-Gobain Vetrotex Glass Fiber - China.

Employees: 133.


## SA IN T- GOBAIN C ANALIZACION Owned 80% by Saint-Gobain PAM and 20% by Saint-Gobain Cristalería. Ductile cast-iron pipes. Plant in Santander. 2 002 sales: € 1 60 million. Employees: 270. Holds: PAM Colombia SA - Colombia (95%). See company profile . Saniplast (70%) - Spain. Distribution of pipes and accessories. Sales: € 41 .6 million. Employees: 89.


## SAINT-GOBAIN VICASA SA 99.9% owned by Saint-Gobain Cristalería. Manufactures glass containers (bottles, industrial jars and flasks). Plants in Azuqueca de Henares (Guadalajara), Burgos, Dos Hermanas (Sevilla); Jerez de la Frontera (Cadiz); Saragossa. 2 002 sales: € 233 million. Employees: 1,218. T hese figures include those of Saint-Gobain Montblanc SA. Manufactures glass containers. Plant in Montblanc (Catalonia). 

### Subsidiaries and holdings • Saint-Gobain Cristalería - Spain; Saint-Gobain Mondego -

Port ugal. See company profile. • Saint-Gobain La Granja SA - Spain (100%). Manufactures

glass containers (flasks), insulators and moldings. Plant in La Granja (Segovia). Sales: € 61 .2 million. Employees: 341. Holds 100% of Saint-Gobain Calmar SA - Spain. Produces plastic pumps. Plant in Barcelona. Sales: € 43.9 million. Employees: 379. • Vidrieras Canarias (41%). Glass containers. Sales:

€ 18 .1 million. Employees: 110. • Gijon Fabril - Spain (100%). Production and distribution of

machines and molds for the glass industry. • Rayen Cura Saic - Argentina (59.5%). Manufactures glass

containers (bottles). Plant in Mendoza. Sales: 55.8 million Argentine pesos. Employees: 241. • STGOBAIN RA02-CH9/GB 13/06/03 9:59 Page 161**162**



### 2 002 sales: £136.2 million. Employees: 1,424. Holds: • Foundry Products Ltd - United Kingdom, Guest and Chrimes

- United Kingdom (100%). • Stanton Bonna Concrete Ltd - United Kingdom (20%)

Concrete pipes. • Saint-Gobain Pipelines South Africa - South Africa (100%).

Manufactures cast-iron parts. Two plants in Pretoria. Sales: 12 6 million rand. Employees: 476.


## SAINT-GOBAIN CERAMICS & PLASTICS PLC

1 00%-owned by Saint-Gobain Plc. Manufactures and sells high-performance plastics and products for chemical processes. Plant in Stoke-on-Trent. Holds: • Saint-Gobain Quartz Plc - United Kingdom (100%),

Chemfab Holding - Ireland (100%). See company profile. • Chemfab Holding UK Ltd - United Kingdom (100%).

Sales: £6.2 million. Employees: 32.
• Saint-Gobain Crystals & Detectors UK - United Kingdom

(100%). • Saint-Gobain Industrial Ceramics Ltd - United Kingdom

(100%). Production and sale of high-temperature insulation fiber and refractory products. Plant in Rainford. • Saint-Gobain Performance Plastics Corby - United Kingdom

(100%). Manufactures heat-resistant hose, tubing and bundles for beverage-dispensing applications. Sales: £5.5 million. Employees: 39.


## SAINT-GOBAIN Q UARTZ PLC

1 00% owned by Saint-Gobain Ceramics & Plastics Plc. Produces silica parts for the chemical industry, fused quartz for the semi-conductor industry, optical fiber manufacturing, infrared heating and laboratory equipment. Plants in Wallsend. 2 002 sales: £10.9 million. Employees: 200. Holds:
• TSL Quadrant Ltd - United Kingdom (100%). Plant in Harlow. • TSL Semicon Quartz Ltd - United Kingdom (100%). Plant in

Cumberland. 

## CHEMFAB HOLDINGS (IRELAND)

1 00% owned by Saint-Gobain Ceramics & Plastics Plc. Processing of coated fabrics (PTFE, silicone) and adhesive tapes. Holds 100% of Tygaflor Holdings - Ireland, which holds: 10 0% of Chemfab Luxembourg SARL. Holds SG PPL - Ireland (100%). Sales: € 27 .9 million. Employees: 118. 

## SAINT-GOBA IN PLC Owned 74.7% by Partidis, 11.7% by Saint-Gobain Glass Benelux, 6% by Spafi, 3.2% by Saint-Gobain PAM, 3.2% by Halbergerhütte and 1.2% by Saint-Gobain Isover A/S. Holding company. Holds: • Solaglas Ltd, Saint-Gobain Pipelines Plc, Saint-Gobain

Ceramics & Plastics Plc, Abrasives Plc; Saint-Gobain Building Distribution Ltd - United Kingdom. See company profiles. • Orchardflint - UK. Holding company. • Saint-Gobain Glass UK Limited (100%) - United Kingdom.

Float in Egborough. Sales: £54.8 million. Employees: 128. • Saint-Gobain Pipe Systems Plc - United Kingdom (100%).

Distribution of pipe products for the building and public works sector. • Saint-Gobain Technical Fabrics UK Ltd (100%). Sales: £5.7

million. Employees: 35. • Saint-Gobain Insulation UK (100%). Holds 50% of British

Gy psum Isover - United Kingdom. Production and sale of insulation products. Sales: £10.9 million. Employees: 131.


## SOLAGLAS LTD

1 00% owned by Saint-Gobain Plc. Processing and distribution of flat glass products for the building industry (tempered glass, laminated glass, mirrors, insulating glass). Network of 42 sites including 27 processing facilities throughout the UK. 2 002 sales (including subsidiaries): £187.6 million. Employees (including subsidiaries): 2,549. Holds: • Hayes Group, Dockrell Glass Group - United Kingdom

(100%). Processing for the building industry. • Thermax, Birmingham Build - United Kingdom (100%).

Processing for the automobile and building industries . • Saint-Gobain Glass Ltd (100%). UK distributor for the

products of the Flat Glass and Containers divisions. • Vetrotech Saint-Gobain UK (50%).


## SAINT-GOBAIN BUILDING DISTRIBUTION PLC

1 00% owned by Saint-Gobain Plc. Distribution of building materials. 2 002 sales: € 1.82 billion. Employees: 12,076.


## SA INT-GOBAIN PIPELINES PLC

1 00% owned by Saint-Gobain Plc. Ductile cast-iron pipes and hydraulic connectors for water-supply and wastewater networks. Hydraulic valves. Cast-iron and steel supplies for roadworks, cast-iron supplies for the building industry. Plants in Stanton, Staveley, Holwell, Risca, West Bromwich and Telford.



# UNITED KINGDOM € 1 = GBP 0.63 • STGOBAIN RA02-CH9/GB 13/06/03 9:59 Page 162**163** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



## SAINT-GOBAIN VETROTEX ITALIA

1 00% owned by International Saint-Gobain. Manufactures and sells fiberglass for reinforcements. Plants in Besana Brianza and Vado Ligure. 2 002 sales: € 161 .4 million. Employees: 535. Holds: 75.9% of Saint-Gobain Revetex SRL - Italy; 100% of LMC - Italy; 5.2% of Saint-Gobain Vetrotex International - Fran ce. See Saint-Gobain Vetrotex France

. 

## SAINT-GOBAIN CONDOT TE SPA Owned 90% by Saint-Gobain PAM and 10% by Halbergerhütte. Ductile cast-iron pipes. Plants in Cogoleto, Lavis and Pesaro. 2 002 sales: € 68.3 million. Employees: 230.


## SAINT-GOBAIN VETRI Owned 100% by Saint-Gobain Emballage. Manufactures glass containers (industrial bottles and jars). Plants in Dego, Lonigo, Villa Poma, Pescia, Gazzo Veronese, Carcare. 2 002 sales: € 351 .1 million. Employees: 1,182. 

### Subsidiaries and holdings • 100% of Silver - Italy. Sand quarry products. • 100% of Ecoglass - Italy; 20% of Ecolvetro - Italy. Collection

and processing of cullet.


## SA IN T- GO BA IN ABRASIVI SPA (ITALY)

1 00% owned by Saint-Gobain Abrasifs (France). Produces abrasive grinding wheels. Plants in Corsico (Milan), Caronno (Varese), Turin and Salerno. 2 002 sales: € 89.3 million. Employees: 458. Holds: FEA SRL - Italy (100%).


## SEP R ITALIA
1 00% owned by SEPR. Manufactures fused-cast refractory products. Plant in Mezzocorona. 2 002 sales: € 30 .7 million. Employees: 238. 

## ABRASIVES PLC

1 00% owned by Saint-Gobain Plc. Holds: 100% of Unicorn Abrasives Ltd and of Saint-Gobain Abrasives Ltd - United Kingdom. Sales: £57.9 million. Employees: 577. Th rough various subsidiaries, manufactures bonded and coated abrasives as well as super-abrasives. Plants in Stafford, Gloucester, Tottenham, Welwyn, Leicester, Southampton and Brighton. Holds 100% of SG Universal Abrasives Inc. - U SA. Plants in Bristol and Romulus. Sales: $56.2 million. Employees: 313.



## SA IN T- GO BA IN GLAS S ITALIA

1 00% owned by Vertec. Plants in Pisa (processed products for the building industry) and Sesto Fiorentino (silvering workshop). 2 002 sales: € 1 48.2million. Employees: 326. 

### Subsidiaries and holdings • Saint-Gobain Sekurit Italia - Italy. See company profile. • Flovetro (50%). Float line at Vasto. • Mineraria Apuana (100%). Operation of a dolomite quarry. • Sirsa (49%). Components for the auto industry. • Mac Trasporti (50%). Road transport. • Gruppo Fontana (100%). Processing and sale of glass.

Sales: € 64.8 million. Employees: 76.
• Vetreira Industriale Saint-Gobain SRL (100%). Employees: 69.


## SA IN T- GO BA IN SE KURIT ITALIA
1 00% owned by Saint-Gobain Glass Italia. Flat glass processing for the auto industry. Plant in Savigliano. 2 002 sales: € 64.7 million. Employees: 296. Holds: 100% of Autover Italia SRL, 50% of Borgna Sicurglass SRL and of Vetro Sud SRL - Italy.


## SA IN T- GO BA IN IS OVER ITALIA 92% owned by International Saint-Gobain. Manufactures insulating materials and sealing products (roofing materials, bonded fiberglass sidings). Plants in Vidalengo and Chieti. 2 002 sales: € 59 .6 million. Employees: 254. Holds: 17.9% of Saint-Gobain Isover SA - Switzerland. See company profile

.



# ITALY € 1 = ITL 1,936.3 • STGOBAIN RA02-CH9/GB 13/06/03 9:59 Page 163

## SAINT-GOBAIN IS OVER SA Owned 46.7% by Saint-Gobain Isover G + H AG, 34.1% by International Saint-Gobain and 17.9% by Saint-Gobain Isover Italia. Production and sale of insulating products. Distribution of fiber reinforcements. Plant in Lucens. 2 002 sales: CHF 38.8 million. Employees: 163. Holds: 25% of Saint-Gobain Isover AB - Sweden. See company profile. 49% of Saint-Gobain Eurocoustic - France. See Saint-Gobain Isover. **164**



## I NTERNATIONAL SAINT-GOBAIN Owned 96.5% by Compagnie de Saint-Gobain and 3.5% by Valf ix. Holding company. Holds: Isover SA - Switzerland; Saint-Gobain Isover Italia - Italy; Saint-Gobain Vetrotex Italia - Italy; Saint-Gobain Isover AB - Sweden; Saint-Gobain Cristalería - Spain. See company profiles . 1.9% of Euroventures BV - Netherlands.



## SAIN T- GO BAIN GLAS S NORDIC A/S (DENMARK) Owned 50% by Saint-Gobain Glass Deutschland GmbH and 50 % by Saint-Gobain Glass Benelux. Holding company. Holds: 100% of:
• Emmaboda Glas AB - Sweden. Produces insulating and

tempered glass. Plant in Emmaboda. Sales: SEK 268.8 million. Employees: 268. Holds 100% of Glashuset I Sverige AB - Sweden. Glass distribution. Holds 100% of Decoustics - Canada. Sales: CAD 28.7 million. Employees: 202. • Scanglas A/S - Denmark. Produces insulating and tempered

glass. Plants in Korsør and Kjellerup. Sales: DKK 301.2 million. Employees: 267. Holds: 100% of VG Glas A/S - Denmark. Glass distribution. • Brodrene Böckmann A/S - Norway. Produces insulating

glass. Plants in Frederikstad and Gjövik. Sales: NOK 336.4 million. Employees: 272. • Scandi-Glass A/S - Norway. Produces insulating glass. Plant

in Sem. Sales: NOK 82.9 million. Employees: 44.
• SI-Glass A/S - Norway. Produces laminated and tempered

glass. Plant in Sauda. Sales: NOK 82.7 million. Employees: 74. • Holds also: Esbjerj Glas - Denmark (100%), Baltiklaas -

Estonia (100%), Finnglass Oy - Finland (63%), Verinvest Oy - Finland (82.7%). Processing and distribution of flat glass for the building industry.


