##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

FORM 20-F



ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2001
Commission file number 1-6784

MATSUSHITA DENKI SANGYO KABUSHIKI KAISHA
(Exact name of Registrant as specified in its charter)

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
(Translation of Registrants name into English)

Japan
(Jurisdiction of incorporation or organization)

1006, Oaza Kadoma, Kadoma-shi, Osaka, Japan
(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

|                            |  |                                             
|--------------------------- |  | --------------------------------------------
|Title of each class         |  | Name of each exchange on which registered   
|                            |  |                                             
|American Depositary Shares* |  | New York Stock Exchange and Pacific Exchange
|                           
|                           
|                           
|                           
|Common Stock**              |  | New York Stock Exchange and Pacific Exchange



|*  |  | American Depositary Shares evidenced by American Depositary Receipts.
Each American Depositary Share represents one share of Common Stock.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------
|  
|  
|  
|  
|** |  | Par value 50 Japanese yen per share.                                                                                                      

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

---

Securities for which there is a reporting obligation pursuant
to Section 15(d) of the Act.

None

---

This form contains 103 pages.





---

TABLE OF CONTENTS



|                                                                                      |                                                            |  |  |  |  |  |  | 
|------------------------------------------------------------------------------------- | ---------------------------------------------------------- |  |  |  |  |  |  | 
|Cautionary Statement Regarding Forward-Looking Statements                            
|PART I                                                                               
|Item 1.Identity of Directors, Senior Management and Advisers                         
|Item 2. Offer Statistics and Expected Timetable                                      
|Item 3. Key Information                                                              
|                                                                                      | A. Selected Financial Data                                
|                                                                                      | B. Capitalization and Indebtedness                        
|                                                                                      | C. Reasons for the Offer and Use of Proceeds              
|                                                                                      | D. Risk Factors                                           
|Item 4. Information on the Company                                                   
|                                                                                      | A. History and Development of the Company                 
|                                                                                      | B. Business Overview                                      
|                                                                                      | C. Organizational Structure                               
|                                                                                      | D. Property, Plants and Equipment                         
|Item 5. Operating and Financial Review and Prospects                                 
|                                                                                      | A. Operating Results                                      
|                                                                                      | B. Liquidity and Capital Resources                        
|                                                                                      | C. Research and Development                               
|                                                                                      | D. Trend Information                                      
|                                                                                      | E. New Accounting Pronouncements                          
|                                                                                      | F. Information by Segment                                 
|Item 6. Directors, Senior Management and Employees                                   
|                                                                                      | A. Directors and Senior Management                        
|                                                                                      | B. Compensation                                           
|                                                                                      | C. Board Practices                                        
|                                                                                      | D. Employees                                              
|                                                                                      | E. Share Ownership                                        
|Item 7. Major Shareholders and Related Party Transactions                            
|                                                                                      | A. Major Shareholders                                     
|                                                                                      | B. Related Party Transactions                             
|                                                                                      | C. Interests of Experts and Counsel                       
|Item 8. Financial Information                                                        
|                                                                                      | A. Consolidated Statements and Other Financial Information
|                                                                                      | B. Significant Changes                                    
|Item 9. The Offer and Listing                                                        
|                                                                                      | A. Offer and Listing Details                              
|                                                                                      | B. Plan of Distribution                                   
|                                                                                      | C. Markets                                                
|                                                                                      | D. Selling Shareholders                                   
|                                                                                      | E. Dilution                                               
|                                                                                      | F. Expenses of the Issue                                  
|Item 10.    Additional Information                                                   
|                                                                                      | A. Share Capital                                          
|                                                                                      | B. Memorandum and Articles of Association                 
|                                                                                      | C. Material Contracts                                     
|                                                                                      | D. Exchange Controls                                      
|                                                                                      | E. Taxation                                               
|                                                                                      | F. Dividends and Paying Agents                            
|                                                                                      | G. Statement by Experts                                   
|                                                                                      | H. Documents on Display                                   
|                                                                                      | I. Subsidiary Information                                 
|Item 11. Quantitative and Qualitative Disclosures about Market Risk                  
|Item 12. Description of Securities Other than Equity Securities                      
|PART II                                                                              
|Item 13. Defaults, Dividend Arrearages and Delinquencies                             
|Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
|Item 15. [ Reserved ]                                                                
|Item 16. [ Reserved ]                                                                
|PART III                                                                             
|Item 17.   Financial Statements                                                      
|Item 18.   Financial Statements                                                      
|Item 19.   Exhibits                                                                  
|EX-1 ARTICLES OF INCORPORATION, AS AMENDED                                           
|EX-2 SHARE HANDLING REGULATIONS, AS AMENDED                                          



---



##### Table of Contents



CONTENTS

|                                                          |  |                                                       |   |      |    | 
|--------------------------------------------------------- |  | ----------------------------------------------------- | - | ---- | -- | 
|                                                          |  |                                                       |   | Page
|                                                          |  |                                                       |   |     
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|Cautionary Statement Regarding
Forward-Looking Statements |  |                                                       | 1 |     
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|PART I                                                   
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|Item 1.                                                   |  | Identity of Directors, Senior Management and Advisers |   |      | 2  | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|Item 2.                                                   |  | Offer Statistics and Expected Timetable               |   |      | 2  | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|Item 3.                                                   |  | Key Information                                       |   |      | 2  | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |  | A. Selected Financial Data                            |   |      | 2  | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |  | B. Capitalization and Indebtedness                    |   |      | 3  | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |  | C. Reasons for the Offer and Use of Proceeds          |   |      | 3  | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |  | D. Risk Factors                                       |   |      | 3  | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|Item 4.                                                   |  | Information on the Company                            |   |      | 4  | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |  | A. History and Development of the Company             |   |      | 4  | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |  | B. Business Overview                                  |   |      | 7  | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |  | C. Organizational Structure                           |   |      | 17 | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |  | D. Property, Plants and Equipment                     |   |      | 18 | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|Item 5.                                                   |  | Operating and Financial Review and Prospects          |   |      | 20 | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |  | A. Operating Results                                  |   |      | 20 | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |  | B. Liquidity and Capital Resources                    |   |      | 26 | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |  | C. Research and Development                           |   |      | 27 | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |  | D. Trend Information                                  |   |      | 28 | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |  | E. New Accounting Pronouncements                      |   |      | 29 | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |  | F. Information by Segment                             |   |      | 30 | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|Item 6.                                                   |  | Directors, Senior Management and Employees            |   |      | 33 | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |  | A. Directors and Senior Management                    |   |      | 33 | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |  | B. Compensation                                       |   |      | 38 | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |  | C. Board Practices                                    |   |      | 39 | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |  | D. Employees                                          |   |      | 39 | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |  | E. Share Ownership                                    |   |      | 39 | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|Item 7.                                                   |  | Major Shareholders and Related Party Transactions     |   |      | 41 | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |  | A. Major Shareholders                                 |   |      | 41 | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |  | B. Related Party Transactions                         |   |      | 42 | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |  | C. Interests of Experts and Counsel                   |   |      | 42 | 





---



##### Table of Contents



|         |  |                                                                              |  |      |     | 
|-------- |  | ---------------------------------------------------------------------------- |  | ---- | --- | 
|         |  |                                                                              |  | Page
|         |  |                                                                              |  |     
|Item 8.  |  | Financial Information                                                        |  |      | 42  | 
|        
|        
|        
|        
|        
|        
|        
|        
|        
|         |  | A. Consolidated Statements and Other Financial Information                   |  |      | 42  | 
|        
|        
|        
|        
|         |  | B. Significant Changes                                                       |  |      | 44  | 
|        
|        
|        
|        
|        
|        
|        
|        
|        
|Item 9.  |  | The Offer and Listing                                                        |  |      | 45  | 
|        
|        
|        
|        
|        
|        
|        
|        
|        
|         |  | A. Offer and Listing Details                                                 |  |      | 45  | 
|        
|        
|        
|        
|         |  | B. Plan of Distribution                                                      |  |      | 46  | 
|        
|        
|        
|        
|         |  | C. Markets                                                                   |  |      | 46  | 
|        
|        
|        
|        
|         |  | D. Selling Shareholders                                                      |  |      | 46  | 
|        
|        
|        
|        
|         |  | E. Dilution                                                                  |  |      | 46  | 
|        
|        
|        
|        
|         |  | F. Expenses of the Issue                                                     |  |      | 47  | 
|        
|        
|        
|        
|        
|        
|        
|        
|        
|Item 10. |  | Additional Information                                                       |  |      | 47  | 
|        
|        
|        
|        
|        
|        
|        
|        
|        
|         |  | A. Share Capital                                                             |  |      | 47  | 
|        
|        
|        
|        
|         |  | B. Memorandum and Articles of Association                                    |  |      | 47  | 
|        
|        
|        
|        
|         |  | C. Material Contracts                                                        |  |      | 56  | 
|        
|        
|        
|        
|         |  | D. Exchange Controls                                                         |  |      | 57  | 
|        
|        
|        
|        
|         |  | E. Taxation                                                                  |  |      | 57  | 
|        
|        
|        
|        
|         |  | F. Dividends and Paying Agents                                               |  |      | 60  | 
|        
|        
|        
|        
|         |  | G. Statement by Experts                                                      |  |      | 60  | 
|        
|        
|        
|        
|         |  | H. Documents on Display                                                      |  |      | 60  | 
|        
|        
|        
|        
|         |  | I. Subsidiary Information                                                    |  |      | 60  | 
|        
|        
|        
|        
|        
|        
|        
|        
|        
|Item 11. |  | Quantitative and Qualitative Disclosures about Market Risk                   |  |      | 61  | 
|        
|        
|        
|        
|        
|        
|        
|        
|        
|Item 12. |  | Description of Securities Other than Equity Securities                       |  |      | 63  | 
|        
|        
|        
|        
|        
|        
|        
|        
|        
|PART II 
|        
|        
|        
|        
|        
|        
|        
|        
|        
|Item 13. |  | Defaults, Dividend Arrearages and Delinquencies                              |  |      | 64  | 
|        
|        
|        
|        
|        
|        
|        
|        
|        
|Item 14. |  | Material Modifications to the Rights of Security Holders and Use of Proceeds |  |      | 64  | 
|        
|        
|        
|        
|        
|        
|        
|        
|        
|Item 15. |  | [ Reserved ]                                                                 |  |      | 64  | 
|        
|        
|        
|        
|        
|        
|        
|        
|        
|Item 16. |  | [ Reserved ]                                                                 |  |      | 64  | 
|        
|        
|        
|        
|        
|        
|        
|        
|        
|PART III
|        
|        
|        
|        
|        
|        
|        
|        
|        
|Item 17. |  | Financial Statements                                                         |  |      | 65  | 
|        
|        
|        
|        
|        
|        
|        
|        
|        
|Item 18. |  | Financial Statements                                                         |  |      | 102 | 
|        
|        
|        
|        
|        
|        
|        
|        
|        
|Item 19. |  | Exhibits                                                                     |  |      | 102 | 



---



##### Table of Contents



- 1 -

Indicate the number of outstanding shares of each of the issuers classes of
capital or common stock as of the close of the period covered by the annual
report.

|                                                                      |  |                   |               |                 |  |  |            | 
|--------------------------------------------------------------------- |  | ----------------- | ------------- | --------------- |  |  | ---------- | 
|                                                                      |  | Outstanding as of
|                                                                      |  |                  
|Title of Class                                                        |  | March 30, 2001    |               | March 29, 2001 
|                                                                      |  | (Japan Time)      |               | (New York Time)
|                                                                      |  |                   |               |                
|Common
Stock  50 yen par value per share                             |  |                   | 2,079,572,737 |                
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|American Depositary Shares, each representing 1 share of common stock |  |                   |               |                 |  |  | 41,976,087 | 

Indicate by check mark whether the Company (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Company was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes   X No .

Indicate by check mark which financial statement item the Company has elected
to follow.
Item 17.  X  Item 18. 
.

All information contained in this Report is as of March 31, 2001 or for the
year ended March 31, 2001 (fiscal 2001) unless the context otherwise indicates.

The noon buying rate for yen in New York City as certified for customs purposes
by the Federal Reserve Bank of New York on July 12, 2001 was
124.10 yen = U.S.$1.