## SAINT-GOBAIN SEKURIT SCANDINAVIA AB (SWEDEN)

1 00% owned by Saint-Gobain Sekurit Deutschland Beteiligungen GmbH. Manufactures tempered and laminated glass for the automobile industry. Plant in Eslöv. 2 002 sales: SEK 481.2 million. Employees: 280. Holds: 100% of Saint-Gobain Sekurit Eesti A/S - Estonia; 1 00% of Glasex AB - Sweden. Manufactures replacement windscreens. 

## SAINT-GOBAIN GLASS POLSKA

1 00%-owned by Saint-Gobain Glass Deutschland GmbH. Manufacturing and processing of flat glass. Float line in Strzemieszyce. 2 002 sales: 304.3 million zloty. Employees: 243. Holds: 100% of Glaspol - Poland. Processing and distribution of flat glass for the building industry. Sales: 125.9 million zloty. Employees: 334.


## SAINT-GOBAIN IS OVER POLSKA

1 00%-owned by Saint-Gobain Isover AB. Production and distribution of insulating products. 2 002 sales: 196.6 million zloty. Employees: 231.


## SAINT-GOBAIN VELIMA T POLSKA SP ZOO

1 00%-owned by SG Vertex AS. Production and distribution of bonded fiberglass. 2 002 sales: 28.8 million zloty. Employees: 84.


## SAINT-GOBAIN ABRASIVES SA (POLAND)

1 00% owned by Saint-Gobain Abrasifs SA (France). Production and distribution of abrasive grinding wheels. Plant in Kolo. 2 002 sales: 82.6 million zloty. Employees: 440. 

# SCANDINAVIA € 1 = DKK 7.,43 € 1 = SEK 9.16 € 1 = NOK 7.51 € 1 = FIM 5.95



# SWITZERLAND € 1 = CHF 1.47 

# POLAND € 1 = PLZ 3.85 • STGOBAIN RA02-CH9/GB 13/06/03 9:59 Page 164**165** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



### Holds: • Saint-Gobain Matériaux Céramiques Benelux SA (100%)

- Belgium. Processing of silicon carbide and corundum for the refractory and abrasives industries. Plant in Hody. Sales: € 18 .9 million. Employees: 27. • Saint-Gobain Materiales Ceramicos (100%) - Venezuela.

Produces silicon carbide. • Norton Lianyungang Grains Industry (50%) - China.



## SAINT-GOBAIN CORPORAT ION

1 00% owned by Spafi. Holds: 100% of Saint-Gobain Delaware Corporation - USA - Holding company which controls CertainTeed Corporation, Saint-Gobain Containers, Inc., Saint-Gobain Calmar, Inc. and Saint-Gobain Abrasives, Inc. - USA. See company profiles

. 

## CERTAINTEED CORPORATION

1 00% owned by Saint-Gobain Delaware Corporation. 2 002 sales: $2,607.4 million. Employees: 8,231. T he sales and the employees of CertainTeed Corporationinclude those of Saint-Gobain Vetrotex America Inc., SaintGobain Technical Fabrics America Inc., Saint-Gobain BayForm America Inc., BTI Inc., Marshall Vinyl Windows Inc. Insulation products. Plants in Athens (Georgia), Chowchilla (California), Kansas City (Kansas), Mountaintop (Pennsylvania), Winter Haven (Florida). Building materials. This division includes the following business lines: • Solid vinyl sidings and windows. Plants in Corona

(California), Hagerstown (Maryland), McPherson (Kansas), Jackson (Michigan), Nesquehoning (Pennsylvania), Social Circle (Georgia), Auburn (Washington), Richmond (Virginia). • Asphalt roofing materials (shingles). Plants in Birmingham

(Alabama), Glenwood and Little Rock (Arkansas), Fremont and Wilmington (California), Oxford (North Carolina), P eechtree City (Georgia), Shreveport (Louisiana), Norwood (Massachussets), Shakopee (Minnesota), Gads Hills (Missouri), Milan (Ohio), Portland (Oregon), Chester (Pennsylvania), Ennis (Texas). • Ventilation systems. Plants in Clinton (Iowa), Dallas (Texas),

Lincolnton (North Carolina). • Polymerization plant in Lake Charles (Louisiana). • PVC pipes and fences. Plants in Lodi (California).

McPherson (Kansas), Waco (Texas), Social Circle (Georgia), Buffalo (New York), Romeoville (Illinois). • Fiber cement siding. Plants in White City (Oregon), Roaring

River (North Carolina). 

### Subsidiaries and holdings • Saint-Gobain Abrasives, Inc. - USA. See company profile. • Saint-Gobain Vetrotex America, Inc.,- USA (100%). 

## SAINT-GOBA IN ISOVE R AB (SWEDEN) Owned 75% by International Saint-Gobain and 25% by Saint-Gobain Isover SA. Production and sale of insulating products. Plants in Billesholm and Vrena. 2 002 sales: SEK 839,1 million. Employees: 515. Holds: Saint-Gobain Ecophon AB - Sweden, Saint-Gobain Isover Oy - Finland, Saint-Gobain Isover Polska - Poland. See company profiles

. 

## SAINT-GOBAIN ECOPHON AB (SWEDEN)

1 00% owned by Saint-Gobain Isover AB. Production and sale of acoustic ceilings. Plant in Hyllinge. 2 002 sales: SEK 948.6 million. Employees: 604. Holds: 100% of Saint-Gobain Ecophon Production A/S - Denmark. Manufactures acoustic products. Holds 60% of Ecophon CertainTeed - USA. See CertainTeed

. 

## SA INT-GOBAIN ISOVER OY (FINLAND)

1 00% owned by Saint-Gobain Isover AB. Production and distribution of insulating products. Plants in Hyvinkää and Forssa. 2 002 sales: € 82.6 million. Employees: 296. Holds: 100% of Saint-Gobain Isover Esti AS - Estonia; 100%of SIA Saint-Gobain Isover - Latvia; 100% of UAB SaintGobain Isover - Lithuania; 99.9% of Zao Isover - Russia. Distribution of insulating materials.


## SA IN T- GO BA IN IS OVER A/S (DENMARK)

1 00% owned by Saint-Gobain Isover G + H AG. Production and sale of insulating products. Plant in Vamdrup. 2 002 sales: DKK 341.6 million. Employees: 213. Holds: 1.2% of Saint-Gobain Plc - United Kingdom. See company profile. 1 00% of Glasuld Ireland. 100% of Glasuld Norge A/S - Norway. Production and distribution of insulating products.


## SA IN T- GO BA IN CE RAMI C MATERIALS A/ S ( NORWAY)

1 00% owned by SEPR. Manufactures and sells silicon carbide products. Plants in Lillesand and Arendal. 2 002 sales: NOK 448.6 million. Employees: 338. 

## NORTH € 1 = USD 0.94 

## AMERICA € 1 = CAD 1.48 • STGOBAIN RA02-CH9/GB 13/06/03 9:59 Page 165**166**



### Daisy (Tennessee), East Granby and New Haven (Connecticut), Elk Grove and Mundelein (Illinois), Anaheim, Fremont, Milpitas, San Jose and Garden Grove (California), Huntsville (Alabama), Merrimack, Milford and Nashua (New Hampshire), North Bennington (Vermont), Po rtage (Wisconsin), Seattle and Washougal (Washington), Albuquerque (New Mexico), West Jordan (Utah), Scarborough (Maine), Beaverton (Michigan), Paris, Brantford and Niagara Falls (Ontario, Canada), Chandler and Phoenix (Arizona), Mundelein (Illinois). 2 002 sales: $1,195.6 million. Employees: 6,220. T hese figures include consolidated subsidiaries.


## SAINT-GOBAIN CO NTA INERS, INC.

1 00% owned by Saint-Gobain Delaware Corporation. Manufactures glass containers (industrial bottles and jars). Plants in El Monte, Maywood and Madera (California), Henderson and Wilson (North Carolina), Dolton and Lincoln (Illinois), Marion and Dunkirk (Indiana), Ruston (Louisiana), Milford (Massachusetts), Pevely (Missouri), Carteret (New Je rs ey) , Sapulpa (Oklahoma), Port Allegany (Pennsylvania), Wa xahachie (Texas), Seattle (Washington), Burlington (Wisconsin). 2 002 sales: $1,389.2 million. Employees: 5,415. 

### Subsidiaries and holdings • Tropicana Industrial Glass - USA (50%). Manufactures glass

containers (bottles). Plant in Bradenton (Florida). • Heye America L. P. - USA (100%). Produces molds for

the manufacture of glass containers.


## SA IN T- GO BA IN C ALMAR, INC.

1 00% owned by Saint-Gobain Delaware Corporation. Manufactures plastic pumps. Plants in City of Industry (California), Lee Summit (Missouri), Washington Courthouse (Ohio) and Winfield (Kansas). 2 002 sales: $185.3 million. Employees: 1,247. 

### Subsidiaries and holdings • Calmar Wuxi Dispensing Systems Ltd.- China (100%).

Assembly of plastic pumps. Plant in Wuxi. • Saint-Gobain Calmar Argentina - Argentina (100%), Calmar

Plastics - Canada (100%). Distribution companies. • Saint-Gobain Calmar GmbH - Germany (1%). See

company profile.


## SA IN T- GO BA IN TECHNICAL FABRICS CANADA, L TD.
1 00% owned by Spafi. Plants in Sainte Catharines and Midland. 2 002 sales: CAD 86.1 million. Employees: 247. Manufactures and sells fiberglass for reinforcements. Plants in Wichita Falls (Texas), Charleston Heights (South Carolina) and Russelville (Alabama). • Saint-Gobain Technical Fabrics America Inc. - USA (100%).

Production and sale of industrial products for reinforcements. Plants in Albion (New York) and in Dover (Ohio). Holds: 100% of Saint-Gobain BTI Inc – USA. Holds 100% of Saint-Gobain BayForm America, Inc. - USA. Production and sale of industrial products and parts for door and window manufacturing. Plants in Cadiz (Ohio), Pasco (Washington), Merrill (Wisconsin). • Air Vent Inc. - USA (100%). Produces ventilation systems

for attics and lofts.
• Ecophon CertainTeed - USA (40%). Sale of acoustic ceilings.
• Bird Inc. - USA (100%). Manufactures shingles and roofing

equipment. Holds 100% of GS Roofing Products Company Inc. • Ludowici- Roof Tile Inc.- USA (100%). Manufactures

terracotta tiles. • Marshall Vinyl Windows Inc. - USA (100%).


## SAINT-GOBAIN A BRASIVES, INC. Owned 82% by Saint-Gobain Delaware Corporation and 18 % by CertainTeed Corporation. 2 002 sales: $592.8 million. Employees: 3,935. Manufactures bonded abrasives, coated abrasives and superabrasives. Main plants: Worcester (Massachusetts); Littleton (New Hampshire); Glenmont and Troy (New York); Arden and High Point (North Carolina), Brownsville and Stephensville (Texas), Fullerton and Ontario (California), Hot Springs (Arkansas), Bensenville (Illinois), Romulus (Michigan), Brookville (Ohio), Hamilton and Plattsville (Ontario), Travelers Rest (South Carolina). Main subsidiaries in the U. S., Canada, Mexico, New Zealand. Also holds: Saint-Gobain Ceramics & Plastics. - USA, Grindwell Norton - India; Saint-Gobain KK - Japan. See company profiles

. Also holds Saint-Gobain Abrasivos SA de CV - Mexico (100%). Manufactures non-woven abrasives and grinding wheels. Plant in Reynosa (through Norton Foreign Affiliates)


## SAINT-GOBAIN CERAMICS & PLASTICS, INC.

1 00% owned by Saint-Gobain Abrasives Inc. Th rough its own activities or through its subsidiaries, manufactures engineered and advanced ceramics, chemical process products, high-performance plastics, fused-cast refractory products and special ceramic grains and silicon carbide products. Main plants in Worcester, Northboro, Northampton and Taunton (Massachusetts), Wayne, Br id gewa te r a nd Mi cke lton (N ew Je rs ey ), Amherst, Niagara Fa lls, Sanborn, Granville, Hoosick Falls, Poestenkill and W heatfield (New York), Akron, Aurora, Stow, Ravenna, Newbury, Mantua, Springboro and Solon (Ohio), Louisville (Kentucky), Buckhannon (West Virginia), Olyphant, Latrobe and Malvern (Pennsylvania), Boca Raton (Florida), Bristol (Rhode Island), Austin, Bryan, Irving and Houston (Texas), Bryant and Fort Smith (Arizona), Colorado Springs (Colorado), • STGOBAIN RA02-CH9/GB 13/06/03 9:59 Page 166**167** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



### and Belém (Para). 2 002 sales: BRL 116 million. Employees: 566. 

### Subsidiaries and holdings

• Eterbras, Saint-Gobain Canalização - Brazil. See company profile. • Santa Veronica (100%). Holds Carborundum Holding

(100%) which holds Saint-Gobain Cerâmicas & Plásticos (100%). Manufactures and sells high-temperature insulation fibers and refractories. Plant in Vinhedo. Sales: BRL 1 06.7 million. Employees: 416. Holds 100% of Jundu - Brazil. Operates quarries. Employees: 277.
• São Juliano (25% + 50% held by Santa Veronica and 25%

by Saint-Gobain Ceramic Materials AS). Holds: 100% of Saint-Gobain Materiais Cerâmicos - Brazil. Produces silicon carbide. Plant in Barbacena (Minas Gerais). Sales: BRL 92.1 mil lion. Employees: 335.
• Saint-Gobain Quartzolit (35% + 15% held by Santa Veronica

and 50% by Saint-Gobain Weber). See Saint-Gobain Weber

. 

## ET ERBRAS

55 % owned by Brasilit. Manufactures fiber-cement sheets and moldings. Plants in Capivari (São Paulo), Guadalupe (Rio de Janeiro), and Goiãnia (Goiás). 2 002 sales: BRL 185.9 million. Employees: 785.


## SA IN T- GO BA IN C ANALIZAÇÃO Owned 83.5% by Saint-Gobain PAM, 2.6% by Santa Claudia Adm., 6.2% by Santa Claudia Part., 6.5% by Brasilit, 0.8% by São Lourenço and 0.4% by Saint-Gobain Vidros. Manufactures ductile cast-iron pipes and connectors. Plant in Barra Mansa (Rio de Janeiro). 2 002 sales: BRL 143.2 million. Employees: 748. Holds: Fundicao Aldebara (100%.) - Brazil. Ductile cast iron connectors. Employees: 316.


## SAINT-GOBAIN A BRASIVOS LTDA

1 00% owned by Spafi. Manufactures bonded and coated abrasives. Plants in Caieiras, Caldas, Guarulhos, Lorena, Igarassu, Pa ulista, Vinhedo and Jundiai. 2 002 sales: BRL 267.2 million. Employees: 1,290. Holds: 100% of Saint-Gobain Abrasivos Argentina - Argentina. Production and distribution of bonded abrasives. Plant in Campana. Employees: 32. Holds: • 100% of Saint-Gobain BayForm Canada. Production and

sale of industrial products and parts for door and window manufacturing. Plants in Toronto (Ontario), Calgary (Alberta) St. Apollinaire (Quebec). Sales: CAD 33.1 million. Employees: 156. • 100% of Saint-Gobain Technical Fabrics Mexico - Mexico.

Produces insect screens. Plant in Tlaxcala. Sales: 144.3 million Mexican pesos. Employees: 168.



## SÃO LOURENÇO

1 00% owned by Compagnie de Saint-Gobain. Holding company. Holds: 44.7% of Saint-Gobain Vidros SA, 1.2% of Brasilit and 0.8% of Saint-Gobain Canalização - Brazil. See company profiles.


## SAINT-GOBAIN VIDROS SA Owned 54.5% by Compagnie de Saint-Gobain, 44.7% by São Lourenço and 0.8% by Santa Claudia. Manufactures and processes flat glass for the auto and building industries, glass containers (bottles, flasks, industrial jars), household glassware, glass fiber insulation and glass fibers for reinforcement. Plants in Mauá, Agus Branca, Campo Bom and Canoas. 2 002 sales: BRL 783.7 million. Employees: 2,971. 

### Subsidiaries and holdings • Cebrace - Saint-Gobain Canalização - Brazil. See company

profile. • Saint-Gobain Isover Argentina - Argentina (100%). Produces

fiberglass for insulation and reinforcements. Plant in Llavallol. Sales: 10.9 million Argentine pesos. Employees: 84. • Santa Marina Vitrage Ltda - Brazil (100%).

Sales: BRL 32.8 million. Employees: 148.


## C EBRACE
50 % owned by Saint-Gobain Vidros SA. Manufacturing and processing of flat glass. Float-glass plants in Jacarei and Caçapava. 2 002 sales: BRL 444,5 million. Employees: 615.


## BRASILIT Owned 98.8% by SGPPI and 1.2% by São Laurenço. Manufactures fiber-cement sheets and moldings. Plants in Esteio (Rio Grande do Sul), Caxanga (Pernambuco)



# BRAZIL € 1 = BRL 2.78 • STGOBAIN RA02-CH9/GB 13/06/03 9:59 Page 167**168**



## HANKUK GLAS S INDUSTRIES INC. (SOUTH KOREA)
39 .7% owned by Sofiag. Float-glass line producing flat glass. Headquarters in Seoul. 2 002 sales: 118.3 billion won. Employees: 336. Holds:
• Hankuk Sekurit Limited - South Korea (50%, plus 25% held

by SGPPI and 25% by Saint-Gobain Sekurit Deutschland Beteiligungen GmbH). Flat glass processing for the auto industry. Plants in Inchon and Chunbuk. Sales: 196.2 billion won. Employees: 927.
• Hankuk Processed Glass Inc. (100%), Hankuk Lighting Glass

(100%), Hankuk Haniso (100%), Hankuk Specialty Glass (60%) - South Korea, Nanjing SG Hanglas Inc. (36.7%, and 36 .8% held by Sofiag) - China. Total sales: 50.3 billion won. Employees: 609.


## SAINT-GOBAIN VETR OTEX KO R EA LTD 98.6% owned by Saint-Gobain Vetrotex International. Manufactures and sells fiberglass for reinforcements. Plant in Kunsan (South Korea). 2 002 sales: 89.7 billion won. Employees: 445.


## GRINDWELL NORTO N LTD (INDIA)
26 .8% owned by Saint-Gobain Abrasives Inc. and 24.6% by SGPPI. Manufactures bonded and coated abrasives. Plants in Bangalore, Bombay, Nagpur and Tirupaty (India). 2 002 sales: 2 billion Indian rupees. Employees: 1,318.


## SAINT-GOBAIN NORTON KK (JAPAN)

1 00% owned by Norton Foreign Affiliates. Produces super-abrasives, technical ceramics, high-performance plastics, chemical process products and fused-cast ceramics and ceramic grains. Plants in Chiba, Suwa and Seto (Japan). 2 002 sales: 6.9 billion yen. Employees: 183.


## SAINT-GOBAIN ABRASIVES PTY

1 00% owned by Saint-Gobain Abrasifs (France). Manufactures coated abrasives, superabrasives and grinding wheels. Plants in Isando and Port Elisabeth (South Africa) 2 002 sales: 132.8 billion rands. Employees: 174 

## SAINT-GOBAIN GLASS MEXICO

1 00% owned by Saint-Gobain Cristalería. Float in Cuautlá. 2 002 sales: 861.1 million Mexican pesos. Employees: 297.


## SAINT-GOBAIN SEKURIT MEXICO
27

.7% owned by Saint-Gobain Cristalería and 72.3% by Saint-Gobain Glass Mexico. Manufactures flat glass products for the auto industry. Plant in Cuautlá. 2 002 sales: 761.3 million Mexican pesos. Employees: 824.


## SAINT-GOBAIN VETROT EX AMERIC A XICOH

55 .6% owned by Saint-Gobain Cristalería and 44.4% by Saint-Gobain Vetrotex España. Manufactures and sells fiberglass reinforcements. Plant in Xicohténcatl. 2 002 sales: 310.9 million Mexican pesos. Employees: 243.


## SAINT-GOBAIN DE COLOMBIA Owned 28.5% by Compagnie de Saint-Gobain, 49.4% by Saint-Gobain Cristalería and 17.1% by Cristalería Andina. Manufactures flat glass for the automobile and building industries. Plants in Barranquilla and Usinme. 2 002 sales: 45.5 billion Colombian pesos. Employees: 217.


## P

AM COLOMBIA SAOwned 95% by Saint-Gobain Canalización and 5% by SaintGobain Cristaleria. Manufactures water supply pipes. 2 002 sales: 36.8 billion Colombian pesos. Employees: 112. 

# OTHER € 1 = KRW 1,175.5 

# COUNTRIES € 1 = JPY 118.1 € 1 = INR 45.9 € 1 = ZAR 9.9 

# MEXICO € 1 = MXN 9.15 

# COLOMBIA € 1 = COP 2,378.4 • STGOBAIN RA02-CH9/GB 13/06/03 9:59 Page 168**169** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

Chairman and Chief Executive Officer
Jean-Louis Beffa 

## PE RS ON RESPONSIBLE FOR THE “DOCUMENT DE RÉFÉRENCE”

Jean-Louis Beffa, Chairman and Chief Executive Officer



### STAT EMENT BY THE PERSON RESPONSIBLE FOR THE “DOCUMENT DE REFERENCE”

STAT EMENT BY THE PERSON RESPONSIBLE FOR THE “DOCUMENT DE REFERENCE” T

ranslated from the original french language statement To the best of my knowledge, the information contained in the “Document de Référence” is correct and includes all the information required by investors to form an opinion on the assets, operations, financial position, results and outlook of the issuer. No information has been omitted that would be likely to alter an investor’s opinion.

Pa ris, April 1, 2003



## STATUTORY AUDITORS
T he Statutory Auditors of the Company are: - PricewaterhouseCoopers Audit, 32 rue Guersant, 75017 Paris,

France, represented by Mike Moralee and Christian Marcellin, reappointed on June 25, 1998 for a term of six years expiring at the close of the 2004 Annual General Meeting; - La Société d'Expertise Comptable Economique et Financière

(SECEF), 3 rue de Turique, 54000 Nancy, France represented by Jacques Tenette, reappointed on June 29, 2000 for a term of six years expiring at the close of the 2006 Annual General Meeting.
In our capacity as Statutory Auditors of Compagnie de SaintGobain (the Company) and as required by Commission des Opérations de Bourse regulation COB 98-01, we have examined in accordance with French professional standards, the information about the financial position and the historical accounts included in the “Document de Référence”.

T he “Document de Référence” is the responsibility of the Chairman of the Board of Directors of the Company. Our responsibility is to express an opinion on the fairness of the information about the financial position and the accounts contained in the “Document de Référence”. Our procedures, which were performed in accordance with French professional standards, consisted of assessing the fairness of the information about the financial position and the accounts and verifying that this information agrees with the audited financial statements, reading the other information contained in the “Document de Référence” in order to identify any material inconsistencies with the information about the financial position and the accounts, and reporting any manifestly incorrect information that came to our attention, based on our overall knowledge of the Company, as acquired during our audit. When reading the forward looking information determined according to a structured process, we took into account the assumptions used by management and the amounts obtained by applying these assumptions.

We a lso audited the consolidated financial statements for the years ended December 31, 2000, 2001 and 2002, as approved by the Board of Directors, in accordance with French generally accepted auditing standards. Our reports on these consolidated financial statements were free of qualifications. Our report on the consolidated financial statements for the year ended December 31 , 2000 contained the following observation: “Without qualifying 

# X - P ERSON RESPONSIBLE FOR THE “DOCUMENT DE REFERENCE” AND STATUTORY AUDITORS • STGOBAIN RA02-CH9/GB 13/06/03 9:59 Page 169**170**

T he Statutory Auditors

PricewaterhouseCoopers Audit S.E.C.E.F.

Mike Moralee Christian Marcellin Jacques Tenette the opinion expressed above, we draw your attention to note 1 to the consolidated financial statements, which describes a change in the method of accounting for pensions and other post-retirement benefits”.
In addition, we audited in accordance with French generally accepted auditing standards the financial statements of the Company for the years ended December 31, 2000, 2001 and 2 002 prepared in accordance with French generally accepted accounting principles, as approved by the Board of Directors. Our reports on these financial statements were free of qualifications or observations.
Based on the procedures described above and taking into account the observation made in our audit report, as mentioned above, we have nothing to report with respect to the fairness of the information about the financial position and the historic financial statements contained in the “Document de Référence”.

Pa ris, April 1, 2003

SECTION CAPTION PAGE 1.1. Names and functions of the persons responsible for the document 169 1.2. Statement by the persons responsible for the document 169 1.3. Names and addresses of the Statutory Auditors 169 3.1. General information concerning the issuer 4 3.2. General information concerning the capital 81 3.3. Current breakdown of ownership and voting rights 69 3.4. Market for the issuer's financial instruments 114 3.5. Dividends 65 4.1. Overview of the Company and the Group 7 4.3. Number of employees 26 4.4. Investment policy 5 4.7. Issuer's risks 83

5.1. Issuer's financial statements 130 5.7. Fees paid to the Statutory Auditors and members of their networks 130 6.1. Membership and operation of the Board of Directors and management bodies 80 6.2. Corporate officers' interests in the company 69 6.3 Employee profit-sharing schemes 71

7. 1. Recent trends 49 7.2. Ou tlook 51 Checklist provided in accordance with regulation 98-01 of the French Stock Exchange Commission (Commission des Opérations de Bourse) • STGOBAIN RA02-CH9/GB 13/06/03 9:59 Page 170**171** SAINT-GOBAIN **2 002 ANNUAL REPORT** 


# ORDINARY AND EXTRAORDINARY 

# GENERAL ME ETING

of June 5, 2003 • STGOBAIN RA02-CH10/GB 13/06/03 10:01 Page 171**172**

T he Board of Directors is inviting shareholders to vote ten resolutions governed by the quorum and majority voting rules applicable to Ordinary General Meetings (resolutions 1 to 10) and eight resolutions governed by the quorum and majority voting rules applicable to Extraordinary General Meetings (resolutions 11 to 18). 