Cautionary Statement Regarding Forward-Looking Statements

This annual report contains forward-looking statements in the context of the
U.S. Private Securities Litigation Reform Act of 1995 about the future
performance of Matsushita and its Group companies (the Matsushita Group). To
the extent that statements in this annual report do not relate strictly to
historical or current facts, they may constitute forward-looking statements.
These forward-looking statements are based on the Companys current assumptions
and beliefs in light of the information currently available to it, and involve
known and unknown risks and uncertainties. The Companys actual actions or
results may differ materially from those discussed in the forward-looking
statements. The Company undertakes no obligation to publicly update any
forward-looking statements after the date of this annual report, but investors
are advised to consult any further disclosures by the Company in its subsequent
filings pursuant to the Securities Exchange Act of 1934.

Specific risks and uncertainties include, but are not limited to, economic
conditions, particularly consumer spending and corporate capital expenditures
in the United States, Europe, Japan and other Asian countries; volatility in
demand for electronic equipment and components from business and industrial
customers, as well as consumers in many product and geographical markets;
currency rate fluctuations, notably between the yen, the U.S. dollar, the euro,
Asian currencies and other currencies in which the Matsushita Group operates
businesses, or in which assets and liabilities of the Matsushita Group are
denominated; the ability of the Matsushita Group to respond to rapid
technological changes and changing consumer preferences with timely and
cost-effective introductions of new products in markets that are highly
competitive in terms of both price and technology; the ability of the
Matsushita Group to maintain competitive strength in many product and
geographical areas; expenses incurred in relation to its business
restructuring; any changes in the Matsushita Groups financial and operational
position or business environment due to its business restructuring; current and
potential, direct and indirect trade restrictions imposed by other counties;
and fluctuations in market prices of securities and other assets in which the
Company has holdings.



---



##### Table of Contents



- 2 -




PART I




Item 1.     Identity of Directors, Senior
Management and Advisers

Not applicable






Item 2.     Offer Statistics and Expected Timetable

Not applicable






Item 3.     Key Information






|A. |  | Selected Financial Data
|-- |  | -----------------------

|                                                |             |          |           |                                                                 |        |      |           |       |        |      |           |       |        |  |           |       |        |  |           |       |        | 
|----------------------------------------------- | ----------- | -------- | --------- | --------------------------------------------------------------- | ------ | ---- | --------- | ----- | ------ | ---- | --------- | ----- | ------ |  | --------- | ----- | ------ |  | --------- | ----- | ------ | 
|                                                |             |          |           | Yen (billions), except per share amounts and yen exchange rates
|                                                |             |          |           |                                                                
|                                                |             |          |           | Fiscal year ended March 31,                                    
|                                                |             |          |           |                                                                
|                                                |             |          |           | 2001                                                            |        | 2000 |           | 1999  |        | 1998 |           | 1997 
|                                                |             |          |           |                                                                 |        |      |           |       |        |      |           |      
|Income Statement Data:                         
|                                               
|                                               
|                                               
|                                               
|Net sales                                       |             |          | 7,682     |                                                                 |        |      | 7,299     |       |        |      | 7,640     |       |        |  | 7,891     |       |        |  | 7,676     |      
|                                               
|                                               
|                                               
|                                               
|Income before income taxes                      |             |          | 101       |                                                                 |        |      | 219       |       |        |      | 202       |       |        |  | 356       |       |        |  | 332       |      
|                                               
|                                               
|                                               
|                                               
|Net income                                      |             |          | 42        |                                                                 |        |      | 100       |       |        |      | 24        |       |        |  | 99        |       |        |  | 138       |      
|                                               
|                                               
|                                               
|                                               
|Per common share:                              
|                                               
|                                               
|                                               
|                                               
|                                                | Net income:
|                                               
|                                               
|                                               
|                                               
|                                                |             | Basic    |           |                                                                 | 19.96  |      |           |       | 48.35  |      |           |       | 11.60  |  |           |       | 47.04  |  |           |       | 65.39  | 
|                                               
|                                               
|                                               
|                                               
|                                                |             | Diluted  |           |                                                                 | 19.56  |      |           |       | 46.36  |      |           |       | 11.58  |  |           |       | 44.01  |  |           |       | 60.64  | 
|                                               
|                                               
|                                               
|                                               
|                                                | Dividends   |          |           | 12.50                                                           |        |      |           | 14.00 |        |      |           | 12.50 |        |  |           | 13.00 |        |  |           | 12.50 |       
|                                               
|                                               
|                                               
|                                               
|                                                |             |          | ($0.116   | )                                                               |        |      | ($0.125   | )     |        |      | ($0.097   | )     |        |  | ($0.107   | )     |        |  | ($0.112   | )    
|                                               
|                                               
|                                               
|                                               
|Balance Sheet Data:                            
|                                               
|                                               
|                                               
|                                               
|Total assets                                    |             |          | 8,156     |                                                                 |        |      | 7,955     |       |        |      | 8,055     |       |        |  | 8,661     |       |        |  | 8,857     |      
|                                               
|                                               
|                                               
|                                               
|Long-term debt                                  |             |          | 542       |                                                                 |        |      | 644       |       |        |      | 709       |       |        |  | 690       |       |        |  | 923       |      
|                                               
|                                               
|                                               
|                                               
|Stockholders equity                            |             |          | 3,773     |                                                                 |        |      | 3,684     |       |        |      | 3,642     |       |        |  | 3,854     |       |        |  | 3,842     |      
|                                               
|                                               
|                                               
|                                               
|Common stock                                    |             |          | 211       |                                                                 |        |      | 210       |       |        |      | 209       |       |        |  | 209       |       |        |  | 208       |      
|                                               
|                                               
|                                               
|                                               
|Number of shares issued at year-end
(thousands) |             |          | 2,079,573 |                                                                 |        |      | 2,062,671 |       |        |      | 2,062,345 |       |        |  | 2,112,318 |       |        |  | 2,111,157 |      
|                                                |             |          |           |                                                                 |        |      |           |       |        |      |           |       |        |  |          
|                                               
|                                               
|                                               
|                                               
|Yen exchange rates per U.S. dollar:            
|                                               
|                                               
|                                               
|                                               
|                                                |             | Year-end |           |                                                                 | 125.54 |      |           |       | 102.73 |      |           |       | 118.43 |  |           |       | 133.29 |  |           |       | 123.72 | 
|                                               
|                                               
|                                               
|                                               
|                                                |             | Average  |           |                                                                 | 110.60 |      |           |       | 111.35 |      |           |       | 128.19 |  |           |       | 122.78 |  |           |       | 113.19 | 
|                                               
|                                               
|                                               
|                                               
|                                                |             | High     |           |                                                                 | 104.19 |      |           |       | 101.53 |      |           |       | 108.83 |  |           |       | 111.42 |  |           |       | 104.49 | 
|                                               
|                                               
|                                               
|                                               
|                                                |             | Low      |           |                                                                 | 125.54 |      |           |       | 124.45 |      |           |       | 147.14 |  |           |       | 133.99 |  |           |       | 124.54 | 

|                       |                       |      |      |  |        |  |      |  |        |  |      |  |        |  |  |  |        |  |  |  |        |  |  |  |        | 
|---------------------- | --------------------- | ---- | ---- |  | ------ |  | ---- |  | ------ |  | ---- |  | ------ |  |  |  | ------ |  |  |  | ------ |  |  |  | ------ | 
|Yen exchange rates for
|                       | each month during the |      | Jan. |  | Feb.   |  | Mar. |  | Apr.   |  | May  |  | Jun.   | 
|                       | previous six months:  |      | 2001 |  | 2001   |  | 2001 |  | 2001   |  | 2001 |  | 2001   |  | 
|                       |                      
|                       |                      
|                       |                       | High |      |  | 114.26 |  |      |  | 114.88 |  |      |  | 117.33 |  |  |  | 121.68 |  |  |  | 118.88 |  |  |  | 119.13 | 
|                      
|                      
|                      
|                      
|                       |                       | Low  |      |  | 118.35 |  |      |  | 117.62 |  |      |  | 125.54 |  |  |  | 126.75 |  |  |  | 123.67 |  |  |  | 124.73 | 



---



##### Table of Contents



- 3 -

| |  |        |  |    |  |                                                                                                                                                                                                                                                                    
| |  | ------ |  | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Notes: |  | 1. |  | Dividends per share reflect those paid during each fiscal year.
The dollar amounts of the dividends per share have been computed at the
exchange rates prevailing on the respective payment dates.                                                                 
| | 
| |  |        |  | 2. |  | Beginning in fiscal 2001, the Company adopted
Statements of Financial Accounting Standards (SFAS) No.115,
Accounting for Certain Investments in Debt and Equity
Securities, and accordingly, prior year figures have been
restated to reflect this change.       
| | 
| |  |        |  | 3. |  | Fiscal 1999 and 1998 net income represent amounts
after subtracting the impact of approximately 42 billion yen and
28 billion yen, respectively, attributable to adjustments of net
deferred tax assets to reflect reductions in Japans corporate
income tax rate.






|B. |  | Capitalization and Indebtedness
|-- |  | -------------------------------
|  
|   |  | Not applicable                 






|C. |  | Reasons for the Offer and Use of Proceeds
|-- |  | -----------------------------------------
|  
|   |  | Not applicable                           






|D. |  | Risk Factors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Matsushita Electric Industrial Co., Ltd. (hereinafter, unless the context
otherwise requires, Matsushita or the Company refers to Matsushita
Electric Industrial Co., Ltd. and its consolidated subsidiaries as a group),
best known for its brand names, such as Panasonic and National, is one
of the worlds leading manufacturers of electronic and electric products for
a wide range of consumer, business and industrial uses, as well as a wide
variety of components. Based in Osaka, Japan, the Company recorded
consolidated net sales of approximately 7,682 billion yen for the fiscal
year ended March 31, 2001 (fiscal 2001). Over the past several decades,
the Company has grown from a small domestic household electrical equipment
manufacturer into a comprehensive electronic and electric equipment, systems
and components manufacturer operating internationally. Of the fiscal 2001
net sales, approximately one-half was represented by sales in Japan, with
the rest by overseas sales.
|  
|   |  | Primarily because of the business areas and geographical areas where it
operates and the highly competitive nature of the industry to which it
belongs, Matsushita is exposed to a variety of risks and uncertainties in
carrying out its business.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          



---



##### Table of Contents



- 4 -



| |  | Specific risks and uncertainties include, but are not limited to, economic
conditions, particularly consumer spending and corporate capital
expenditures in the United States, Europe, Japan and other Asian countries;
volatility in demand for electronic equipment and components from business
and industrial customers as well as consumers in many product and
geographical markets; currency rate fluctuations, notably between the yen,
the U.S. dollar, the euro, Asian currencies and other currencies in which
the Matsushita Group operates businesses, or in which assets and liabilities
of the Matsushita Group are denominated; the ability of the Matsushita Group
to respond to rapid technological changes and changing consumer preferences
with timely and cost-effective introductions of new products in markets that
are highly competitive in terms of both price and technology; the ability of
the Matsushita Group to maintain competitive strength in many product and
geographical areas; expenses incurred in relation to its business
restructuring; any changes in the Matsushita Groups financial and
operational positions or business environment due to its business
restructuring; current and potential, direct and indirect trade restrictions
imposed by other countries; and fluctuations in market prices of securities
in which the Company has holdings.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------






Item 4.    Information on the Company






|A. |  | History and Development of the Company
|-- |  | --------------------------------------

GENERAL



| |  | The Company was incorporated in Japan on December 15, 1935 under the laws of
Japan as Matsushita Denki Sangyo Kabushiki Kaisha (Address : 1006, Oaza
Kadoma, Kadoma-shi, Osaka, Japan. Phone : +81-6-6908-1121 / Agent : Mr.
Shigeru Nakatani, President of Panasonic Finance (America), Inc.) as the
successor to an unincorporated enterprise founded in 1918 by the late
Konosuke Matsushita. Mr. Matsushita led the Company with his corporate
philosophy of contributing to the peace, happiness and prosperity of mankind
through the supply of quality consumer electrical goods. The Companys
business expanded rapidly with the recovery and growth of the Japanese
economy after World War II, as it met rising demand for consumer electric
and electronic products, starting with washing machines, black-and-white
television sets (TVs) and refrigerators. Matsushita continued to grow
during the following decades by expanding its product range to include color
TVs, hi-fi components, air conditioners, videocassette recorders (VCRs),
industrial equipment and information and communications equipment, as well
as electronic components. Overseas sales and production expansion was also
a significant factor for the growth in these decades.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | In the 1990s, Matsushita placed emphasis on technological development and
the use of advanced electronics technology in every phase of life, thus
steering the Company to achieve further growth in the 21st century. In
particular, the Company expanded its development activities in such areas as
next-generation audiovisual (AV) equipment, multimedia products, and
advanced electronic components and devices, many items of which incorporate
digital technology.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              