## I – FINANCIAL STATEMENTS OF THE COMPANY AND THE GROUP; DIVIDEND
T he financial statements of the Company and the Group are presented in the 2002 Annual Report.
Shareholders are invited to approve the financial statements of the Company (1 st resolution) and the Group (2 nd resolution) for the year ended December 31, 2002.
A description of the Company’s and Group’s financial position at December 31, 2002 and their business and results for the year then ended, as well as the information required by applicable legislation and regulations are also included in the 2002 Annual Report, to which we would ask you to refer.



### APPRO PRIATION OF NET INCOME Net income for Compagnie de Saint-Gobain came to 

### € 5 95,916 thousand in 2002, versus 

### € 1,092,872 thousand in 2001.

Total distributable income amounts to 

### € 1,461,798 thousand. This figure includes 

### € 865,882 thousand in retained earnings brought over from prior years, which takes into account the 

### € 118 thousand adjustment to the 2001 dividend relating to treasury shares sold between the Board Meeting held to approve the accounts on March 28 , 2002 and the dividend payment date of June 24, 2002.

In the 3 rd resolution, shareholders are invited to approve the deduction of 

### € 7, 7 06 thousand from the long-term capital gains reserve (representing the net impact of the appropriation of a provisional amount of 

### € 34 ,068 thousand for 2002 less a 

### € 41,774 thousand adjustment to the provisional appropriation to long-term capital gains reserves made in 2001) and to: - carry forward 

### € 1,089,993 thousand as retained earnings;

- appropriate for distribution to shareholders a total of

€ 379,51 1,476.32 corresponding to a net dividend per share of € 1.13 which, including the avoir fiscal tax credit of 

### € 0.565, represents total dividend income per share of € 1.695. T he 2002 net dividend of 

### € 1.13 (up from 

### € 1.125 for 2001) will be payable in cash from June 23, 2003 on all outstanding shares in circulation at that date. 

## II – REGULATED AGREEMENTS No new agreements governed by articles L-225-38 et s eq. of the Commercial Code were entered into during the year. T herefore, the Auditors’ special report only refers to agreements authorized in prior years which remained in force during 2002 (4 th resolution). T he general assistance agreement between Compagnie de Saint-Gobain and Saint-Gobain PAM is now considered as a routine agreement entered into on an arm’s length basis, as noted by the Board of Directors, and therefore no longer appears in this report. 

## III - AUT HORIZATION TO BUY BACK AND R ESELL SAINT-GOBAIN SHARES
The purpose of the 5 th resolutio n is to authorize the Board of Directors to buy back and possibly resell Saint-Gobain shares. The maximum purchase price under this authorization is set at 

### € 40 per share and the minimum sale price at 

### € 16 per share.

Th is authorization is intended to enable Compagnie de Saint-Gobain to continue to take advantage of the flexibility allowed by the legal provisions relating to the buy back and resale of its own shares, including: to grant stock purchase options, to allocate shares to employees, to buy and sell the Company’s shares (including while a public tender offer is in progress), to take advantage of market situations, to stabilize the share price by trading against the trend, to cancel the shares subject to authorization by an Extraordinary Meeting (see the fifteenth resolution), to hold the shares in treasury stock or transfer them in any way, including in exchange for shares, or to manage the Company’s cash position or equity. The shares bought back may not exceed 10% of the Company’s capital stock.

The authorization given last year to buy back the Company’s shares has been implemented as explained on page 73 of the 2002 Annual Report. 

# REPORT TO THE ORDINARY AND EXTRAORDINARY GENERAL MEETING OF JUNE 5, 2003 • STGOBAIN RA02-CH10/GB 13/06/03 10:01 Page 172**173** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



## IV - RATIFICATION OF THE APPOINTMENT OF A D IRECTOR AND RENEWAL OF HIS TERM OF OFFICE, RENEWAL OFA DIRECTOR’S TERM OF OFFICE, ELECT ION OF TWO NEW DIRECTORS

- At its meeting of November 21, 2002, the Board of Directors

approved the recommendation of the Appointments Committee and appointed Sehoon Lee as a Director on a provisional basis to replace Jean-Marie Messier, who resigned from his position on June 7, 2002. As Mr Lee’s term of office is due to expire at the close of this meeting, shareholders are invited to ratify his appointment and renew his term of office (6 th resolution).
Sehoon Lee, 53, of South Korean nationality, is Co-Chairman of South Korea-based Hankuk Glass Industries and Hankuk Sekurit.
After obtaining a doctorate in Philosophy from the University of Seoul and an MBA from Wharton (University of Pennsylvania), Sehoon Lee joined the South-Korean Hanglas group in 1977 as Chief Financial Officer. He occupied various positions within the gr oup before becoming Chairman and Chief Executive Officer in 1 995. Mr Lee is also the Chairman of the Management Committeeof the Hanglas Group, Chairman of the Board of Directors of SaintGobain Hanglas (Asia), SL Investment Co and SL Advisory Co, as well as Vice-Chairman of the Korean Chamber of Commerce. He is Chevalier de la Légion d’Honneur à titre étranger. He owns 1,000 Saint-Gobain shares. Mr Lee was appointed by the Board of Directors on November 21, 2002.

- Shareholders are also invited to renew Gérard Mestrallet’s term

of office in the 7 th resolution

. Gérard Mestrallet, 53, is Chairman and Chief Executive Officer of Suez. He graduated from the Ecole Polytechnique, the Ecole de l’Aviation Civile and the E.N.A. After occupying various posts at the Ministry of the Economy and Finance, Gérard Mestrallet joined Compagnie de Suez as Chargé de Mission in 1984, before being appointed Deputy General Delegate in charge of industrial affairs in 1986. In 1991 he became a Director and Chairman of the Management Committee of Société Générale de Belgique. In 1995, he was appointed Chairman and Chief Executive Officer of Compagnie de Suez, and then in 1997 Chairman of the Management Board of Suez Lyonnaise des Eaux. Mr Mestrallet is also a member of the Supervisory Boards of AXA and Taittinger and a Director of Crédit Agricole and Pargesa Holding. Within the Suez group, Gérard Mestrallet is Chairman of Société Générale de Belgique and of Tractebel and Vice-Chairman of Hisusa and Sociedad General de Aguas de Barcelona. In 2002 he was also a Director of Ondeo and Frabepar, a member of the Supervisory Board of Casino, Crédit Agricole Indosuez, Métropole Télévision M6, SAGEM and Société du Louvre, and a permanent representative on the Board of Directors of Fimalac and Le Monde Entreprises. Gérard Mestrallet owns 840 Saint-Gobain shares.
- Finally, the Board of Directors has also approved the Appointments

Committee’s recommendations in relation to the election of two new Directors: Pierre Kerhuel to replace Jean-Maurice Malot, and Denis Ranque to replace Bernard Esambert. Shareholders are asked to elect these two Directors in the 8 th and 9 th resolutions

. Pierre Kerhuel, 59, is a Civil Engineering Graduate of the Ecole des Mines de Nancy. He began his career in 1967 in the IT department of Everitube, which subsequently became Everite, part of the Building Materials Division of the Saint-Gobain Group. He went on to be successively appointed Head of Scheduling, Logistics, Sales Management and Products, before becoming Sales Director – F rance in 1977. In 1979 he was appointed as Marketing Director for Everitube and in 1981 Sales Director. Between 1985 and 2000, he worked as the Chief Executive Officer of Tuiles Lambert, before being appointed as Deputy Chief Operating Officer of Saint-Gobain Te rreal, part of Saint-Gobain’s Tiles business, in November 2000. He has been a member of the Supervisory Board of the Group Savings Plan Mutual Funds since December 1999 and in December 2 002 became President of the Saint-Gobain Employees’ and Fo rmer Employees’ Shareholders’ Association, replacing JeanMaurice Malot. Pierre Kerhuel is also a Director of Toit Dak, a Belgium -based Saint-Gobain subsidiary.
Denis Ranque, 51, is Chairman and Chief Executive Officer of Thales. After graduating from the Ecole Polytechnique and the Ecole des Mines, Denis Ranque occupied various energy-related posts at the Industry Ministry. He joined the Thomson Group in 1983 as Corporate Strategy Director and went on to become Aerospace Director for the Electronic Tubes Division. In 1986, he was appointed Director of the High Frequency Tubes Department of the division which was spun-off in 1988 under the name Thomson Tubes Electroniques (TTE). In 1989, he became Chief Executive Officer of TTE, before taking up the position of Chairman and Chief Executive Officer in 1991. In 1992, Denis Ranque became Chairmanand Chief Executive Officer of Thomson Sintra Activités sousmarines. He was then appointed by Thomson-CSF and GEC-Marconi as Chief Executive Officer of Thomson Marconi Sonar, a joint-venture created in 1996 operating in sonar systems. Since January 1998, Denis Ranque has been Chairman and Chief Executive Officer of • STGOBAIN RA02-CH10/GB 13/06/03 10:01 Page 173**174**

Thomson-CSF, which has now changed its corporate name to Thales. He is also Chairman of the Board of Directors of l’Ecole Nationale Supérieure des Mines de Paris, a Director of the F ondation de l’Ecole Polytechnique and Chairman of the Cercle de l’Industrie since September, 2002.
Shareholders will be asked to grant four-year terms of office to all of the Directors mentioned in these four resolutions, subject to the adoption of the 16th resolution which provides for reducing Directors’ terms of office from six to four years, as from the date of this meeting. 

## V - RENEWAL OF FINANCIAL AUTHORIZATIONS G IVEN TO THE BOARD OF DIRECTORS At the meeting, shareholders will be asked to approve three resolutions renewing authorizations given at the Combined Ordinaryand Extraordinary Meeting of June 28, 2001 for a period of twentysix months. The first resolution is ordinary and the second two are extraordinary.

Under the 10 th resolution, the Board of Directors is asking for authorization, with a power of delegation, to issue bonds and other debt securities with a maximum nominal value of 

### € 3 billion.

Y

ou are also invited to adopt two resolutions to grant authorizations to the Board of Directors to issue all kinds of securities which may gi ve rise to the acquisition of an interest in the capital of the Company, (whether immediately or subsequently), one including pre-emptive subscription rights for shareholders and one without.

T he 11 th resolution provides for an authorization to be given to the Board of Directors, with a power of delegation, to issue, on the Fr ench, foreign and/or international markets, with pre-emptive subscription rights for existing shareholders, shares, stand-alone warrants and/or any other marketable securities convertible, exchangeable, redeemable or otherwise exercisable for shares (e.g. convertible bonds, shares or bonds with equity warrants attached, equity notes, etc.), as well as to increase the Company’s capital through capitalizing reserves. The maximum par value of common stock issued under this authorization would be 

### € 76 0 m illion (including the par value of any issues carried out under the 12 th resolution) and the maximum nominal value of debt securities 

### € 3 billion or the foreign currency equivalent.

T he 12 th resolution includes the waiver of existing shareholders’ pre-emptive subscription rights and authorizes the Board of Directors, or any person duly authorized by the Board, to issue the same shares and share equivalents as in the eleventh resolution, either on the French, foreign or international markets. These securities may be issued in payment for shares of another companytendered to a stock-for-stock offer made by Compagnie de SaintGobain. This resolution would also apply to shares issued on the presentation of marketable securities convertible, redeemable, exchangeable or otherwise exercisable for new Saint-Gobain shares, issued with the agreement of the Board of Directors, by direct or indirect subsidiaries. The blanket ceiling applicable to both the eleventh and twelfth authorizations is 

### € 7 60 million for the par value of common stock issued and 

### € 3 billion or the foreign currency equivalent for debt securities.

T he purpose of these financial authorizations which you are asked to renew and approve is to give the Board of Directors a large degree of flexibility and enable it to tailor the form of marketable securities issued based on market opportunities and conditions either in France or abroad. The Board of Directors is asking for shareholders to waive their pre-emptive rights to cover situations where the speed of transactions is vital to their success, or where it is preferable to obtain financing from a wide range of investors, as well as to be able to carry out issues on foreign and international markets where appropriate. If the Board of Directors were to use the authorization gi ven in the twelfth resolution, it would be possible to grant shareholders, for a limited period of time, a priority right to subscribe to issues on the French market, in which case shares or share equivalents not taken up by shareholders exercising their priority right would be placed on the market.