---



##### Table of Contents



- 5 -



| |  | Matsushita currently offers a comprehensive range of products, systems and
components for consumer, business and industrial use. Most of the Companys
products are marketed under the Panasonic and National brand names. The
Company also uses the Technics brand name for certain hi-fi products, with
some of its subsidiaries using other brand names such as Quasar, Victor
and JVC. To form the basis for growth in the evolving digital networking
age, the Company continues to emphasize technological development and the
creation of new businesses, identifying several priority areas, such as
digital broadcasting systems, mobile communications, semiconductors, data
storage devices and display devices. The Company is also striving to
develop new service-oriented businesses, such as systems solutions and
"e-Net business, as areas of potential growth over the mid-term.                                                               
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | In June 1995, Matsushita sold an 80% equity interest in MCA (now named
Universal Studios, Inc.), which the Company purchased in December 1990, to
The Seagram Company Ltd. for approximately U.S.$5.7 billion, leaving the
Company with a minority interest.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | In April 1997, the Matsushita parent company established a new
organizational structure, setting up four internal divisional companies 
responsible for AVC (audiovisual and computer products), home appliances and
household equipment, air conditioners, and electric motors  by grouping a
majority of its some 50 product divisions. This step was taken in order to
facilitate strategic planning, effective decision making and more efficient
allocation of resources across a broader range than that afforded by each
single product division.                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | In March 1998, the Company announced a package of new management initiatives
aimed at better sharing interests with shareholders. As part of this
package, management implemented, with approval at the annual shareholders
meeting in late June 1998, the repurchase of 50 million shares of the parent
companys common stock from the stock market for retirement, spending
approximately 99 billion yen of retained earnings during fiscal 1999. At
the same time, as an incentive to Board members and employees toward the
enhancement of corporate value, the parent company introduced stock option
plans for Board members and select senior executives (similar option plans
have been implemented in fiscal 2000, 2001 and 2002), and established a
stock-price-linked remuneration plan, under which modest cash payments have
been offered to employees manager-level or above once a year through fiscal
2001 in addition to ordinary salary and bonus payments.
|
| |  | In October 1999, EPCOS AG, a German electronic components joint venture of
the Company and Siemens AG of Germany, had its initial public offering,
listing its shares on German and U.S. stock exchanges. Following EPCOS AGs
public offering, Matsushitas 45% (held by a subsidiary) and Siemens AGs
55% holdings in EPCOS AG were reduced to nearly 12.5%, respectively.
Matsushita realized a 59 billion yen gain from the sale of its shares in
EPCOS AG in fiscal 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | On April 1, 2000, the Company made Matsushita Refrigeration Company and
Wakayama Precision Company wholly-owned subsidiaries, by means of share
exchanges. As a result of the share exchanges, the Company issued
16,321,187 shares of its Common Stock to shareholders of the respective
companies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           



---



##### Table of Contents



- 6 -



| |  | In June 2000, Matsushitas Board of Directors elected Kunio Nakamura as
President of the Company to succeed to his predecessor Yoichi Morishita, who
became Chairman. A new management team headed by Mr. Nakamura subsequently
established the Companys new three-year business plan, called Value
Creation 21, which was formally implemented in April 2001. The Value
Creation 21 plan was designed to take full advantage of the opportunities
arising in the evolving digital networking society. Its objective is to
transform Matsushita into a company that meets the needs of the 21st century
through structural reforms and growth strategies with emphasis on enhancing
growth potential, profitability and capital efficiency, thereby ensuring the
Companys continued contribution to society. For more information about
this mid-term plan, see Section D of Item 5.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | In February 2001, Matsushita entered into an agreement with Toshiba
Corporation (Toshiba), under which the two companies will establish a joint
venture in Singapore to manufacture low temperature polysilicon liquid
crystal display (LCD) panels, with production scheduled to start in July
2002. The joint venture companys initial capital of 50 billion yen has
been 67% subscribed by Toshiba and 33% by Matsushita.                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | In April 2001, the Company absorbed Matsushita Electronics Corporation
(MEC), its wholly-owned subsidiary, by merger to implement unified
operational management in such key device areas as semiconductors and
display devices. By establishing new internal divisional companies directly
under the control of the parent company, namely the Semiconductor, Display
Device and Lighting companies, the development, manufacturing and sales
functions that were previously distributed between Matsushita and MEC for
each of these strategic businesses have been integrated.                                                                                                                                                                                                                                                                                                       

CAPITAL INVESTMENTS



| |  | Recognizing that building advanced technologies, equipment and processes is
essential to the cost-efficient and speedy manufacture of sophisticated
electronic products and devices, Matsushita has been attentive in planning
plant and equipment investment to achieve higher competitiveness and
investment efficiency. Besides constant investment in production automation
and energy-saving facilities, increasing emphasis has been placed on
expansion of facilities in such business areas as digital AV equipment,
mobile communications equipment, and components and devices.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Total capital investment (excluding intangibles) amounted to 352 billion
yen, 338 billion yen and 504 billion yen for fiscal 1999, 2000 and 2001,
respectively. The increase in the Companys capital investment for fiscal
2001 was due mainly to expanded plant and equipment investment in the
components area including semiconductors and LCD devices.                                                                                                                                                                                                                              
|
| |  | For the current fiscal year ending March 31, 2002 (fiscal 2002),
Matsushita expects its capital investment to decrease to approximately 420
billion yen as the investment in the components area has peaked. Of the
projected total amount, nearly 320 billion yen will be invested in
facilities in Japan and the remaining 100 billion yen overseas. This
investment will be funded mainly through internal sources.                                                                                                                                                                 



---



##### Table of Contents



- 7 -






|B. |  | Business Overview
|-- |  | -----------------

SALES BY PRODUCT CATEGORY



| |  | Matsushita is engaged in the production and sale of electronic and electric
products in a broad array of business areas. The following table sets forth
the Companys sales breakdown by product category for the last three fiscal
years;
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                     |                                          |          |       |                             |  |       |    |      |   |     |       |       |  |       |    |    |   |     |       |       |  |       |    |    |   |    
| | ------------------- | ---------------------------------------- | -------- | ----- | --------------------------- |  | ----- | -- | ---- | - | --- | ----- | ----- |  | ----- | -- | -- | - | --- | ----- | ----- |  | ----- | -- | -- | - | ---
| |                     |                                          |          |       | Yen (billions)             
| |                     |                                          |          |       |                            
| |                     |                                          |          |       | Fiscal year ended March 31,
| |                     |                                          |          |       |                            
| |                     |                                          |          |       | 2001                        |  | 2000  |    | 1999
| |                     |                                          |          |       |                             |  |       |    |     
| | Consumer products  
|
|
|
|
| |                     | Video and audio equipment                |          |       | 1,756                       |  |       |    | 23   | % |     |       | 1,706 |  |       |    | 23 | % |     |       | 1,895 |  |       |    | 25 | %
|
|
|
|
| |                     | Home appliances and
household
equipment  |          |       | 1,316                       |  |       |    | 17   |   |     |       | 1,306 |  |       |    | 18 |   |     |       | 1,394 |  |       |    | 18 |  
| |                     |                                          |          |       |                             |  |       |    |      |   |     |       |       |  |       |    |    |   |     |       |       |  |       |    |   
| |                     |                                          | Subtotal |       |                             |  | 3,072 |    |      |   | 40  |       |       |  | 3,012 |    |    |   | 41  |       |       |  | 3,289 |    |    |   | 43 
|
|
|
|
| | Industrial products
|
|
|
|
| |                     | Information and
communications equipment |          |       | 2,175                       |  |       |    | 28   |   |     |       | 2,022 |  |       |    | 28 |   |     |       | 2,150 |  |       |    | 28 |  
|
|
|
|
| |                     | Industrial equipment                     |          |       | 817                         |  |       |    | 11   |   |     |       | 735   |  |       |    | 10 |   |     |       | 717   |  |       |    | 10 |  
| |                     |                                          |          |       |                             |  |       |    |      |   |     |       |       |  |       |    |    |   |     |       |       |  |       |    |   
| |                     |                                          | Subtotal |       |                             |  | 2,992 |    |      |   | 39  |       |       |  | 2,757 |    |    |   | 38  |       |       |  | 2,867 |    |    |   | 38 
|
|
|
|
| | Components          |                                          |          | 1,618 |                             |  |       | 21 |      |   |     | 1,530 |       |  |       | 21 |    |   |     | 1,484 |       |  |       | 19 |   
| |                     |                                          |          |       |                             |  |       |    |      |   |     |       |       |  |       |    |    |   |     |       |       |  |       |    |   
| |                     |                                          | Total    |       |                             |  | 7,682 |    |      |   | 100 | %     |       |  | 7,299 |    |    |   | 100 | %     |       |  | 7,640 |    |    |   | 100
| |                     |                                          |          |       |                             |  |       |    |      |   |     |       |       |  |       |    |    |   |     |       |       |  |       |    |   



| |  | Consumer Products                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Consumer products is Matsushitas traditional business area, and the Company
maintains a competitive edge in domestic and overseas markets, based on its
market share for a number of major products. Over the last three fiscal
years, sales of this category, consisting of video and audio equipment and
home appliances and household equipment, did not show marked growth due to
such factors as slow consumer spending, especially in Japan, intensified
global price competition notably in the traditional analog AV equipment
field and the high saturation rate for many home appliance items in
developed nations. However, growth has been seen in sales of digital AV
equipment and new, high-value-added home appliances, such as single-unit
washer/dryers, cordless vacuum cleaners and induction-heating cooking
equipment.
|
| |  | Video and Audio Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Principal products in this category include TVs, VCRs, camcorders, DVD
players, audio equipment, and pre-recorded audio and video software.
Over the last several years, increasing emphasis has been placed on digital
AV equipment and, most recently on networkable AV equipment to make
Matsushita a leader in the approaching home networking age.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      



---



##### Table of Contents



- 8 -



| |  | In TVs, Matsushita produces a broad range of models to meet demand in all
segments of Japanese and international markets. In the mainstay
cathode-ray-tube (CRT) TVs, the Company has shifted production of
traditional CRT models from Japan to Southeast Asian and other overseas
factories. Domestic production is now concentrated on flat-surface CRT
models, including the industrys thinnest model. Also during the last three
fiscal years, the Company has gradually expanded production of
high-picture-quality, high definition models, as well as flat TVs such as
LCD TVs and plasma display panel (PDP) TVs. Volume production of PDP TVs
will start in the summer of 2001 at a newly established manufacturing
venture with Toray Industries, Inc. The Company is also active in the
burgeoning market for digital TVs.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | In the VCR and camcorder area, Matsushita has been accelerating
digitization, introducing D-VHS VCR decks and expanding its range of digital
camcorders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | In DVDs, Matsushita was the first to market DVD players in 1996 and, as a
forerunner in the industry, boasts a wide product range from standard to
portable LCD equipped models. In addition, the Company has been expanding
DVD disc production at a rapid pace, through its own facilities as well as
overseas joint ventures with Universal Music Group and Eastman Kodak Company
established in 1999.                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | In the area of audio equipment, Matsushita produces a large variety of
products, including such digital products as compact disc (CD) players, CD
radio cassette recorders and Mini Disc (MD) players, as well as radio
receivers, tape recorders, portable headphone players, stereo hi-fi
equipment and electronic musical instruments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | During fiscal 2001, the Company successfully launched new products in the
digital AV equipment segment. Of these, sales of digital TVs including
set-top boxes in Japan were particularly strong, mainly attributable to the
launch of Broadcast Satellite (BS) digital TV broadcasting services, which
commenced in December 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | The Company further introduced the industrys first digital TV with a
built-in AV-use hard disk (AVHDD) recorder in May 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | To prepare for the spring 2002 launch in Japan of digital TV-based e-Net
services, Matsushita, in cooperation with other Japanese companies,
established ePF Network Corporation to develop a common e-Platform as the
basis for e-shopping, e-banking and other interactive services via the TV.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Matsushita also expanded its range of other new digital AV equipment in
fiscal 2001, with the launch of DVD-Audio players, DVD video recorders, and
a series of products using the Secure Digital (SD) Memory Card, such as an
ultra-compact portable headphone player. The SD Memory Card is a new
postage stamp-sized data storage device now supported by more than 200
corporate members of the SD Association worldwide.                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Matsushita is working further on the expansion of its networkable AV
equipment business, envisioning the creation of a future home networking
environment, where digital TV, offering a wide range of functions through
easy-to-use remote control operation, will serve as the information station
for all digital AV and household equipment as well as outside public and
mobile communications networks.                                                                                                                                                                                                                                                                                                                                                                                                                           