T he amount received by the Company for each share issued under the authorization without pre-emptive subscription rights must be at least equal to the average of the opening prices quoted for the Company’s shares over ten consecutive trading days selected from among the twenty trading days preceding the Board Meeting which decides to issue the securities.

T he only shares we would envisage issuing under these authorizations are common Compagnie de Saint-Gobain shares and not any preferred shares, non-voting preferred dividend shares or investment certificates.

Fo r issues of other marketable securities, the Board of Directors would determine the timing and applicable terms and conditions for their conversion, redemption, exchange or exercise at the time of the issues concerned. • STGOBAIN RA02-CH10/GB 13/06/03 10:01 Page 174**175** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



## VI – DEV ELOPMENT OF EMPLOYEE SHARE OWNER SHIP

T he Board of Directors has strived for the past fifteen years to develop employee share ownership for the Company and the 13 th resolution is in line with this continuing objective.
Its aim is to renew the authorization granted to the Board of Directors at the Combined Ordinary and Extraordinary Meeting of June 28, 20 01 to carry out employee share issues for members of the Group Savings Plan. The Plan, which has been continued this year, allows current and former employees of Group companies in France and abroad, subject to certain conditions, to directly or indirectly subscribe to Saint-Gobain shares offered at a discount not exceeding 20 % to the average of the opening prices over the twenty trading days preceding the date of the decision made by the Board of Directors setting the price of the shares. By its nature, this authorization entails the waiver of pre-emptive rights by existing shareholders. As in the previous authorization, the maximum aggregate par value of shares issued would be 

### € 64 million (representing 16 million shares) and the authorization would be valid for twenty-six months. 

## VII – AUTHOR IZATION TO THE BOARD OF D IRE CTOR S TO GRANT STOCK OPTIONS
Under the 14 th resolution , shareholders are asked to renew the authorization to grant stock purchase options given to the Board of Directors in the Combined Ordinary and Extraordinary General Meeting of June 28, 2001 and to extend the authorization to stock subscription options. The authorization would be given for a period of twenty-six months and stock options granted would represent a maximum of 3% of the Company’s share capital.
Under this authorization, the exercise price of the options must be at least equal to the average of the opening prices quoted for the Company's shares over the twenty trading days preceding the Board of Directors’ decision to grant the options. 

## V III – CANCELLAT ION OF SHARES
In the 15 th resolution, shareholders are invited to renew the authorization given to the Board of Directors at the Combined Ordinary and Extraordinary Meeting of June 28, 2001 to cancel shares of the Company acquired under authorizations given by the shareholders, representing up to a maximum of 10% of the Company’s capital. The authorization would be given for a period of twenty-four months. 

## AMENDMENTS TO THE BYLAWS

- The purpose of the first three proposed amendments to the bylaws

is to reduce the duration of Directors’ terms of office, to set the same age limit for all Directors and to amend the age limit applicable to the Chairman of the Board of Directors when he or she does not also exercise the role of Chief Executive Officer (16 th resolution) :

• The first amendment would reduce the duration of Directors’ terms

of office from six to four years.

• T he second amendment would set the age limit of 70 for all

Directors (or permanent representatives of legal entities on the Board). T hese amendments would apply to terms of office granted or renewed as from the General Meeting of June 5, 2003 and would not affect those in progress at that date.

• T he third amendment would increase the age limit for the

Chairman of the Board from 65 to 68 when he or she does not also act as Chief Executive Officer. The age limit for the Chairman and Chief Executive Officer, the Chief Executive Officer and Chief Operating Officer(s) remains unchanged at 65.

- T he three other bylaw amendments are minor in nature

(17 th resolution):• The fourth amendment is intended to take into account the fourfor-one stock split of June 2002 and increase the minimum number of Saint-Gobain shares required to be held by each Director from two hundred to eight hundred. • The aim of the fifth amendment is to renumber articles 11 to 15

as articles 10 to 14 as article 10 was repealed by the Combined Ordinary and Extraordinary General Meeting of June 24, 1999.

• T he sixth amendment would split the current article 15

(renumbered article 14) into two to create a new article 14 dealing exclusively with the Chairman of the Board of Directors, identical to the current wording of the first paragraph of article 15 (subject to the increase in the age limit from 65 to 68 provided for in the 16 th resolution) and a new article 15 dealing with the Chief Executive Officer and Chief Operating Officers. Paragraphs 1 and 2 of the new article 15 would be identical to paragraphs 2 and 3 of the current article 15.

T he 18 th resolution gi ves full powers to carry out formalities associated with the General Meeting. • STGOBAIN RA02-CH10/GB 13/06/03 10:01 Page 175**176**

Please find hereafter additional information required by law.



### EXECUTI VE MANAGEMENT OF THE COMPANYIn accordance with article 148 of the Decree of March 23, 1967, we hereby inform shareholders that at its meeting of July 25, 2002, the Board ofDirectors unanimously decided that the Chairman of the Board, JeanLouis Beffa, will continue to be responsible for the general management of the Company and hold the title of Chairman and Chief Executive Officer, for the duration of his term of office as Director.


### EMPLOYEE STOCK OWNERSHIP At December 31, 2002, 6.3% of the Company’s capital and 9.6% of the voting rights were held collectively by employees under the Group Savings Plan. Saint-Gobain employee shareholders will berepresented by a new Director, Pierre Kerhuel (to replace JeanMaurice Malot), from the date of this meeting, subject to the adoption of the eight resolution.


### REMUNERATION OF CORPORATE OFFICERS Information required under article L-225-102-1 of the French Commercial Code is provided on page 79 of the 2002 Annual Report.


### TE RMS OF OFFICE AND FUNCTIONS OF DIRECTORS Information required under article L-225-102-1 of the French Commercial Code is provided on pages 73 to 75 of the 2002 Annual Report.


### SOCIAL AND ENVIRONMENTAL INFORMATION Information required under article L.225-102-1, para. 4 of the French Commercial Code is provided on pages 23 to 46 of the 2002 Annual Report.


### CON SULTATION OF HOLDERS OF “OCÉANE” BONDS CONCE RNING RESOLUTIONS INCLUDING A WAIVER OF PRE-EMPTI VESUBSCRIPTION RIG HTS (12 th 

### – 14th 

### RESOLU TIONS) Resolutions including the waiver of pre-emptive subscription rights have been submitted for approval by holders of "Océane” bonds that are convertible into either new or existing shares issued in February 2002, with an annual interest rate of 2.625%.


### DISCLOSURE THR ESHOLDSDuring 2002, Compagnie de Saint-Gobain did not cross any disclosure thresholds in terms of ownership interest or voting rights. 

## OR DI NARY MEETING
Approval of the parent company financial statements for the year ended December 31, 2002, Approval of the consolidated financial statements for the year ended December 31, 2002, Approval of the appropriation of net income and the proposed dividend, Report on regulated agreements, Authorization to the Board of Directors to buy back and resell the Company’s shares, Ratification of the appointment of Sehoon Lee as a Director and renewal of his term of office, Renewal of the term of office as Director of Gérard Mestrallet, Election of Pierre Kerhuel as Director, to replace Jean-Maurice Malot, Election of Denis Ranque as Director, to replace Bernard Esambert, Renewal of the authorization to the Board of Directors to issue bonds and other debt securities with a maximum face value of 

### € 3 billion. 

## EXTRAORDINARY MEETING Renewal of the authorization given to the Board of Directors to increase capital stock, either through the issue, with pre-emptive subscription rights for existing shareholders, of shares or share equivalents or through the capitalization of additional paid-in capital, reserves, income or other capitalizable items, up to a maximum of 

### € 7 60 million (par value of shares) and 

### € 3 billion (debt securities),
Renewal of the authorization given to the Board of Directors to increase capital stock, through the issue, without pre-emptive subscription rights for existing shareholders, of shares and share equivalents, including if applicable securities to be issued by subsidiaries, up to a maximum of 

### € 7 60 million (par value of shares) and 

### € 3 billion (debt securities). Renewal of the authorization given to the Board of Directors to carry out employee share issues for members of the Group Savings Plan up to a maximum aggregate par value of 

### € 64 million, Authorization to the Board of Directors to grant stock purchase or subscription options representing a maximum of 3% of the Company’s capital stock, Renewal of the authorization given to the Board of Directors to cancel shares representing a maximum of 10% of the Company’s capital stock,



# A GENDA 

# * * * • STGOBAIN RA02-CH10/GB 13/06/03 10:01 Page 176**177** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

Amendments to the bylaws relating in particular to the duration of Directors’ terms of office and applicable age limits, P owers to carry out formalities.



## OR DI NARY MEETING

FIR ST RESOLUTION Approval of the parent company financial statements for the year ended December 31, 2002 T he General Meeting, after reviewing the report of the Board of Directors and the general report of the Statutory Auditors, approves the parent company financial statements for the year ended December 31, 2002 as presented, as well as the transactions reflected in these financial statements and summarized in these reports.



### SECOND RESOLUTION Approval of the consolidated financial statements for the year ended December 31, 2002 T he General Meeting, after reviewing the report of the Board of Directors and the general report of the Statutory Auditors, approves the consolidated financial statements for the year ended December 31 , 2002 as presented, as well as the transactions reflected in these financial statements and summarized in these reports.



### THIRD RESOLUTION Approval of the appropriation of net income and proposed dividend T he General Meeting, having noted that net income for the year amounts to 

### € 5 95,916,171.19 and retained earnings to 

### € 865,881,693.59, giving a total of 

### € 1,461,797,864.78, approves the proposals made by the Board of Directors with respect to the appropriation of net income and resolves:

• to deduct from the special long-term capital gains reserve an

amount of 

### € 7 ,7 06,382.61 representing the net impact of the appropriation of a provisional amount of 

### € 34,067 ,7 90 for 2002 less a 

### € 41 , 774 ,172.61 adjustment to the provisional appropriation to long-term capital gains reserves made in 2001; • to carry forward 

### € 1,089,992,771.07 as retained earnings • to appropriate for distribution to the shareholders: - a first dividend of 

### € 67,170,1 72. 80. . an additional dividend of 

### € 312,341,303.52. • giving a total amount of 

### € 379,51 1,476.32. Th e net dividend per share carrying dividend rights will therefore amount to 

### € 1.13 which, including the 50% avoir fiscal tax credit of 

### € 0.565, represents a total dividend of 

### € 1.695.
In accordance with legal requirements, dividends paid in the last three years are presented in the table below:



### FOURTH RESOLUTION Report on regulated agreements T he General Meeting notes the terms of the Statutory Auditors’ special report on regulated agreements, drawn up in accordance with legal requirements.



### FIFTH RE SOLUTION Authorization to the Board of Directors to buy back and resell the Company’s shares T he General Meeting, having reviewed the report of the Board of Directors and the prospectus approved by the Commission des Opérations de Bourse, authorizes the Board of Directors to buy back and possibly resell Company shares, in accordance with articles L.225-209 et seq. of the Commercial Code, on one or more occasions. The shares may be purchased, sold or transferred by any appropriate method, including over-the-counter, in the form of block sales, through option transactions or by means of derivative instruments. The purpose of this authorization is to allow the Company to grant stock purchase options, allocate shares to employees, buy and sell the Company’s shares – including while a public tender offer is in progress –, to stabilize the share price by trading against the trend or to take advantage of market situations, to cancel the shares subject to authorization by an Extraordinary Meeting, to hold the shares in treasury stock or to sell or transfer them in any way, including in exchange for shares, or to manage the Company’s cash position or equity. Such transactions will be governed by the following terms: Y

ear Number Net Tax Total of shares Dividend credit revenue on which dividend paid in € in € in € 

### 1 999 83,587,844 * 3 .60 1.80 5.40 334,351,376 ** 0.90 0.45 1.35 2000 82,990,762 * 4.30 2.15 6.45 331,963,048 ** 1. 075 0.5375 1.6125 2001 84,080,890 * 4.50 2.25 6.75 336,323,560 ** 1.125 0.5625 1.6875 

# RESOLUTIONS

* Before ** After the four-for-one stock split carried out in June 2002. 

# { • STGOBAIN RA02-CH10/GB 13/06/03 10:01 Page 177**178**

• maximum purchase price: 

### € 40 per share • minimum sale price: 

### € 16 per share • maximum number of shares: 10% of the total number of shares

making up the Company’s capital stock at the date of this meeting, representing a maximum theoretical purchase price of 

### € 1,342,000,000.
In the case of a bonus share issue paid up by capitalizing reserves, or a stock split or reverse stock split, the above prices per share will be adjusted based on the ratio between the number of shares issued and outstanding before and after the transaction.

Th is authorization is granted for a period of eighteen months from the date of this meeting. It supersedes, for the unexpired period, the unused portion of the authorization granted in the fifth resolution of the Ordinary General Meeting of June 6, 2002. The General Meeting gives full powers to the Board of Directors, and by delegation, to any person duly authorized by the Board, to enter into any and all agreements, carry out any and all formalities and take any and all other action required to use this authorization.