---



##### Table of Contents



- 9 -



| |  | Home Appliances and Household Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Matsushitas vast array of home appliance products includes washing
machines, clothes dryers, vacuum cleaners, electric irons, microwave ovens,
rice cookers and other cooking appliances, dishwashers, refrigerators, air
conditioners, electric fans, air purifiers, electric and kerosene heaters
and electrically-heated rugs. The line of household equipment mainly
comprises kitchen fixture systems, electric, gas and kerosene hot-water
supply systems, and bath and sanitary equipment. This category also
includes certain healthcare equipment, electric lamps, bicycles, and optical
cameras and flash units.                                                          
|
| |  | Matsushita continues to lead the Japanese home appliance industry, launching
new technologically innovative models. Within the last three fiscal years,
for instance, the Company launched the worlds first centrifugal force
washing machine for home use in fiscal 1999, and the worlds first automatic
top-loading washer/dryer using centrifugal force in fiscal 2001. The
Company also introduced a series of space-saving refrigerators that do not
sacrifice inner capacity in each year through fiscal 2000, followed by the
worlds first refrigerator to employ separate cooling functions for the
refrigerator compartment, vegetable drawer and freezer in fiscal 2001.
|
| |  | Other recent product innovations include the Companys compact
rechargeable-battery-powered cordless vacuum cleaner employing a centrifugal
force dust collection system marketed in fiscal 2000, and a new cordless
rechargeable vacuum cleaner for fiscal 2001, that offers approximately
40-minutes continuous operation. Furthermore, in the air conditioner field,
Matsushita introduced a series of energy-efficient models, the latest one
featuring a triple-panel design for precise room temperature control.                                                                                                                                                              
|
| |  | In the household equipment area, the Company is meeting market needs by
providing user-friendly products. Successful examples include
easy-to-operate pull-down cabinet shelves, and a barrier-free bath, designed
specifically to meet the needs of elderly people.                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | In addition to developing and introducing high-value-added products to
stimulate the matured appliance market in Japan, the Company has also been
strengthening its business base by taking the lead in the newer, growth
product areas, such as dish washers, frame-free induction heating cooking
equipment and compact garbage processing units. Sales of these products
have been rising at a faster pace than other traditional product lines
during the last three years.                                                                                                                                                                                                      
|
| |  | Furthermore, Matsushita is working on the development of new businesses to
create enriched living environments in the 21st century, offering a range of
products and services using digital networking technologies that focus on
important issues such as the environment and energy, health and healthcare,
comfort and security and greater convenience at home. Activities in
progress include the development of networkable home appliances, garbage
recycling services for the food industry and home healthcare services.                                                                                                                                                    
|
| |  | Industrial Products                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Industrial products is comprised of information and communications equipment
and industrial equipment. This has been the Companys fastest growth
category in the last decade, led by mobile communications equipment and
personal computer (PC) related equipment. For the last three fiscal
years, however, this categorys business has shown some volatility due
to such factors as increased price competition in the PC peripherals
area and the fiscal 2001 second half setbacks in global demand for
information technology (IT)-related products such as PCs and cellular
phones.                                                                                           



---



##### Table of Contents



- 10 -



| |  | Information and Communications Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The line of information and communications equipment includes: information
equipment, such as PCs, PC displays, hard disk drives (HDDs), CD-ROM,
DVD-ROM and other optical disk drives, copying machines and printers;
communications equipment, such as, telephones, cellular phones, other mobile
communications equipment, digital private branch exchanges and facsimile
equipment; and other systems equipment, such as CATV systems, broadcast- and
business-use AV equipment and systems, large-screen visual equipment,
communications network-related equipment, and traffic-related systems. Of
these, Matsushita believes it has a competitive edge worldwide in such lines
as HDDs and optical disc drives, facsimile equipment, broadcast-use digital
VCR equipment and airline in-flight AV systems, while also maintaining a
leading position in the Japanese cellular phone industry.
|
| |  | In PCs, Matsushita continued to upgrade its notebook models over the last
three fiscal years. In fiscal 1999, the Company launched an A5-sized
notebook PC with CCD camera and cellular-phone interface and, mainly for
overseas markets, ruggedized notebook PCs, built to resist shock, and
thereby supporting such uses as police field activities in North America.
This was followed by the introduction in fiscal 2000 of ultra slim models
with added features such as wireless communication. In fiscal 2001, adding
further to its slim notebook series, the Company introduced the Hito, an
AV-oriented notebook PC that links easily to AV equipment to better meet the
needs of the digital networking age.                                                                                                                                                                              
|
| |  | In the field of PC peripherals, Matsushita strengthened its disk drive
lineups. In HDDs, the Company continued to introduce upgraded models to
meet the need for greater data storage capacity and faster processing speed.
In the optical disk drive area, Matsushita announced in fiscal 1999 a
compact DVD-RAM drive with data storage capacity of 5.2 GB using both sides
of a disc, which received worldwide attention. In fiscal 2000, the Company
expanded its range of slim models for notebook PCs, and in fiscal 2001,
introduced several new multiple disk drive models that gained popularity,
including the industrys slimmest and fastest single-unit DVD-ROM and
CD-R/RW drive.                                                                                                                                                                                                      
|
| |  | In communications equipment, Matsushita has developed and introduced a
number of new mobile communications products with focus on downsizing,
ease-of-use and Internet connectivity, in the last three fiscal years. In
fiscal 1999, the Company marketed cellular phones and Personal Handyphone
System (PHS) at the forefront of the race toward downsizing and
multi-functionality. In fiscal 2000, the Company launched NTT DoCoMos
popular i-mode cellular handsets equipped with e-mail and Internet browsing
capabilities, as well as PHS terminals offering similar functions.
Furthermore, in fiscal 2001, Matsushita began shipments of base transceiver
stations for next-generation, W-CDMA (wideband code division multiple
access) cellular phone services to be commenced by NTT DoCoMo in fiscal
2002, followed by sample shipments of W-CDMA handsets in May 2001.                 
|
| |  | Among other communications equipment, the Company launched the worlds first
Internet-compatible facsimile machine in fiscal 1999. Also in fiscal
2001, the Company marketed a new multifunctional model, featuring fax, copy,
printer, scanner and telephone functions. In addition, Matsushita
introduced a color facsimile machine, compatible with the SD Memory Card.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           



---



##### Table of Contents



- 11 -



| |  | In the broadcast-use AV equipment and systems field, Matsushita launched the
DVCPRO HD (high-definition) series in April 2000, building on the success of
its light, compact digital DVCPRO series and, in fiscal 2001, the Company
supplied major BS digital TV networks in Japan with conditional access
systems (CASs) and an electronic program guide (EPG), both key systems for
BS digital broadcasting. In these years, the Company has also solidified
its leading position in the global in-flight AV systems market by delivering
AV systems with LCD monitors and state-of-the-art personal multimedia
systems that allow passengers to enjoy in-flight shopping from their seats.                                                                                                                                                                                                                                                                                                                                                         
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Industrial Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Matsushitas product range of industrial equipment encompasses factory
automation (FA) equipment, welding machines, power distribution equipment,
ventilating and air conditioning equipment, vending machines and medical
equipment. This category also includes car AV equipment, such as car audio
and car navigation equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | In FA equipment, Matsushita is an industry leader in
electronic-parts-mounting machines, and a major producer of industrial
robots and electronic measuring instruments. Building on this strength to
meet ever-more sophisticated customer requirements, the Company launched
innovative products during the last three years, with a focus on smaller,
lighter high-precision machines. Successful examples included a unique Stud
Bump Bonding semiconductor mounting machine marketed in fiscal 1999, and the
following years introduction of a new high-speed multifunctional chip
mounter as well as an innovative laser processing machine for ultra-fine
production of high-integration circuit boards. In fiscal 2001, the Company
added modular components mounters to its mainstay range of parts-mounting
machines. Concurrently, Matsushita introduced the worlds smallest and
lightest fully digital CO2/MAG automatic welding machine. The Company also
holds a competitive position in DVD disc mastering and replication
equipment.
|
| |  | In the area of commercial-use ventilation and air-conditioning
systems, Matsushita continued to expand delivery of its specialty
in-tunnel dust collection and ventilation systems to Japans major
expressways during these years. Meanwhile, the Company sourced the
manufacture of packaged air conditioners to Daikin Industries, Ltd.
(Daikin) in fiscal 2001 as part of an alliance between the two
companies. The alliance covers a broad range, including consumer-use
air conditioners in which Matsushita will provide manufacturing
cooperation to Daikin, as well as joint procurement of parts and
materials and co-development of eco-friendly products.                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | In car AV equipment, Matsushita continued to develop more advanced car
navigation systems for the domestic market, as well as further
promoting global expansion in car audio equipment. The Company
introduced the worlds first car navigation model featuring voice
control and DVD video playback functions in fiscal 1999, and in fiscal
2000, extended its DVD car navigation networking capabilities by
launching new Internet capable models that interact with Electronic
Toll Collection (ETC) systems. In fiscal 2001, Matsushita continued to
launch upgraded car navigation systems that can receive mobile
information services, while delivering infrastructure equipment for ETC
services, which officially began in April 2001 as an integral part of
Japans Intelligent Transport Systems (ITS) project.                                                                                                                                                                                                                           
|
| |  | Components                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Matsushita produces a wide range of electronic and electric components and
devices. Major products included in this category are semiconductors,
general electronic components, display devices, electric motors,
compressors and batteries, to support the Companys finished products
and for sale to other manufacturers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          



---



##### Table of Contents



- 12 -



| |  | Recognizing that components and devices hold the key to innovation and
advancement, as well as the competitiveness of finished products and systems
in the digital networking age, Matsushita places significant priority on the
development of electronic components technology and business, with special
emphasis on semiconductors and display devices. As a result, sales in the
components category have increased over the last three fiscal years. In
recent months, however, business in this category has been adversely
affected by setbacks in demand from the global IT-related industries.                                                                                                                                                                                                                                                                                                                                                                      
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Companys range of semiconductors is primarily made up of integrated
circuits (ICs), such as MOS LSIs and bipolar ICs, discrete devices and CCDs.
The Company has been strengthening development of multifunctional system
LSIs, which form the basis of digital network-related equipment. Successful
results included system LSI chip sets for DVD-ROM drives, MPEG-2 encoder
chips, 32-bit microcontrollers with embedded DRAMs, all marketed in fiscal
1999, system LSI chip sets for digital TV tuners in fiscal 2000, and the
worlds first single-chip MPEG-4 multi-codec system LSI in fiscal 2001.
Matsushita has also been a leader in optical pickup semiconductors for DVDs,
CCDs for video camcorders, and gallium-arsenide power modules for cellular
phones. The Company is currently working to develop 0.10 micron process
technology in an alliance with Mitsubishi Electric Corporation for future
system LSIs for use in digital networkable products.
|
| |  | Matsushita maintains a broad spectrum of general components, encompassing
electronic circuit components, printed circuit boards, transformers,
power supply components, coils, capacitors, resistors, tuners,
speakers, ceramic components, and various sensors. During the last
three fiscal years, the Company has continued to focus on smaller, more
advanced components for equipment downsizing and performance
improvement. As part of this effort, in fiscal 1999, Matsushita
expanded its production of proprietary compact Any Layer Interstitial
Via Hole printed circuit boards, called ALIVHs, and high frequency
components for use in compact mobile communications equipment. In
areas related to digital networkable consumer products, the Company
developed in fiscal 2001 a surface-mounted circuit module for
Bluetooth, a short-range wireless networking protocol.                                                                                     
|
| |  | In display devices, Matsushita added high technology Semi Stretched Tension
(SST) flat surface CRTs during fiscal 1999, expanding the product range in
fiscal 2000 to include a model with a brightness level 20% higher than
conventional models. The Company began concentrating production of
flat-surface CRTs in Japan, while shifting production of traditional CRTs
overseas. The Company also focused efforts on developing high-picture
quality LCD devices with faster picture response and wider viewing angles.
In fiscal 2001, the Company developed the worlds thinnest 32- and 36-inch
flat-surface high-definition (HD) CRTs for BS digital HDTVs, and further
boosted its PDP lineup, with the development of a 60-inch unit to add to its
current 37-, 42- and 50-inch models.                                                                                                                                                                             
|
| |  | In electric motors, Matsushita augmented its FA equipment motor lineup in
fiscal 2000 through 2001, with the MINAS-A and MINAS-S, a series of smaller,
high-speed servomotors with greater energy efficiency than conventional
models. The lineup of AV and information and communications equipment
motors have also been expanded during the last three fiscal years, including
compact spindle motors for use in PC peripherals and DVD players and
vibration motors for cellular phones. In compressors, the Company is a
world leader, primarily for air conditioners and refrigerators.                                                                                                                                                                                                                                                                                                                                                                                 