### SIXTH RESOLUTION Ratification of the appointment of Sehoon Lee as a Director and renewal of his term of office T he General Meeting ratifies the appointment of Sehoon Lee as Director, which was made on a provisional basis by the Board ofDirectors at its meeting of November 21, 2002, to replace JeanMarie Messier who resigned from his position on June 7, 2002. As Mr. Lee’s term of office is due to expire at the close of this meeting, the General Meeting renews his term of office for a period of four years (subject to the adoption of the sixteenth resolution), expiring at the close of the General Meeting called to approve the financial statements for the year ending December 31, 2006.



### SEVENT H RESOLUTION Renewal of the term of office as Director of Gérard Mestrallet T he General Meeting notes that Gérard Mestrallet’s term of office as Director is due to expire at the close of this meeting and renews his term of office for a period of four years (subject to the adoption of the sixteenth resolution), expiring at the close of the General Meeting called to approve the financial statements for the year ending December 31, 2006.



### EIGHTH RESOLUTION Election of Pierre Kerhuel as Director, to replace Jean-Maurice Malot T he General Meeting notes that Jean- Maurice Malot’s term of office as Director is due to expire at the close of this meeting and elects Pierre Kerhuel as Director as his replacement in accordance with para. 3 of article 9 of the bylaws, for a four year term of office (subject to the adoption of the sixteenth resolution), expiring at the close of the General Meeting called to approve the financial statements for the year ending December 31, 2006.



### NINTH RESOLUTION Election of Denis Ranque as Director, to replace Bernard Esambert T he General Meeting notes that Bernard Esambert’s term of office as Director is due to expire at the close of this meeting and elects Denis Ranque as Director as his replacement, for a four year term of office (subject to the adoption of the sixteenth resolution), expiring at the close of the General Meeting called to approve the financial statements for the year ending December 31, 2006.



### TENTH RESOLUTION Renewal of the authorization given to the Board of Directors on June 28, 2001 to issue bonds and other debt securities with a maximum face value of € 3 billion T he General Meeting, having reviewed the report of the Board of Directors, authorizes the Board of Directors to issue at its discretion, on one or more occasions, either in France or abroad or on theinternational market, bonds and other debt securities, such as fixedterm or perpetual subordinated securities, interest-bearing or otherwise and if so at fixed or variable rates, with or without attached warrants giving rights to the grant, purchase or subscription of other securities and/or debt securities.

T he maximum nominal value of the above-mentioned debt issues may not exceed 

### € 3 billion or the equivalent in foreign currency or a monetary unit determined by reference to a basket of currencies.

T he General Meeting grants full powers to the Board of Directors, with a right to sub-delegate in accordance with the law, to carry out the issue(s) and to determine the timing and conditions of the issues and the form, interest rates and characteristics of the securities concerned, including the conditions governing their exercise, amortization or redemption, including through exchange or transfer of other marketable securities held by the Company.

Th is authorization is given for a period of twenty-six months from the date of this meeting and supersedes, for the unexpired period, the unused portion of the authorization granted in the eighth resolution of the General Meeting of June 28, 2001. • STGOBAIN RA02-CH10/GB 13/06/03 10:01 Page 178**179** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



## EXTRAORDINARY MEETING
ELEVENTH RESOLUTION Renewal of the authorization given to the Board of Directors on June 28, 2001 to increase capital stock, either through the issue, with pre-emptive subscription rights for existing shareholders, of shares or share equivalents or through the capitalization of additional paid-in capital, reserves, income or other capitalizable items, up to a maximum of € 7 60 million (par value of shares) and € 3 billion (debt securities) Th e Extraordinary Meeting, having reviewed the report of the Board of Directors and the special report of the Statutory Auditors, in accordance with French Company law, including article L-225-129- III of the Commercial Code:
1/ Authorizes the Board of Directors to carry out one or more capital increases, the amounts and timing of which will be decided at the Board of Directors discretion: a) by the issue, in euros, foreign currencies or any other monetary unit defined by reference to a basket of currencies (whether issued for consideration or not), of shares, stand-alone warrants and/or any other marketable securities convertible, exchangeable redeemable or otherwise exercisable (whether immediately or subsequently and whether with certainty or only as a possibility), for common shares of the Company, on the French, foreign and/or international markets,
b) and/or by issuing bonus shares or raising the par value of existing shares

to be paid up by capitalizing all or part of the Company’s additional paidin capital, reserves, retained earnings, or any other capitalizable items in accordance with the law and the Company’s bylaws.
2/ Resolves that this authorization is given for a period of twentysix months from the date of this meeting.
3/ Resolves that the following conditions will apply if the Board of Directors uses this authorization to issue the securities described in 1/a) above,
a) the maximum par value of common stock which may be issued, either directly or on the presentation of other securities, is 

### € 76 0 m illion or the foreign currency equivalent, which includes the total par value of any common stock issued to preserve the rights of the holders of these securities in accordance with the law. T he par value of any common stock issued either directly or indirectly in accordance with the twelfth resolution of this General Meeting will be charged against this total, b) the maximum nominal value of debt securities which may be issued under this resolution is set at 

### € 3 billion, or the foreign currency equivalent thereof.

4/ Resolves that if the Board of Directors uses this authorization to issue the securities described in 1/a) above:
a) the securities will be offered to existing shareholders on a preemptive basis, pro rata to their existing interest in the Company’s capital,
b) the Board of Directors may grant shareholders a pre-emptive right to subscribe for any shares and/or share equivalents not taken up by other shareholders,
c) this authorization entails the waiver by the shareholders, in favor

of the holders of any of the above securities, of their pre-emptive right to subscribe for the shares to be issued on conversion, redemption or exchange of the securities, on exercise of a warrant or otherwise.
5/ Gives full powers to the Board of Directors with a right to subdelegate in accordance with law, to use the above authorization, and: a) to determine the conditions of the capital increase(s) and/or issue(s), b) for all issues carried out in accordance with the authorization g ranted in 1/a) above:

- to determine the amount of the issue, the issue price and the

premium,

- to decide on the timing and other terms of the issues, including

the form and characteristics of the securities, which may be subordinated or unsubordinated, and may be undated or have a fixed maturity date, - to determine the terms of settlement of the subscription price of

the securities,

- to define the terms and conditions for the exercise of any rights

attached to the securities issued or to be issued and to determine the date from which the securities will carry dividend or interest rights, which may be set retroactively, as well as all other terms and conditions relating to the issue(s),

- to set the conditions under which the securities issued directly or

indirectly under this authorization may be bought back or exchanged by the Company on the open market, at any time or during fixed periods, • STGOBAIN RA02-CH10/GB 13/06/03 10:01 Page 179**180**

- to suspend the rights attached to the securities for a period not exceeding three months, - at its sole discretion, to charge issue costs to the related premiums

and credit all or part of the remaining premiums to the legal reserve as needed in order to raise this reserve to one-tenth of the new capital stock after each increase.
c) for all issues carried out by capitalizing additional paid-in capital, reserves, retained earnings, or any other capitalizable items:

- to decide the amount and types of items to be capitalized, the

number of new shares to be issued or the amount by which the par value of existing shares is to be increased, to set the retrospective or future date from which the new shares will carry dividend and voting rights or the date on which the increase in par value will be effective, - to decide that, as an exception to the provisions of Article L.225-

1 49 of the Commercial Code, rights to fractions of shares will be non-transferable and that the corresponding shares will be sold,
d) and generally, to enter into any and all agreements, take all appropriate steps and carry out all formalities necessary for the issue and servicing of the shares and share equivalents issued under this authorization and for the exercise of the rights attached thereto, to place on record the capital increase(s) resulting from issues in accordance with this authorization and to amend the bylaws accordingly.
6/ Notes that this authorization supersedes, for the unexpired period, the unused portion of the authorization granted in the ninth resolution of the General Meeting of June 28, 2001.



### TWELFT H RESOLUTION Renewal of the authorization given to the Board of Directors on June 28, 2001 to increase capital stock, through the issue, without pre-emptive subscription rights for existing shareholders, of shares and share equivalents, including if applicable securities to be issued by subsidiaries, up to a maximum of € 7 60 million (par value of shares) and € 3 billion (debt securities)

T he Extraordinary Meeting, having reviewed the report of the Board of Directors and the special report of the Statutory Auditors, in accordance with French Company law, including articles L-225- 129- III , L. 225-148, L. 225-150 and L.228- 93 of the Commercial Code:
1/ Authorizes the Board of Directors to carry out one or more capital increases, the amounts and timing of which will be decided at the Board of Directors discretion, by issuing the following securities on French, foreign and/or international markets, denominated in euros or any other currency or monetary unit determined by reference to a basket of currencies: a) shares, stand-alone warrants and/or any other marketable securities, convertible, exchangeable, redeemable or otherwise exercisable, at any time or at a set time, for shares. The Board of Directors may issue shares in payment for shares of another company tendered to a stock-for-stock offer made by the Company, subject to compliance with the provisions of Article L.225-148 of the Commercial Code. b) and/or the securities described below, following the issue by companies directly or indirectly over-50% owned by Compagnie de Saint-Gobain, and with the latter’s agreement: - bonds with warrants to subscribe for common stock of Compagnie

de Saint-Gobain,

- or any other marketable securities convertible, redeemable,

exchangeable or otherwise exercisable, at any time or at a set time, for new securities representing a proportional interest in the share capital of Compagnie de Saint-Gobain. These securities may take the form of shares with warrants to subscribe for common stock, bonds convertible for common stock, bonds redeemable in common stock or any other form subject to compliance with the applicable legislation.
2/ Resolves that this authorization is given for a period of twentysix months from the date of this meeting.
3/ Resolves that the following conditions will apply if the Board of Directors uses this authorization to issue the securities described: a) The maximum par value of common stock which may be issued, either directly or on the presentation of other securities, is 

### € 76 0 m illion or the foreign currency equivalent, which includes the total par value of any common stock issued to preserve the rights of the holders of these securities in accordance with the law. The par value of any common stock issued either directly or indirectly in accordance with the eleventh resolution of this General Meeting will be charged against this total. b) The maximum nominal value of debt securities which may be issued under this resolution is set at 

### € 3 billion, or the foreign currency equivalent thereof.
4/ Resolves that existing shareholders shall not have a pre-emptive right to subscribe to the shares or share equivalents issued under this authorization, either directly by the Company or by a subsidiary more than 50%-owned by the Company, but that the Board of Directors may grant shareholders a priority right to subscribe to all or part of each issue, for a period and on terms to be decided by • STGOBAIN RA02-CH10/GB 13/06/03 10:01 Page 180**181** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

the Board. Said priority right shall be non-transferable but shareholders may, at the Board’s discretion, be offered a secondary priority right to subscribe for any shares or share equivalents not taken up by other shareholders. Any shares or share equivalents not subscribed by shareholders exercising their priority right will be placed on the market.
5/ Notes and resolves that this authorization entails the waiver by the shareholders, in favor of the holders of any of the above securities, of their pre-emptive right to subscribe for the shares to be issued on conversion, redemption or exchange of the securities, on exercise of a warrant or otherwise.
6/ Resolves that the amount received by the Company for each share issued under this authorization either directly or on conversion, exchange, redemption or exercise of share equivalents shall be at least equal to the average of the opening prices quoted for the Company’s shares over ten consecutive trading days selected from among the twenty trading days preceding the issue of the shares or share equivalents, as adjusted for any differences in cum-dividend dates.

7/ Gives full powers to the Board of Directors, with a right to subdelegate in accordance with law, to use the above authorization, and:

• to determine the conditions of the issue(s) in agreement with

the relevant corporate bodies of the companies concerned, where applicable,

• to determine the amount of the issue, the issue price and the

premium, • to decide on the timing and other terms of the issues, including

the form and characteristics of the securities, which may be subordinated or unsubordinated, and may be undated or have a fixed maturity date, • to determine the terms of settlement of the subscription price of

the securities, • to define the terms and conditions for the exercise of any rights

attached to the securities issued or to be issued and to determine the date from which the securities will carry dividend or interest rights, which may be set retroactively, as well as all other terms and conditions relating to the issue(s), • to set the conditions under which the securities issued directly or

indirectly under this authorization may be bought back or exchanged on the open market, at any time or during fixed periods,

• to suspend the rights attached to the securities for a period not

exceeding three months, • in the case of issuance of shares or share equivalents in payment for securities tendered under a public exchange offer made by the Company, the Board of Directors shall have full powers to determine the securities concerned, the conditions of the issue, the exchange parity and any balance to be paid in cash, and to determine the terms of issue either for a public exchange offer, an alternative offer to acquire or to exchange, or a principal offer to acquire or exchange associated with a specific tender offer to exchange or acquire.
• at its sole discretion, to charge issue costs to the related premiums

and credit all or part of the remaining premiums to the legal reserve as needed in order to raise this reserve to one-tenth of the new capital stock after each increase,
• generally, to enter into any and all agreements, take all appropriate

steps and carry out all formalities necessary for the issue and servicing of the shares and share equivalents issued under this authorization and for the exercise of the rights attached thereto, to place on record the capital increases resulting from issues in accordance with this authorization and to amend the bylaws accordingly.
8/ Notes that this authorization supersedes, for the unexpired period, the unused portion of the authorization granted in the tenth resolution of the General Meeting of June 28, 2001.