---



##### Table of Contents



- 13 -



| |  | Matsushita is one of the worlds largest battery manufacturers, producing a
comprehensive range of batteries, ranging from manganese, alkaline, lithium,
silver oxide and zinc air cells, to rechargeable batteries, such as
lithium-ion, nickel metal-hydride, nickel-cadmium and sealed lead-acid
batteries and storage batteries for automotive use, as well as various
battery powered appliances. Among these, production of compact,
high-performance batteries, such as the Companys long life alkaline
batteries and lithium-ion batteries, have been expanding in recent years, as
they are increasingly used in compact electronic equipment. As a
technological breakthrough in fiscal 1999, Matsushita began production of
thin lithium-polymer cells, while being at the forefront of nickel
metal-hydride batteries for electric and hybrid electric vehicles,
production of which has been expanding, as they are increasingly installed
in new cars of the leading Japanese auto manufacturers. In fiscal 2000,
Matsushita launched the worlds thinnest (0.4 mm) manganese dioxide-lithium
battery, known as the Paper Coin for use in IC cards for e-commerce. In
fiscal 2001, the Company launched rectangular lithium-ion rechargeable
batteries, commencing construction of a new plant to reinforce its
production capability.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | While Matsushita offers total solutions by boasting such a wide array of key
components and devices, the Company is currently accelerating its efforts to
achieve a greater competitive edge and operating efficiency through more
strategic selection of priority items in each of the above component
segments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    



| | Note: |  | In response to new business environments created by the evolution
of digital networks, the convergence of broadcasting and communications
and other ongoing developments, Matsushita announced that it would
reclassify its Consumer, Industrial and Components segments into four
new segments: AVC Networks, Home Appliances, Industrial Equipment, and
Components and Devices, effective April 2001. The Company intends to
compile sales breakdown results under this new classification from the
new fiscal year.
| | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

MARKETING CHANNELS



| |  | Below is a sales breakdown by geographical market:
| |  | --------------------------------------------------

| |                         |  |                             |       |      |  |      |     |   |  |       |       |  |  |    |     |   |  |       |       |  |  |    |     |  
| | ----------------------- |  | --------------------------- | ----- | ---- |  | ---- | --- | - |  | ----- | ----- |  |  | -- | --- | - |  | ----- | ----- |  |  | -- | --- | -
| |                         |  | Yen (billions)             
| |                         |  |                            
| |                         |  | Fiscal year ended March 31,
| |                         |  |                            
| |                         |  | 2001                        |       | 2000 |  | 1999
| |                         |  |                             |       |      |  |     
| | Japan                   |  | 4,034                       |       |      |  | 53   | %   |   |  | 3,698 |       |  |  | 51 | %   |   |  | 3,752 |       |  |  | 49 | %  
|
|
|
|
| | North and South America |  | 1,380                       |       |      |  | 18   |     |   |  | 1,384 |       |  |  | 19 |     |   |  | 1,513 |       |  |  | 20 |    
|
|
|
|
| | Europe                  |  | 849                         |       |      |  | 11   |     |   |  | 906   |       |  |  | 12 |     |   |  | 1,019 |       |  |  | 13 |    
|
|
|
|
| | Asia and Others         |  | 1,419                       |       |      |  | 18   |     |   |  | 1,311 |       |  |  | 18 |     |   |  | 1,356 |       |  |  | 18 |    
| |                         |  |                             |       |      |  |      |     |   |  |       |       |  |  |    |     |   |  |       |       |  |  |    |    
| | Total                   |  |                             | 7,682 |      |  |      | 100 | % |  |       | 7,299 |  |  |    | 100 | % |  |       | 7,640 |  |  |    | 100 | %
| |                         |  |                             |       |      |  |      |     |   |  |       |       |  |  |    |     |   |  |       |       |  |  |    |    



| |  | Sales and Distribution in Japan                                                                                                                                                                                                                                                                            
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Domestic sales are handled or coordinated by several sales divisions
organized according to the type of customer (consumers, corporate,
government, manufacturing industry, and other respective industries) in
order to meet the specific and ever-diversifying needs of consumers and
various industries.



---



##### Table of Contents



- 14 -



| |  | For the consumer market, Matsushita maintains the industrys most extensive
sales networks, supplying a large number of consumer electronics and
appliance retailers throughout Japan, and has also expanded to volume
retailers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Sales to corporate and government customers are centered on information and
communications equipment, and sales to the manufacturing industry are
focused on industrial equipment and components.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | In April 2001, Matsushita began implementing major reorganizations of its
domestic consumer sales and distribution structure. As a first step,
Matsushita restructured the previous corporate consumer products sales
divisions, sales functions within individual product divisions and the
Corporate Advertising Division, into two new brand name-linked marketing
divisions, the Corporate Panasonic Marketing Division (primarily responsible
for AV and information/communications equipment) and the Corporate National
Marketing Division (primarily responsible for home appliances and household
equipment). Concerning distribution, Matsushita intends to consolidate its
22 regional consumer sales companies throughout Japan into a single company,
along with a similar integration of credit sales (primarily installment
sales) and leasing subsidiaries into a single company. By implementing
these reforms and revitalizing domestic consumer sales and distribution
operations, Matsushita intends to create a highly efficient structure that
ensures speedy response to customer needs and realizes a significant
reduction in distribution costs with an increased market share.
|
| |  | During fiscal 2001, the Company also inaugurated Internet-based sales
systems in cooperation with local retailers in Japan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Overseas Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Matsushita operates 229 companies in 44 countries outside of Japan,
including five regional headquarters, 44 manufacturing/sales companies, 100
manufacturing companies, 48 sales companies, 13 research organizations and
five finance subsidiaries. International marketing of Matsushitas products
is conducted through the Companys sales subsidiaries and affiliates and
also through independent distributors. In addition, certain products are
sold in foreign markets on an OEM basis and marketed under the brand names
of third parties. The Company has been gradually strengthening overseas
sales channels for industrial products and components as well as integrated
systems products, aside from existing consumer products sales networks in
many countries and regions.                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Overseas sales represented approximately 47% of the Companys total
consolidated sales in fiscal 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | In order to promote global business development and counter currency
fluctuations, in recent years, the Company placed emphasis on building and
expanding manufacturing facilities in newly developing areas, such as China
and Eastern Europe, in addition to Southeast Asia.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | Matsushita places emphasis on promoting localization of development of
products and technologies to enhance competitiveness of individual overseas
manufacturing sites. The Company is also reviewing the functions of its
R&D, production and sales bases worldwide, integrating and relocating, as
necessary, to achieve optimum efficiency of Matsushitas global operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         



---



##### Table of Contents



- 15 -



| |  | Customers                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The largest markets for Matsushita have traditionally been consumer
products. However, since the 1980s, the proportion of sales to non-consumer
customers, such as governments, commercial and industrial corporations and
other institutions, including large customers such as electric and
electronic equipment manufacturers, automotive manufacturers and various
other machinery makers, has been rising as Matsushita places increasing
emphasis on industrial and commercial products and electronic components.
In fiscal 2001, sales of industrial products and components accounted for
approximately 60% of Matsushitas total sales, rising from 48% of the total
in fiscal 1995. Matsushitas business is not materially dependent upon any
single customer.

SEASONALITY OF BUSINESS



| |  | The Companys main business has no significant seasonality in terms of sales
or profits. However, when it comes to the consumer electronics market,
normally the fiscal third quarter is a peak because it falls in the year-end
sales season for consumer durables in Japan and the holiday sales season in
many overseas countries.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Additionally, seasonal appliances, such as air conditioners and
refrigerators have a different business cycle, in line with the practice of
the relevant Japanese industry, which starts from October and ends in
September. This does not have a material effect upon the Companys overall
operation.                              

RAW MATERIALS AND SOURCE OF SUPPLY



| |  | Matsushita purchases a wide variety of parts and materials from various
suppliers in Japan and abroad. The Company applies a multi-sourcing policy
 being not dependent upon any one source of supply for any essential item.
The Company has also been endeavoring to promote a policy of global optimum
purchasing by selecting the most qualified suppliers from all over the world
and buying the most competitive parts and materials. Although prices of
certain materials, such as metals, are volatile, the Company has managed to
minimize the negative effects on its operations by maintaining favorable
relations with suppliers and continuing a multi-sourcing policy.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | In an attempt to improve operational efficiency and reduce parts and
materials costs, Matsushita has recently introduced an Internet-based
procurement system. The Company is currently expanding this system to all
of its locations and, at the same time working on the increased use of
common parts and the reduction of the number of suppliers.                                                                                                                                                                                                                                                                                                                               

PATENT LICENSE AGREEMENTS



| |  | Matsushita holds numerous Japanese and foreign patents and utility model
registrations for its products and engages in mutual exchange of
technologies with a number of Japanese and foreign manufacturers. Its
technical assistance, or licensing, to other manufacturers is increasing
year by year.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---



##### Table of Contents



- 16 -



| |  | Matsushita is a licensee under various license agreements which cover a wide
range of products, including audiovisual products, computers, communications
equipment, semiconductors and other components. Matsushita has
non-exclusive patent license agreements, with among others, Thomson
Multimedia Licensing Inc. and Thomson Licensing S.A. covering a broad range
of its products, including TVs, VCRs, CD players and CD-ROM drives.
Matsushita has non-exclusive patent cross-license agreements, with among
others, Texas Instruments Incorporated and International Business Machines
Corporation, both covering semiconductors, information equipment and certain
other related products. Certain internal divisional companies as successors
to Matsushita Electronics Corporation, a former subsidiary now merged into
the Company, have non-exclusive patent license agreements with Koninklijke
Philips Electronics N.V. covering most of the items manufactured by such
divisional companies, including semiconductor devices, various lamps,
cathode-ray and electron tubes and certain other products.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Most of Matsushitas license and technical assistance agreements are for
three- to ten-year periods, unless the agreements cover specific patents to
be licensed therein, in which case they are normally for the life of the
patent.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | The Company considers all its technical exchange and license agreements
beneficial to its operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

COMPETITION



| |  | The markets in which the Company sells its products are highly competitive
in Japan, as well as abroad. Matsushitas principal competitors, across the
full range of its products, consist of several large Japanese manufacturers
and a number of smaller and more specialized companies. In certain
categories of products it encounters additional competition from companies
in the United States, Europe and Asia. The Company expects that competition
will continue to be intense both in Japan and abroad.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | In addition, the recent advancement towards a borderless economy has applied
pressure to Japanese manufacturers, including Matsushita, in terms of global
price competition. To minimize the effects of these negative factors, the
Company is devising various cost-reduction and efficiency measures to
enhance competitiveness, such as innovating manufacturing processes through
the use of information technology, increasing overseas production,
shortening production and distribution lead time through the introduction of
supply chain management (SCM) in cooperation with several overseas and
domestic mass-scale retailers, and also developing joint ventures and other
cooperative agreements with domestic and overseas partners. Also, with the
advancement of digital networking technologies, competition around the
so-called de facto standard has become intense. In response, Matsushita
has been strengthening its efforts for alliances with leaders of not only
the electronics industry but also the software, devices, broadcasting,
communications services and other industries.

GOVERNMENT REGULATIONS



| |  | Effective April 1, 2001, the Japanese government (Regulator: Ministry of the
Environment and Ministry of Economy, Trade and Industry) enacted the Law
for Recycling of Specified Kinds of Consumer Electric Goods, (the
Recycling Law). The Recycling Law now requires that consumers, retailers
and manufacturers share the responsibility of recycling used TVs,
refrigerators, air conditioners and washing machines.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---



##### Table of Contents



- 17 -



| |  | To cope with the Recycling Law, Matsushita set up an effective system that
can utilize its existing infrastructure of recycling and transportation
companies throughout Japan for collection and recycling activities. The
Company also established the Matsushita Eco Technology Center Co., Ltd. not
only for dismantling used products and recycling scrapped materials, but
also for research and development of recycling technology. So far, the
actual recycling ratio of products has been growing steadily. Matsushita,
as the industry leader in the domestic home appliance market, has been
consistently working on environmental protection measures to ready itself
for the Recycling Law. The Company therefore, does not believe that the new
legislation will have a material adverse effect on its business, except for
the current reverse effect of temporary advance consumer purchases of the
four subject product items prior to the enactment of the Recycling Law.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Company is subject to a number of other government regulations in Japan
and overseas, but overall, the Company presently manages to operate its
business without any significant difficulty or financial burden in coping
with them.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   






|C. |  | Organizational Structure                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In order to maintain production, sales and service activities in broad
business areas as a comprehensive electronics manufacturer, Matsushita has
traditionally operated under a decentralized divisional management structure
with substantial delegation of authority to divisional companies and
subsidiaries, with the headquarters focusing on group-wide strategic
functions, such as corporate planning, personnel administration, finance and
corporate communications, as well as corporate-level R&D, sales and
marketing functions.
|  
|   |  | Principal divisional companies and subsidiaries at present are as listed
below:                                                                                                                                                                                                                                                                                                                                                                                                                                                               



| | (1) |  | Internal divisional companies of Matsushita Electric Industrial
Co., Ltd.:
| | --- |  | --------------------------------------------------------------------------

|                                             |  |  |  | 
|-------------------------------------------- |  |  |  | 
|Name of internal
divisional company         
|                                            
|AVC Company                                 
|                                            
|                                            
|                                            
|                                            
|Home Appliance & Housing Electronics Company
|                                            
|                                            
|                                            
|                                            
|Air-Conditioner Company                     
|                                            
|                                            
|                                            
|                                            
|Packaged Air-Conditioner Company*           
|                                            
|                                            
|                                            
|                                            
|Motor Company                               
|                                            
|                                            
|                                            
|                                            
|Semiconductor Company*                      
|                                            
|                                            
|                                            
|                                            
|Display Device Company*                     
|                                            
|                                            
|                                            
|                                            
|Lighting Company*                           
|                                            
|                                            
|                                            
|                                            
|Factory Automation Company*                 



| |  |  | Note: | The asterisk (*) indicates the new divisional companies
established on April 1, 2001 upon reorganizations.
| |  |  | ----- | ----------------------------------------------------------------------------------------------------------



---



##### Table of Contents



- 18 -



| | (2) |  | Principal domestic subsidiaries:
| | --- |  | --------------------------------

|                                                 |  |            |       |  
|------------------------------------------------ |  | ---------- | ----- | -
|                                                 |  | Percentage
|Name of company                                  |  | owned     
|                                                 |  |           
|Matsushita Communication Industrial Co., Ltd.    |  |            | 56.3  | %
|                                                
|                                                
|                                                
|                                                
|Matsushita Electronic Components Co., Ltd.       |  |            | 99.3  |  
|                                                
|                                                
|                                                
|                                                
|Matsushita Industrial Equipment Co., Ltd.        |  |            | 100.0 |  
|                                                
|                                                
|                                                
|                                                
|Matsushita Battery Industrial Co., Ltd.          |  |            | 98.0  |  
|                                                
|                                                
|                                                
|                                                
|Matsushita Refrigeration Company                 |  |            | 100.0 |  
|                                                
|                                                
|                                                
|                                                
|Kyushu Matsushita Electric Co., Ltd.             |  |            | 51.1  |  
|                                                
|                                                
|                                                
|                                                
|Matsushita Seiko Co., Ltd.                       |  |            | 57.6  |  
|                                                
|                                                
|                                                
|                                                
|Matsushita Graphic Communication Systems, Inc.   |  |            | 67.5  |  
|                                                
|                                                
|                                                
|                                                
|Matsushita Kotobuki Electronics Industries, Ltd. |  |            | 57.7  |  
|                                                
|                                                
|                                                
|                                                
|Victor Company of Japan, Ltd.                    |  |            | 52.4  |  



| | (3) |  | Principal overseas subsidiaries:
| | --- |  | --------------------------------

|                                                                 |  |               |           |            |  |  |       |  
|---------------------------------------------------------------- |  | ------------- | --------- | ---------- |  |  | ----- | -
|                                                                 |  | Country of    |           | Percentage
|Name of company                                                  |  | incorporation |           | owned     
|                                                                 |  |               |           |           
|Matsushita Electric Corporation of America                       |  |               | U.S.A.    |            |  |  | 100.0 | %
|                                                                
|                                                                
|                                                                
|                                                                
|Matsushita Electric Europe (Headquarters) Ltd.                   |  |               | U.K.      |            |  |  | 100.0 |  
|                                                                
|                                                                
|                                                                
|                                                                
|Matsushita Electric Asia Pte. Ltd.                               |  |               | Singapore |            |  |  | 100.0 |  
|                                                                
|                                                                
|                                                                
|                                                                
|Matsushita Electric Espana S.A.                                  |  |               | Spain     |            |  |  | 100.0 |  
|                                                                
|                                                                
|                                                                
|                                                                
|Matsushita Electric (Taiwan) Co., Ltd.                           |  |               | Taiwan    |            |  |  | 67.1  |  
|                                                                
|                                                                
|                                                                
|                                                                
|Matsushita Industrial Corporation Sdn. Bhd.                      |  |               | Malaysia  |            |  |  | 80.0  |  
|                                                                
|                                                                
|                                                                
|                                                                
|Matsushita Television & Network Systems Co.,
(Malaysia) Sdn. Bhd |  |               | Malaysia  |            |  |  | 100.0 |  
|                                                                
|                                                                
|                                                                
|                                                                
|Matsushita Refrigeration Industries (S) Pte. Ltd.                |  |               | Singapore |            |  |  | 100.0 |  
|                                                                
|                                                                
|                                                                
|                                                                
|Matsushita Electronics (S) Pte. Ltd.                             |  |               | Singapore |            |  |  | 100.0 |  



| | Note: |  | Matsushitas consolidated financial statements as of March
31, 2001 comprise the accounts of 321 consolidated companies plus
53 companies reflected by the equity method.
| | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------






|D. |  | Property, Plants and Equipment                                                                                                                                                                                                            
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Companys principal executive offices and key research laboratories are
located in Kadoma, Osaka, Japan.                                                                                                                              
|  
|   |  | Matsushitas manufacturing plants are located principally in Japan, other
countries in Asia, North and South America and Europe. The Company
considers all its factories well maintained and suitable for current
production requirements.



---



##### Table of Contents



- 19 -



| |  | The following table sets forth information as of March 31, 2001 with respect
to manufacturing facilities:
| |  | ---------------------------------------------------------------------------------------------------------

|                      |  |               |        |                                 |  |                                                                                                                                                                                                        
|--------------------- |  | ------------- | ------ | ------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                      |  | Floor Space  
|                      |  | (thousands of
|Location              |  | square feet)  |        | Principal Products Manufactured
|                      |  |               |        |                                
|                     
|Osaka                 |  |               | 9,770  |                                 |  | VCRs, PDP TVs, DVD products, audio equipment, washing
machines, other home appliances, information equipment,
industrial equipment, components, batteries, kitchen
fixtures.                           
|                     
|                     
|                     
|                     
|Kanagawa              |  |               | 4,165  |                                 |  | Communications, information and measuring equipment, VCRs,
audio equipment, car AV equipment, compact discs,
refrigerators, batteries.                                                                 
|                     
|                     
|                     
|                     
|Shiga                 |  |               | 3,564  |                                 |  | Air conditioners, refrigerators, compressors, vacuum cleaners.                                                                                                                                         
|                     
|                     
|                     
|                     
|Tochigi               |  |               | 1,953  |                                 |  | TVs, TV picture tubes, information equipment.                                                                                                                                                          
|                     
|                     
|                     
|                     
|Nara                  |  |               | 1,992  |                                 |  | Home appliances, gas and kerosene equipment, compact discs
and DVD discs.                                                                                                                              
|                     
|                     
|                     
|                     
|Okayama               |  |               | 1,901  |                                 |  | VCRs, components, magnetic tapes and discs.                                                                                                                                                            
|                     
|                     
|                     
|                     
|Kyoto                 |  |               | 1,630  |                                 |  | Semiconductors, components.                                                                                                                                                                            
|                     
|                     
|                     
|                     
|Ibaraki               |  |               | 1,059  |                                 |  | TVs, magnetic tapes.                                                                                                                                                                                   
|                     
|                     
|                     
|                     
|Shikoku               |  |               | 3,739  |                                 |  | VCRs, information equipment, home appliances.                                                                                                                                                          
|                     
|                     
|                     
|                     
|Kyushu                |  |               | 2,353  |                                 |  | Information and communications equipment, PC peripherals,
components, industrial equipment.                                                                                                            
|                     
|                     
|                     
|                     
|North America         |  |               | 7,783  |                                 |  | TVs, home appliances, VCRs, DVD discs, car audio equipment,
communications equipment, compressors, components, batteries.                                                                              
|                     
|                     
|                     
|                     
|Europe                |  |               | 4,147  |                                 |  | VCRs, TVs, audio equipment, car audio equipment, home
appliances, components, information and communications
equipment.                                                                                
|                     
|                     
|                     
|                     
|Asia(excluding
China) |  |               | 17,715 |                                 |  | TVs, VCRs, audio equipment, air conditioners, refrigerators,
other home appliances, components, semiconductors,
information and communications equipment, industrial
equipment, compressors, batteries.
|                     
|                     
|                     
|                     
|China                 |  |               | 4,477  |                                 |  | TVs, audio equipment, air conditioners, washing machines,
other home appliances, car audio equipment, industrial
equipment, compressors, components, batteries.                                        
|                     
|                     
|                     
|                     
|Other                 |  |               | 16,298 |                                 |  | Home appliances, industrial equipment, components,
semiconductors, video and audio equipment, batteries,
information and communications equipment.                                                     
|                      |  |               |        |                                
|Total                 |  |               | 82,546 |                                
|                      |  |               |        |                                



| |  | All of the above facilities and properties are fully owned by the Company,
except for the land, some parts of which are leased from companies outside
of the Matsushita Group.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---



##### Table of Contents



- 20 -



| |  | In addition to its manufacturing facilities, Matsushitas properties all
over the world include sales offices located in various cities with an
aggregate floor space of approximately 8.5 million square feet, research and
development facilities with an aggregate floor space of approximately 7.0
million square feet, employee housing and welfare facilities with an
aggregate floor space of approximately 11.5 million square feet, and
administrative offices with an aggregate floor space of approximately 17.4
million square feet.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | As of March 31, 2001, Matsushita leased approximately 18.3 million square
feet of floor space, most of which was for sales office space.                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | Substantially all of Matsushitas properties are free of material
encumbrances and Matsushita believes such properties are in adequate
condition for their purposes and suitably utilized. During fiscal 2001,
there was no material problem, regarding both the productive capacity and
the extent of utilization of the Companys properties.                                                                                                                                                                                                 
|
| |  | In terms of environmental issues, all of the Matsushita Groups properties
operate in compliance with governmental and municipal laws and regulations.
Furthermore, the Company established a number of internal environmental
guidelines which are stricter than those provided by the authority. In case
any occasional non-compliance may take place, Matsushita takes immediate and
appropriate actions to meet the regulatory requirements and to ensure
current good utilization standards.                                               
|
| |  | For fiscal 2002, the Company will make a capital investment of approximately
420 billion yen, for the purpose of production of new products and
enhancement of production capacity and efficiency with a focus on such areas
as (digital) AV and information and communications equipment (approximately
115 billion yen), and electronic components and devices including
semiconductors, LCD panels and PDPs (approximately 265 billion yen).                                                                                                 
|
| |  | The investments stated above will be funded mainly through internal sources.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    






Item 5.    Operating and Financial Review and Prospects






|A. |  | Operating Results                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | During the three year period ended March 31, 2001 (fiscal 1999, fiscal
2000 and fiscal 2001), the corporate business environment
surrounding Matsushita remained generally sluggish. In fiscal 1999,
economic growth in Japan slowed, with a 0.6% decrease in real Gross Domestic
Product (GDP), reflecting lowered corporate capital investment and consumer
spending. In fiscal 2000, the Japanese economy began to show a moderate
recovery, owing to government economic stimulus packages and a surge in
demand for information technologies (IT), which resulted in a 1.4% increase
in real GDP. The recovery continued through fiscal 2001, especially in the
first half, led by IT-related corporate capital investment. In the second
half of fiscal 2001, however, economic growth in Japan slowed once again due
to continued sluggish consumer spending and moderating export growth. As a
result, Japans GDP grew only an estimated 0.9% in real terms during fiscal
2001.