### THIRTEENTH RESOLUTION Renewal of the authorization given to the Board of Directors on June 28, 2001 to carry out employee share issues for members of the Group Savings Plan up to a maximum aggregate par value of € 64 million T he Extraordinary Meeting, having reviewed the report of the Board of Directors and the special report of the Statutory Auditors, and in accordance with French Company law including articles L 225- 12 9-VII and L 225-138 of the Commercial Code, and articles L. 443- 1 et seq. of the Labor Code:
1/ Authorizes the Board of Directors to carry out one or more capital increases by issuing common stock for subscription by members of the Group Savings Plan, the amounts and timing of which will be decided at the Board of Directors discretion. This authorization entails the waiver, by existing shareholders of their pre-emptive right to subscribe for new shares to be issued for members of the plan.

2/ Resolves that the shares issued under this authorization will be offered for subscription by the members of a savings plan of • STGOBAIN RA02-CH10/GB 13/06/03 10:01 Page 181**182**

Compagnie de Saint-Gobain or related companies as defined by article L. 225-180 of the Commercial Code and article L. 444-3 of the Labor Code, subject to compliance with any conditions which may be set by the Board of Directors.
3/ Resolves that this authorization is given for a period of twentysix months from the date of this meeting.

4/ Resolves to set at 

### € 64 million, the maximum aggregate par value of shares issued under this authorization.
5/ Resolves that shares issued under this authorization may not be offered at a discount of over 20% to the average of the opening prices quoted for the Company’s shares on the Premier Marché of the Paris stock exchange over the twenty trading days preceding the date of the decision made by the Board of Directors setting the price of the shares.
6/ Gives full powers to the Board of Directors, with a right to subdelegate in accordance with law, to use the above authorization, and to: • define the eligibility conditions for participation in the share issues

to be carried out under this authorization, • set the conditions of issue, • set the amount, issue price, timing and terms for each issue, • set the time limit for paying up shares, • set the date from which the new shares will carry rights, which may

be retroactive, • record the increase in capital stock to reflect the number of shares

effectively subscribed, or decide to raise the amount of the issue in order to ensure that all subscription requests are fulfilled, and to set the applicable rules regarding the reduction of individual subscription amounts in the event of over subscription, • at its sole discretion, charge issue costs to the related premiums

and credit all or part of the remaining premiums to the legal reserve as needed in order to raise this reserve to one-tenth of the new capital stock after each increase,

• take all the necessary steps and carry out all the necessary

formalities related to the increases in capital stock, including amending the company bylaws. 

### FOURTE ENTH RESOLUTION Authorization to the Board of Directors to grant stock purchase or subscription options representing a maximum of 3% of the Company’s capital stock T he Extraordinary Meeting, having reviewed the report of the Board of Directors and the special report of the Statutory Auditors, in accordance with French Company law, including articles L-225- 177 to L. 225-185 and L. 225-209 of the Commercial Code:

1/ Authorizes the Board of Directors, at its sole discretion, and on one or more occasions, to award options to the beneficiaries set out below to purchase existing shares of the Company bought back in accordance with the law, or to subscribe to new common stock of the Company issued by way of a capital increase.
2/ Resolves that this authorization is given for a period of twentysix months from the date of this meeting.
3/ Resolves that the sole beneficiaries of these options will be employees (collectively, on an individual basis or by category) or officers, as defined by law, of Compagnie de Saint-Gobain and related companies and intercompany partnerships as defined by article L.225-180 of the Commercial Code.
4/ Resolves that the total number of options granted may not entitle beneficiaries to purchase or subscribe to a number of shares representing over 3% of Compagnie de Saint-Gobain’s capital stock at the date of this meeting.
5/ Resolves that for stock purchase options, the purchase price of the shares will be set on the date on which the options are granted by the Board of Directors and must be at least equal to 100% of the average of the opening prices quoted for the Company’s shares over the twenty trading days preceding the date of grant and may not represent less than the average price paid for the shares held by the Company pursuant to articles L. 225-208 and L.225-209 of the Commercial Code.
6/ Resolves that for stock subscription options, the subscription price of the shares will be set on the date on which the options are g ranted by the Board of Directors and must be at the least equal to 100% of the average of the opening prices quoted for the Company’s shares over the twenty trading days preceding the date of grant. • STGOBAIN RA02-CH10/GB 13/06/03 10:01 Page 182**183** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

7/ Notes that this authorization entails the waiver by existing shareholders of their pre-emptive right to subscribe for new shares to be issued from time to time as options are exercised, to the grantees of the stock subscription options,
8/ Gives full powers to the Board of Directors to use the above authorization, subject to compliance with the law, and to: • set the conditions of grant, to draw up the list of or categories of

beneficiaries as described above and to determine the conditions under which the exercise price and the number of shares may be adjusted, particularly if the Company carries out any financial transactions requiring such an adjustment, • set the exercise periods for the options thus granted, which may

not exceed ten years from the date of grant, • provide for the temporary suspension of the right to exercise the

options for a maximum period of three months in the event of financial transactions involving the exercise of rights attached to the Company’s shares,

• carry out all actions and formalities required to implement the

capital increase or increases carried out under this authorization and amend the bylaws to reflect the new capital, and generally to do whatever is necessary, • at its sole discretion, charge issue costs to the related premiums

and credit all or part of the remaining premiums to the legal reserve as needed in order to raise this reserve to one-tenth of the new capital stock after each increase, 9/ Notes that this authorization supersedes, for the unexpired period, the unused portion of the authorization granted in the thirteenth resolution of the General Meeting of June 28, 2001.



### FIFTEENTH RESOLUTION Renewal of the authorization given to the Board of Directors on June 28, 2001 to cancel shares representing a maximum of 10% of the Company’s capital stock T he Extraordinary Meeting, having reviewed the report of the Board of Directors and the special report of the Statutory Auditors: 1/ Resolves, in accordance with article L 225-209 of the Commercial Code, to authorize the Board of Directors to cancel the shares of the Company acquired under the authorizations given by shareholders in General Meeting, as follows: - the Board shall have full discretionary authority to cancel, on one

or more occasions, all or some of the shares purchased under shareholder-approved buyback programs, provided that the total number of shares cancelled in the twenty-four month period prior to cancellation does not exceed 10% of the total number of shares outstanding at the date of the cancellation, and to reduce the Company’s capital accordingly, - any difference between the price paid for the cancelled shares and their par value will be partly charged to the legal reserve (10% of the capital cancelled), with the remainder deducted from the issue premium.

- this authorization is given for a period of twenty-four months

from the date of this meeting. The Board of Directors shall have full powers to carry out any and all actions, formalities and filings required to cancel the shares, reduce the capital and amend the bylaws to reflect the new capital, either directly or through a duly authorized representative.
2/ Notes that this authorization supersedes, for the unexpired period, the unused portion of the authorization granted in the fourteenth resolution of the General Meeting of June 28, 2001.



### SIXTEENTH RESOLUTION Amendments to the bylaws relating to the duration of Directors’ terms of office and applicable age limits (effective for terms of office granted as from June 5, 2003) and the applicable age limit for the Chairman of the Board of Directors T he Extraordinary Meeting, having reviewed the report of the Board of Directors, resolves to amend paragraphs 4 and 6 of article 9 and the first paragraph of article 15 of the bylaws as set out below. The amendments relating to the duration of Directors’ terms of office and their age limits will apply to terms of office granted as from the date of this meeting and will not affect those in progress at that date (new paragraph 10 of article 9). • STGOBAIN RA02-CH10/GB 13/06/03 10:01 Page 183**184**

- First and second amendments (Changes in italics) - Third amendment (Changes in italics)

Current text 

### ARTICLE 9 **Membership of the Board of Directors**  **Par agraph 4**  Directors are elected for a term of office of up to six years, subject to the restrictions concerning age limits. Their re-election is subject to the same restrictions. **Par agraph 6** The number of Directors or permanent representatives of legal entities on the Board of Directors, aged over seventy may not exceed one third of the total number ofDirectors, including both individuals and legal entities. New text 

### ARTICLE 9 **Membership of the Board of Directors**  **Par agraph 4**  Directors are elected for a term of office of up to four years, subject to the restrictions concerning age limits. Their re-election is subject to the same restrictions. **Par agraph 6** The age limit for Directors or permanent representatives of legal entities on the Board of Directors is set at 70. The terms of office ofDirectors or permanent representatives of legal entities on the Board of Directors end at the close of the General Meeting held to approve the financial statements for the year in which he or she reaches the age of 70 New paragraph 10 The amendments to para. 4 relating to the duration of Directors’ terms of office and para. 6 relating to their age limits apply to terms of office granted as from the General Meeting of June 5, 2003 and do not affect those in progress at that date. Current text 

### ARTICLE 15 **Chairman of the Board of Directors**  The Chairman of the Board of Directors represents the Board. He or she organizes and directs the work of the Board and reports to the shareholders’ General Meeting thereon. The Chairman alsoensures that the Company’s corporate bodies function effectively and, in particular, that the Directors are in a position to fulfill their responsibilities. The Chairman of the Board’s term of office ends at the latest at the close of the General Meeting held to approve the financial statements for the year in which he or she reaches the age of 65. New text 

### ARTICLE 14 **Chairman of the Board of Directors**  The Chairman of the Board of Directors represents the Board. He or she organizes and directs the work of the Board and reports to the shareholders’ General Meeting thereon. The Chairman alsoensures that the Company’s corporate bodies function effectively and, in particular, that the Directors are in a position to fulfill their responsibilities. Where the Chairman of the Board is not also the Chief Executive Officer, his or her term of office ends at the latest at the close of the GeneralMeeting held to approve the financial statements for the year in which he or she reaches the age of 68. • STGOBAIN RA02-CH10/GB 13/06/03 10:01 Page 184**185** SAINT-GOBAIN **2 002 ANNUAL REPORT** 



### SEVENTEE NTH RESOLUTION Amendments to the bylaws to take into account the four-for-one stock split, to renumber the articles and to split the current article 15 into two articles T he Extraordinary Meeting, having reviewed the report of the Board of Directors, resolves to amend paragraph 2 of article 9 and articles 10 to 15 of the bylaws as set out below: - First amendment: reflection of the four-for-one stock split of June

2 002 in relation to the minimum required number of shares for Directors (paragraph 2 of article 9) (Changes in italics)

- Second amendment: articles 11 to 15 renumbered 10 to 14, as

article 10 was repealed by the General Meeting of June 24, 1999.

- Th ird amendment: article 15 (renumbered article 14) split in

two: - article 14 is entitled “Chairman of the Board of Directors” and is

the same as the first paragraph of the current article 15, subject to the amendment set out in the sixteenth resolution concerning the age limit of the Chairman of the Board of Directors.

- article 15 is entitled “Chief Executive Officer – Chief Operating

Officers”. The two paragraphs are identical to paragraphs 2 and 3 of the current article 15. 

### EIGHTEENTH RESOLUTION Po wers to carry out formalities T he Extraordinary Meeting gives full powers to the bearer of an original, copy or extract of the minutes of this meeting, to carry out all necessary formalities.

Current text 

### ARTICLE 9 **Membership of the Board of Directors**  **Par agraph 2**  Each Director must own at least two hundred Company shares. New text 

### ARTICLE 9 **Membership of the Board of Directors**  **Par agraph 2**  Each Director must own at least eight hundred Company shares. • STGOBAIN RA02-CH10/GB 13/06/03 10:01 Page 185**186**

Fo r the year ended December 31, 2002 T

ranslated from the original French language report

Tothe shareholders,
In our capacity as the Statutory Auditors of Compagnie de SaintGobain, we present below our report on regulated agreements.
Our responsibility does not include identifying any undisclosed agreements. We are required to report to shareholders, based on the information provided, about the main terms and conditions of agreements that have been disclosed to us, without commenting on their relevance or substance. Under the provisions of article 92 of the March 23, 1967 decree, it is the responsibility of shareholders to determine whether the agreements are appropriate and should be approved.
Agreements entered into in 2002 We have not been advised of any new agreements governed by article L. 225-38 of the Commercial Code entered into during the year.
Agreements entered into in prior years which remained in force during the year In application of the decree of March 23, 1967, we were informed of the following agreements entered into in prior years, which remained in force during the year. Agreements with Saint-Gobain PAM Ta

x consolidation agreement The tax consolidation agreement signed with Saint-Gobain PAM on July 24, 1998 expired on December 31, 2002.
On January 23, 2003 the Board of Directors noted that the new tax consolidation agreement to be entered into effective from January 1, 2003 between Compagnie de Saint-Gobain and other companies including Saint-Gobain PAM, could now be considered as a routine group agreement and is therefore not governed by article L. 225-38 of the Commercial Code.

General assistance contract In application of the general assistance contract of September 18, 19 91 and its additional clauses, the Company received fees totaling 

### € 13 ,322,442 from Saint-Gobain PAM.
On January 23, 2003 the Board of Directors decided that as this type of agreement is becoming increasingly common between the Company and its subsidiaries, the contract with Saint-Gobain PAM can now be considered as a routine agreement entered into on arm’s length terms. The Board of Directors therefore noted that the agreement is no longer governed by article L. 225-38 of the Commercial Code.

We conducted our review in accordance with the standards of our profession applicable in France. Those standards require that we carry out the necessary procedures to verify the consistency of the information disclosed to us with the source documents.

Pa ris, March 20, 2003

The Statutory Auditors
PricewaterhouseCoopers Audit S.E.C.E.F.

Mike Moralee Christian Marcellin Jacques Tenette 

# SPECIAL REPORT OF THE STATUTORY AUDITORS ON REGULATED AGREEMENTS • STGOBAIN RA02-CH10/GB 13/06/03 10:01 Page 186**187** SAINT-GOBAIN **2 002 ANNUAL REPORT** 

Fo r the year ended December 31, 2002 T

ranslated from the original French language report

To the shareholders,



### 1. AUTHORIZATIONS TO ISSUE SHARES AND SHARE

EQUIVALE NTS (11 th 

### AND 12 th 

### RESOLU TIONS) In our capacity as Statutory Auditors of Compagnie de Saint-Gobain and as required by the Commercial Code, we present below our report on the proposed issues of shares and share equivalents.
As provided for in Article L.225-129 III of the Commercial Code, the Board of Directors is asking shareholders for an authorization, on the basis described in the Board's report, to fix the terms and conditions of these issues and, where applicable, for shareholders to waive their pre-emptive right to subscribe for the securities concerned.
In the eleventh resolution, the Board of Directors is seeking anauthorization to increase capital stock, through the issue, with preemptive subscription rights for existing shareholders, of shares or share equivalents.

T he maximum par value of common stock which may be issued is 

### € 7 60 million, including the par value of common stock issued in accordance with the twelfth resolution.

T he maximum nominal amount of debt securities which may be issued is 

### € 3 billion.
In the twelfth resolution, the Board of Directors is seeking an authorization to increase capital stock, through the issue, without pre-emptive subscription rights for existing shareholders, of shares and share equivalents, including if applicable securities to be issued by subsidiaries.
Under this authorization the Board of Directors may issue sharesin payment for shares of another company tendered to a stockfor-stock offer made by the Company, subject to compliance with the provisions of Article L.225-148 of the Commercial Code.

T he maximum par value of common stock which may be issued is 

### € 7 60 million, including the par value of common stock issued in accordance with the eleventh resolution.

T he maximum nominal amount of debt securities which may be issued is 

### € 3 billion.

T hese authorizations entail the waiver by the shareholders, in favor of the holders of any of the above securities, of their pre-emptive right to subscribe for the shares to be issued on conversion, redemption or exchange of the securities, on exercise of a warrant or otherwise.

We reviewed the planned issues in accordance with the professional standards applicable in France. Those standards require that we carry out the necessary procedures to review the methods used for determining the issue price of the securities concerned.
Since the issue price has not yet been set, we cannot formulate an opinion on the final conditions under which the issues will be carried out, and consequently have no opinion on the proposal to waive shareholders' pre-emptive subscription rights, the principle of which is consistent with the proposed operation.

In accordance with article 155-2 of the decree of March 23, 1967, we will issue a supplementary report at the time of each such issue conducted by the Board of Directors.



### 2. AUTHORIZATION TO CARRY OUT EMPLOYEE SHARE

ISSUES FOR MEMBERS OF THE GROUP SAVINGS PLAN (13 th 

### RESOLUTION) In our capacity as Statutory Auditors and in accordance with article L. 225-135 of the Commercial Code, we present below our report on the proposed issue of shares to the employees of the Company and related companies within the meaning of Article L.225-180 of the Commercial Code who are members of the Group Savings Plan, as presented to shareholders for approval.
As provided for in Article L.225-129 VII of the Commercial Code, the Board of Directors is asking shareholders for a twenty-six month authorization, on the basis described in the Board's report, to fix the terms and conditions of these issues in accordance with the conditions set down in article L 443-5 of the Labor Code, and to waive their pre-emptive right to subscribe for the securities concerned. 

# SPECIAL REPORT OF THE STATUTORY AUDITORS ON FINANCIAL AUTHORIZATIONS • STGOBAIN RA02-CH10/GB 13/06/03 10:01 Page 187**188**

T he maximum aggregate par value of shares issued under this authorization is 

### € 64 million.

We reviewed the planned issues in accordance with the professional standards applicable in France. Those standards require that we carry out the necessary procedures to review the methods used for determining the issue price of the securities concerned.

Wehave no comments to make on the proposed methods.



### 3. AUTHORIZATION TO THE BOARD OF DIRECTORS

TO GRANT STOCK PU RCHASE OR SUBSCRIPTION OPTIONS (14th 

### RESOLUTION) In our capacity as Statutory Auditors and in accordance with article L. 225-177 of the Commercial Code and article 174-19 of the decree of March 23, 1967, we present below our report on the proposed grant(s) of stock purchase or subscription options to certain employees and corporate officers as described in the fourteenth resolution.

T he Board of Directors is responsible for preparing a report relating to the reasons for granting stock options as well as the proposed methods to be used for setting the exercise price thereof. Our responsibility is to express an opinion on the proposed methods to be used to set the option exercise price.

We reviewed the planned grants in accordance with the professional standards applicable in France. Those standards require that we carry out the necessary procedures to ensure that the proposed methods to be used for determining the exercise price of the options granted are included in the Board of Directors’ report, that the said methods comply with the applicable law and regulations, that they do not appear manifestly inappropriate and that sufficient information is provided to shareholders. Wehave no comments to make on the proposed methods.



### 4. CANCEL LATION OF S HARES BOUGHT BACK

(15 th 

### RESOLUTION) In our capacity as Statutory Auditors and in accordance with article L. 225-209, para. 4 of the Commercial Code concerning capital reductions through the cancellation of shares bought back, we present below our report on the reasons and terms of the proposed capital reduction.

We conducted our review in accordance with the professional standards applicable in France. Those standards require that we review the proposed capital reduction in order to ensure whether the reasons and terms are fair.

Th is proposed capital reduction would take place further to the buyback of the Company’s shares, representing a maximum of 10% of the share capital, in accordance with paragraph 4 of article L. 225- 2 09 of the Commercial Code. The Board of Directors is seeking an eighteen-month authorization for this buyback program at the Ordinary General Meeting.
Shareholders are also invited to grant the Board of Directors full powers for a period of twenty-four months, to cancel the shares acquired, provided the aggregate number of shares cancelled in any gi ven period of twenty-four months does not exceed 10% of the Company’s capital.

We have no comment to make on the reasons or terms of the proposed capital reduction, the implementation of which depends on the Ordinary General Meeting approving the buy back of the Company’s shares.

Pa ris, April 11, 2003

The Statutory Auditors
PricewaterhouseCoopers Audit S.E.C.E.F.

Mike Moralee Christian Marcellin Jacques Tenette • STGOBAIN RA02-CH10/GB 13/06/03 10:01 Page 188

## Over the course of its development and diversification, Saint-Gobain has consistently been at the forefront of successive industrial revolutions. The Group’s present configuration is the fruit of a sweeping transformation of its business operations and structures which began
in the 1990s.

T

oday, Saint-Gobain operates as a manufacturer and provider of high-technology materials and associated
services. 

# SAINT-GOBAIN GLASS SECTOR

H IGH-PERFORMANCE MATERIALS SECTOR

HOUSING PR ODUCTS SECTOR

SUSTAINABLE DEVELOPMENT

SAINT GOBAIN IN 2002 Sales 

# € 3 0,274 millions
Net income 

# € 1 ,040 millions Number of employees 

# 172,357 MAIN ADDRESSES

FRANCE

SAINT-GOBAIN

Head Office and divisions: Flat Glass, Insulation & Reinforcements, Containers, Ceramics & Plastics, Abrasives, Building Materials Distribution, Building Materials

Les Miroirs 18 Avenue d’Alsace F-92400 Courbevoie

www .saint-gobain.com Mailing Address: Les Miroirs F-92096 La Défense Cedex T el.: +33(0) 1 47 62 30 00
Pipe Division 91 avenue de la Libération F-54076 Nancy T el.: +33(0) 3 83 95 20 00 Fa x: +33(0) 3 83 96 27 57

www .pont-a-mousson.com


### GERMANY AND CENTRAL AND EASTERN EUROPE
General Delegation V iktoria-Allee 3-5 D- 52 066 Aachen T el.: (49) (241) 516 0 Fa x: (49) (241) 516 24 44

www .saint-gobain.de


### BENE L UX
General Delegation Boulevard de la Plaine, 5 B-1050 Brussels T el.: (32) (2) 645 87 11 Fa x: (32) (2) 645 87 95 

### UN ITED KINGDOM AND REPUBLIC OF IRELAND
General Delegation Aldwych House 81 Aldwych UK-London WC2B 4HQ T el.: (44) (0)20 7400 8800 Fa x: (44) (0)20 7400 8899

www .saint-gobain.co.uk


### SPAIN, PORTUGAL AND MOROCCO
General Delegation Edificio Ederra - Centro Azca P aseo de la Castellana n° 77 E-28046 Madrid T el.: (34) (91) 397 20 00 Fax: (34) (91) 397 26 26



### ITALY AND GREECE
General Delegation Vi a E. Romagnoli, 6 I-20146 Milan T el.: (39) (2) 42 43 1 Fa x: (39) (2) 47 47 98



### NORDIC COUNTRIES AND BALTIC STATES
General Delegation Box 501 S-26050 Billesholm T el.: (46) 4 28 40 00 Fa x: (46) 4 28 40 01



### POLAND
General Delegation Atrium Plaza Al Jana Pawla II 29 00-867 Warsaw, Poland T el.: (48) 22 653 79 00 Fa x: (48) 22 653 79 09 

### CO M MONWEALTH OF INDEPENDENT STAT ES(CIS)

Delegation Vo lokolamskoye, Shosse, 1 "Proektny Institut # 2" 1 25 843 Moscow, Russia Te l.: 7 (095) 937 32 23 Fa x: 7 (095) 937 32 24

www .saint-gobain.ru



### EURASIA

Delegation Büyükdere Caddesi Bahçeler Sok. Efe Han N° 20/1 Mecidiyeköy, Istanbul, Turkey T el.: (90) 212 275 67 76 Fa x: (90) 212 275 67 34



### UN ITED STATES AND CANADA
General Delegation 75 0 E Swedesford Road PO Box 860 Va lley Forge, PA 19482-0101 T el.: (1) (610) 341 70 00 Fa x: (1) (610) 341 77 97

www .saint-gobain.com/us



### BRAZIL AND ARGENTINA

General Delegation A

venida Santa Marina, 482 Agua Branca 05036-903 São Paulo SP T el.: (55) (11) 3874 7988 Fax: (55) (11) 3611 1598

www .saint-gobain.com.br 

### M EXICO, COLOMBIA AND VENEZUELA
General Delegation Horacio n°1855-502 Colonia Polanco 115 10 Mexico DF Te l.: 52 (55) 52 79 16 52 Fa x: 52 (55) 52 79 16 99

www .saint-gobain.com.mx


### CHINA Delegation Citic Building 24-5 19 Jian Gao Men Wai Da Jie 1 00004 Beijing T el.: (86-10) 65 01 33 27 Fa x: (86-10) 65 12 98 43

www .saint-gobain.com.cn


### ASIA-PACIFIC
General Delegation Saint-Gobain Bldg 3-7 Kojimachi, Chiyodaku 1 02-0083 Tokyo T el.: (813) 52 75 08 61 Fa x: (813) 52 75 08 69

www .saint-gobain.co.jp


### SOUTH-EAST ASIA
Delegation 15 Beach Road # 04-02 Beach Centre Singapore 189677 T el.: (65) 63 34 26 36 Fa x: (65) 63 34 53 25



### INDIA
General Delegation Army and Navy Building 1 48 Mahatma Gandhi Road 400001 Mumbai T el.: (91) 22 287 52 90 Fa x: (91) 22 202 37 11

www .saint-gobain.co.in • Saint Gobain Couv+tranche GB 23/05/03 12:38 Page 2Les Miroirs 92096 La Défense Cedex www.saint-gobain.comDesigned and produced:alliance design04/03- Photo credits: Saint-Gobain photo library, X.



## SAINT-GOBAINSAINT-GOBAIN2002ANNUAL REPORT



# SAINT-GOBAIN **SAINT-GOBAIN** • Saint Gobain Couv+tranche GB 23/05/03 12:37 Page 1