---



##### Table of Contents



- 21 -



| |  | For most of the three-year period, economic conditions were generally
favorable in many regions of the world outside Japan, led by the United
States economy. From around the middle of fiscal 2001, however, U.S.
economic growth began to slow down, coinciding with setbacks in the global
IT industry, which had previously enjoyed rapid growth in demand centered on
personal computers (PCs) and cellular phones. These conditions are
currently having negative effects on Asian and European economies, as well
as the IT and related electronic equipment and components industries around
the world.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Also during the period, survival for certain enterprises became difficult
and global competition intensified, which, together with sluggish consumer
spending, triggered a deflationary trend in Japan. The consumer price index
in Japan rose 0.2% in fiscal 1999, but declined 0.5% in fiscal 2000 and
declined 0.5% again in fiscal 2001. This deflationary trend was also
reflected in Matsushitas product prices, thereby putting pressure on
earnings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Foreign currency exchange rates were volatile during the three-year period,
with the Japanese yen generally strengthening against such major currencies
as the U.S. dollar and the euro through the middle of fiscal 2001 and
somewhat weakening thereafter (See Section A of Item 3). In order to
alleviate the effects of currency-related transaction risk, Matsushita has
traditionally used several currency risk hedging methods, such as forward
foreign-exchange contracts and currency options contracts with leading
banks. Matsushita has also implemented matching of exports and imports
exchange contracts. As a basic countermeasure against currency exchange
risk, the Company has been strengthening production operations outside Japan
to meet overseas demand, while reducing dependence on exports. The Company
does not have any material unhedged monetary assets, liabilities, or
commitments denominated in currencies other than the operations functional
currency. The strengthening of the yen has had an adverse affect on
Matsushitas financial results, as explained in more detail in the following
paragraphs.
|
| |  | During the period, Matsushita directed companywide efforts toward building a
solid foundation for future growth under its four-year Progress 2000 Plan
from fiscal 1998 through fiscal 2001. Under the plan, the Company
implemented a number of business reforms, including the introduction of the
internal divisional company system and the selection and strengthening of
strategic areas to concentrate resources. As a result, Matsushitas five
priority businesses, including, among others, digital television systems,
semiconductors and mobile communications equipment have come to play an
essential role in the operations of the Company. In April 2001, Matsushita
implemented a new mid-term plan, Value Creation 21, centered on various
restructuring and growth strategies, as explained in more detail in Section
D of this Item 5.                                                                                                                                                                                                                                                                                         
|
| |  | Matsushitas consolidated sales and earnings results during the last three
fiscal years, reflecting all of the aforementioned external and internal
conditions, can be summarized as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | In fiscal 1999, net sales decreased 3.2% to 7,640 billion yen, mainly
reflecting the sluggish Japanese economy and, outside Japan, the lingering
economic conditions in such regions as Southeast Asia and the Commonwealth
of Independent States (CIS), both of which suffered in the aftermath of the
currency-related turmoil. Net income dropped 85.5% to 14 billion yen,
primarily because of decreased sales and price declines due to intensified
worldwide competition. The net income decrease was further exacerbated by
the negative effect of 42 billion yen in adjustments of net deferred tax
assets reflecting a reduction in Japans corporate income tax rate. Without
the effects of these adjustments, net income for fiscal 1999 would have
decreased 47.7%.                                                                                                                                                                                                                                                                                                                                                                   



---



##### Table of Contents



- 22 -



| |  | In fiscal 2000, net sales decreased 4.5% to 7,299 billion yen, mainly
attributable to sluggish demand in Japan due to continued weak consumer
spending, intense global price competition and yen appreciation. Net income
totaled 100 billion yen increasing 636.3% over the previous year. Increased
profitability in Components and improved overall efficiency could not fully
offset the negative effects of price declines and yen appreciation on
earnings. However, the significant net income increase was realized largely
due to a non-operating gain of 59 billion yen from the sale of shares of
EPCOS AG, a German electronic component manufacturing joint venture, as well
as the above mentioned adjustments in net deferred tax assets in the
previous year, which were not incurred in fiscal 2000.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | In fiscal 2001, net sales rose 5.2% to 7,682 billion yen, due mainly to
generally favorable economic conditions in Japan and overseas, as well as
increased demand for IT-related products and components, especially in the
first half of the fiscal year. Despite the positive effect of this sales
gain and overall cost reduction and efficiency improvement efforts, net
income declined 58.4% to 42 billion yen, largely because of restructuring
expenses incurred to compensate employees in Japan subject to the new
regional-based employee remuneration system and early retirement programs,
both implemented as part of the mid-term Value Creation 21 plan. The
absence of the previous years non-operating gain from the sale of EPCOS AG
shares also adversely affected net income.                 
|
| |  | Details of operating and financial results for each of the last three fiscal
years are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

Year ended March 31, 2001 compared with 2000



|(1) |  | Sales                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Consolidated net sales for fiscal 2001 increased 5.2% to 7,682 billion yen,
from 7,299 billion yen in the previous year. The growth mainly reflected a
moderate recovery in the Japanese economy and a favorable advance in
overseas economies, along with the expansion of worldwide, IT-related
investment, although toward the end of the year external conditions led to a
sharp adverse turn with a slowdown in growth of the U.S. economy and rapidly
weakening global demand for IT-related products and components.                                                                                                                                                 
|   
|    |  | Domestic sales climbed 9.1% to 4,034 billion yen. This increase was
achieved through solid growth in industrial products, including mobile
communications equipment and factory automation (FA) equipment, as well as
components, such as general electronic components and semiconductors. A
moderate recovery in consumer products, achieved mainly by growth in digital
audiovisual (AV) equipment also contributed to the increase in domestic
sales. Overseas sales were 3,648 billion yen, up 1.3% when translated into
yen and up 5.0% on a local currency basis, with the components category
leading the way, followed by consumer products.                       
|   
|    |  | Sales by major product category were as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|    |  | Sales of consumer products increased 2.0% to 3,072 billion yen. Within this
category, sales of video and audio equipment were up 2.9% to 1,756 billion
yen. This rise was mainly owing to robust sales of color TVs and DVD
players worldwide and digital TVs and compact disc (CD) music albums in
Japan, which more than offset decreased sales of VCRs and audio equipment.
Sales of home appliances and household equipment edged up 0.8% to 1,316
billion yen, principally attributable to the market success of new products,
mainly in Japan, such as a centrifugal force washer/dryer and a cordless
rechargeable vacuum cleaner offering long continuous operation.



---



##### Table of Contents



- 23 -



|    |  | Sales of industrial products climbed 8.5% to 2,992 billion yen. In this
category, sales of information and communications equipment advanced 7.6% to
2,175 billion yen, largely owing to an expansion in mobile communications
equipment, such as cellular phones, along with steady increases in sales of
PCs and CD-R/RW drives. However, overseas sales of information and
communications equipment were down slightly, hampered by a global downturn
in the IT sector in the second half of the year. Meanwhile, sales of
industrial equipment surged 11.1% to 817 billion yen. This positive result
was mainly attributable to solid sales of FA equipment, such as
electronic-parts-mounting machines, mainly for the information and
communications industry, and car AV equipment including navigation systems,
in both domestic and overseas markets.                                                                   
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Sales of components increased 5.7% to 1,618 billion yen. This increase was
attributable to solid sales in both domestic and overseas markets, in such
lines as general electronic components, semiconductors, liquid crystal
display (LCD) devices and electric motors, mainly for mobile communications
equipment and digital AV products.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(2) |  | Other Revenues (Revenue excluding Net Sales)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|    |  | Other revenues include interest income, dividends received and other income.
Of these, interest income increased 1.8% to 44 billion yen, while dividends
received decreased 16.6% to 12 billion yen. Other income decreased 60.2% to
54 billion yen, as there was no significant gain recorded in this fiscal
year comparable to the previous years gain of 59 billion yen from the sale
of EPCOS AG shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(3) |  | Costs and Expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    |  | As net sales expanded, cost of sales increased 5.6% to 5,481 billion yen and
selling, general and administrative expenses also increased 3.2% to 2,012
billion yen. However, the ratio of these operating expenses in aggregate to
net sales declined by 0.3%, compared with the previous year, offsetting the
adverse effects of price declines and yen appreciation. Meanwhile, interest
expense also decreased 5.8% to 44 billion yen, owing to a reduction in the
Companys borrowings. However, other deductions increased 76.0% to 154
billion yen, due mainly to the aforementioned restructuring expenses,
totaling approximately 100 billion yen, associated with compensation for
domestic employees affected by the new regional-based employee remuneration
system, as well as early retirement programs in several domestic
subsidiaries. As a result, total costs and expenses increased 5.7% to 7,691
billion yen.
|   
|(4) |  | Income before Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    |  | As a result of the above factors, income before income taxes decreased 53.9%
to 101 billion yen, compared with 219 billion yen in fiscal 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(5) |  | Provision for Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    |  | Provision for income taxes amounted to 50 billion yen, compared with 137
billion yen in the previous year. Its ratio to income before income taxes
dropped to 49.5%, from 62.7% a year ago, mainly due to a lower increase in
the valuation allowance for deferred tax assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(6) |  | Minority Interests                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    |  | Minority interests increased to 22 billion yen, compared with negative 1
billion yen in fiscal 2000, reflecting the earnings improvements and
turnaround from losses of certain subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    



---



##### Table of Contents



- 24 -



|(7) |  | Equity in Earnings (Losses) of Associated Companies                                                                                                                                                                      
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Equity in earnings of associated companies decreased 25.8% to 13 billion
yen, from the previous years 17 billion yen, due mainly to decreased
earnings of several associated companies.                                 
|   
|(8) |  | Net Income                                                                                                                                                                                                               
|   
|    |  | As a result of all the factors stated in the preceding paragraphs, net
income for fiscal 2001 decreased 58.4% to 42 billion yen. Net income as a
percentage of net sales declined to 0.5%, compared with 1.4% a year ago.

Year ended March 31, 2000 compared with 1999



|(1) |  | Sales                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Consolidated net sales for fiscal 2000 decreased 4.5% to 7,299 billion yen,
from 7,640 billion yen in the previous year. The decrease was mainly
attributable to sluggish demand in Japan, intense global price competition,
and yen appreciation, which negatively affected overseas sales when
translated into yen.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    |  | Domestic sales were 3,698 billion yen, down 1.4% from the previous year.
Although domestic sales of consumer products continued to be impacted by
sluggish consumer spending in Japan, sales of industrial products and
components increased year on year. Overseas sales on a local currency basis
increased 3.4% as local-currency based sales grew in all major markets.
However, due to the appreciation of the yen, sales when translated into yen
dropped 7.4% to 3,601 billion yen.                                                                                                                                                                                                                                                                                                                                                                                         
|   
|    |  | Sales by major product category were as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    |  | Sales of consumer products totaled 3,012 billion yen, down 8.4% from the
previous year. Within the consumer products category, sales of video and
audio equipment fell 9.9%, to 1,706 billion yen. The drop in domestic sales
was mainly due to setbacks in sales of VCRs and TVs; however, MD and DVD
players continued to robustly grow. Overseas, sales of video and audio
equipment declined over the previous year, due mainly to the strong yen
negatively affecting sales when translated into yen. Meanwhile, sales of
home appliances and household equipment decreased 6.3%, to 1,306 billion
yen. Domestic sales in this category were down, despite increases in vacuum
cleaners and small cooking appliances. Overseas sales in all regions were
generally slow.                                                                                                      
|   
|    |  | Sales of industrial products slipped 3.8%, to 2,757 billion yen. In this
category, sales of information and communications equipment declined 6.0%,
to 2,022 billion yen. This decrease was mainly attributable to global price
declines in computer peripherals such as cathode ray tube (CRT) displays and
hard disk drives, along with the negative effect of yen appreciation.
However, sales of mobile communications equipment, such as cellular phones,
and personal computers increased over the previous year. Furthermore, sales
of industrial equipment increased 2.6%, to 735 billion yen. FA equipment,
such as electronic-parts-mounting machines rebounded from the previous
years drop, owing mainly to signs of recovery in capital investment in
Japan and Southeast Asia. Gains in this category were also driven by solid
growth in sales of car AV equipment.
|   
|    |  | Sales of components advanced to 1,530 billion yen, up 3.1% from the previous
year. The sales increase in this category was driven by favorable growth in
semiconductors, high frequency components, LCD devices and electric motors,
for use in information and communications equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          



---



##### Table of Contents



- 25 -



|(2) |  | Other Revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | In other revenues, interest income decreased 21.1% to 43 billion yen and
dividends received increased 48.7% to 15 billion yen. Other income
increased 157.9% to 136 billion yen, mainly attributable to a gain of 59
billion yen from the sale of shares of EPCOS AG.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(3) |  | Costs and Expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    |  | Companywide efforts to reduce manufacturing costs and raise overall
efficiency resulted in decreases in cost of sales and selling, general and
administrative expenses, which, however, did not fully offset the negative
effects of price declines and yen appreciation. Cost of sales totaled 5,191
billion yen, down 2.9%, while selling, general and administrative expenses
decreased 7.1% to 1,950 billion yen. Interest expense also decreased 25.5%
to 46 billion yen as the Company reduced borrowings. However, other
deductions increased 89.4% to 88 billion yen, due mainly to an impairment
loss of 20 billion yen related to the write-down of machinery and equipment
to manufacture CRTs and other components. As a result, overall costs and
expenses decreased 3.7% to 7,274 billion yen.
|   
|(4) |  | Income before Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    |  | As a result of the above factors, income before income taxes increased 8.1%
to 219 billion yen, compared with 202 billion yen in fiscal 1999.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(5) |  | Provision for Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    |  | Provision for income taxes amounted to 137 billion yen, versus 164 billion
yen a year ago. Its ratio to income before income taxes declined to 62.7%
from 81.3% a year ago, mainly attributable to previous year adjustments in
net deferred tax assets and a decline in the normal tax rate in fiscal 2000.
(See Note 9 of the Notes to Consolidated Financial Statements.)                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(6) |  | Minority Interests                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    |  | Minority interests decreased to negative 1 billion yen, compared to 8
billion yen in fiscal 1999, mainly reflecting depressed earnings results in
several subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(7) |  | Equity in Earnings (Losses) of Associated Companies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|    |  | Equity in earnings (losses) of associated companies rebounded to 17 billion
yen from a loss of 5 billion yen in the prior year, due to earnings
improvements in associated companies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(8) |  | Net Income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    |  | Due to the factors stated in the preceding paragraphs, net income for fiscal
2000 grew 311.2% to 100 billion yen, compared with 24 billion yen in the
prior year. Net income as a percentage of net sales was 1.4%, compared with
0.3% in the previous year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                



---



##### Table of Contents



-26-






|B.  |  | Liquidity and Capital Resources                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) |  | Company Policy on Financial Position and Liquidity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    |  | As its basic policy, Matsushita has long placed emphasis on maintaining
sound balance sheets, and on generating as much available funding as
possible from internal sources through efforts to raise the operational
efficiency or asset turnover ratios, so as not to overly rely on external
fund raising. This conservativeness is exemplified in the tradition of
maintaining the ratio of stockholders equity to total assets at a
relatively high level and keeping a large cash balance. The ratio of
stockholders equity to total assets as of March 31, 2001 stood at 46.3%,
the same level as a year ago, and the total of short-term borrowings and
long-term debt continued to decrease to 1,090 billion yen as of March 31,
2001, from 1,111 billion yen a year ago. Cash balance (the total of cash
and cash equivalents plus time deposits with a maturity of more than three
months) also remained at the relatively high level of 1,376 billion yen as
of March 31, 2001, decreasing only slightly from the previous 1,456 billion
yen due mainly to increased capital investment and repayment of borrowings
during fiscal 2001.
|   
|    |  | With this cash balance, combined with high credit ratings from the worlds
leading credit rating agencies, Matsushita believes that it has sufficient
sources of liquidity for either working capital or long-term investment
needs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    |  | As of March 31, 2001, the outstanding balance of short-term borrowings
totaled 548 billion yen, and long-term debt was at 542 billion yen. Of the
short-term borrowings, 99 billion yen is the current portion (maturity of
less than one year) of outstanding convertible bonds. Matsushitas
borrowings are not significantly affected by seasonal factors. (For further
details, see Note 7 of the Notes to Consolidated Financial Statements.)
Most borrowings are at fixed rates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    |  | It should be noted, however, that in recent years, Matsushita has focused on
raising capital efficiency upon review of its balance sheet. As part of
this move, the Company initiated an endeavor to achieve more efficient
utilization of available cash resources held by subsidiaries and associated
companies. This is achieved by lending such cash resources to other Group
companies, as necessary, through a network of cash management systems at
financial subsidiaries located in each global region. Through this
operation, the Company is working on the reduction of both excess cash and
borrowings on a consolidated Groupwide basis, along with reducing interest
and related cost payments to outside financial institutions to help realize
a lean balance sheet.                                                                                                                                                                                                                                                                                                                                                               
|   
|    |  | Regarding the use of financial instruments for hedging purposes, see Item
11.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(2) |  | Fiscal 2001 Financial Position and Liquidity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    |  | The Companys consolidated total assets at the end of fiscal 2001 increased
to 8,156 billion yen, compared with 7,955 billion yen at the end of fiscal
2000. This rise was chiefly a result of an increase in inventories, which
reflected the setback in sales of IT-related products and components toward
the end of the fiscal year, and the negative effects of currency translation
into yen of overseas assets at year-end, along with increased capital
investment in plant and equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    |  | Stockholders equity at the end of fiscal 2001 also increased, to 3,773
billion yen, from 3,684 billion yen in the previous year. This was largely
attributable to an increase in capital surplus and the favorable effect of
the yens year-end exchange rate on cumulative translation adjustments,
despite a decrease in unrealized holding gains of available-for-sale
securities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              



---



##### Table of Contents



-27-



|    |  | The Companys capital investment (including intangibles other than goodwill)
during fiscal 2001 totaled 531 billion yen, an increase from the previous
years figure of 355 billion yen. This was due mainly to expanded plant and
equipment investment in Components, such as semiconductors and LCD devices.
Of the total capital investment, investment in Components increased by 158
billion yen, to 337 billion yen. Depreciation during the year edged up, to
345 billion yen, compared with 343 billion yen in the previous year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Net cash provided by operating activities in fiscal 2001 amounted to 393
billion yen, compared with 476 billion yen in the previous fiscal year.
This reduction was primarily attributable to a decrease in net income and
increases in trade receivables and inventories that were greater than the
decrease in net gain on sale of investments. Net cash used in investing
activities amounted to 583 billion yen, compared with 604 billion yen in
fiscal 2000, chiefly owing to an investment decrease in time deposits, which
offset an increase in capital expenditures. Net cash used in financing
activities fell to 113 billion yen, from 216 billion yen a year ago, mainly
due to a decrease in repayment of short-term borrowings compared with fiscal
2000. All these activities, compounded by the effect of exchange rate
changes, resulted in a net decrease of 267 billion yen in cash and cash
equivalents during fiscal 2001. Cash and cash equivalents at the end of
fiscal 2001 totaled 849 billion yen, compared with 1,116 billion yen a year
ago. These are primarily held in yen (70%) and U.S. dollars (14%).
|   
|(3) |  | Commitments for Capital Expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    |  | As of March 31, 2001, commitments outstanding for the purchases of property,
plant and equipment approximated 50 billion yen.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          






|C. |  | Research and Development                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Matsushita considers research and development (R&D) to be a key factor in
its success and essential to the achievement of its corporate theme: to
provide the utmost satisfaction to customers throughout the world through
differentiated products and services and to contribute to the progress and
happiness of mankind. Under this theme, the Company has been committed to
R&D that creates next generation businesses, while at the same time
supporting todays and tomorrows products and businesses.
|  
|   |  | Recognizing also that R&D is an essential factor in enhancing the Companys
competitiveness within an increasingly competitive environment, particularly
in the electronics industry, Matsushita has increased its R&D investment in
recent years. R&D expenditures for the last three fiscal years are as
follows:                                                                                                                                                                                              
|  
|   |  | Total expenditures for research and development amounted to 500 billion yen,
526 billion yen and 544 billion yen for the three fiscal years ended March
31, 1999, 2000 and 2001, respectively, representing 6.5%, 7.2% and 7.1% of
Matsushitas total net sales for each of those periods.                                                                                                                                                                                                                       



---



##### Table of Contents



-28-



| |  | The main focus of Matsushitas R&D activities has been increasingly directed
to digital networks and environment & energy, which also support the
Companys five areas of expected growth, namely digital broadcasting
systems, mobile communications, semiconductors, data storage devices and
display devices. In order to speedily address these themes, Matsushita
categorized R&D activities into four main technological areas: multimedia
software, devices and environment- and energy-related technologies,
semiconductors, and production engineering and quality control.
Furthermore, Matsushita increased communication and collaboration between
corporate R&D centers and divisional technology divisions across various
product areas. This strategic approach has enabled Matsushita to launch
several product firsts onto the market while at the same time forming the
base for the creation of new growth businesses. The Company has also worked
on the expansion of its global R&D networks, establishing a number of R&D
centers in North America, Europe and Asia. A new R&D facility was also
established in China for the development of digital network-related
technology.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------






|D. |  | Trend Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | As previously mentioned, during the second half of fiscal 2001, slowdowns in
the growth of the U.S. economy became apparent, and are currently having
negative effects on Asian and European economies. At the same time, sharp
setbacks occurred in the global IT industry, affecting, in particular, PCs
and cellular phones. Meanwhile, growing uncertainty has also been mounting
about the outlook for the Japanese economy, as it took a negative turn,
posting a minus 0.8% growth rate year-on-year in real GDP during the three
months from January to March 2001, according to a governments flash report.                                                                        
|  
|   |  | These conditions had negative effects on Matsushitas business operations
over the most recent several months. Within the major product categories,
negative effects are being felt in cellular phones and PC-related products,
as well as components and devices and FA equipment. Specifically,
components and devices and FA equipment are suffering from substantially
reduced orders from the global IT industry, high inventories and declining
prices, along with increased depreciation costs from increased capital
investment in the previous fiscal year.                                                                                                                         
|  
|   |  | The consumer products area is also suffering, due to the negative effects of
slow consumer spending and a reverse effect of temporary advance consumer
purchases prior to the enactment in April 2001 of a new home appliance
recycling law in Japan, as well as weak overseas demand reflecting the U.S.
and other regions economic slowdowns.                                                                                                                                                                                                                                                                                                                                             
|  
|   |  | These severe conditions have caused decreases in Matsushitas sales in a
number of product areas, with significant negative impact on earnings in
recent months. For fiscal 2002, the Company currently foresees possible pretax and net
losses for the first quarter, with a severe earnings environment
continuing through the first half of the year.                                                                                                                                                                                                                                                                                                                                     
|  
|   |  | As part of the Companys efforts to counter the effects of the above
mentioned severe conditions, Matsushita is considering the implementation,
during fiscal 2002, of an early retirement program in the parent company and
several domestic subsidiaries, following a similar program implemented in
certain domestic subsidiaries in fiscal 2001. Although details have not
been solidified, the program would include one-time special retirement
allowances for employees who choose early retirement. At this point, the
Company is unable to estimate the total amount of such allowances, since the
amount depends on the number and seniority of employees who apply to the
program.



---



##### Table of Contents



-29-



| |  | Meanwhile, after several months of preparatory work, Matsushita implemented
the Value Creation 21 plan, which aims at transforming Matsushita into a
company that meets the needs of the 21st century through structural reforms
and new growth strategies with emphasis on enhancing growth potential,
profitability and capital efficiency.                                                                                                                                                                                                                                                                                                                                                    
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | As part of the planned reforms, Matsushita reorganized, in April 2001, its
domestic consumer sales and distribution structure with the aim of creating
a new simplified and efficient sales organization that can quickly respond
to market changes.                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | Matsushita is also taking several other bold steps to reform its
organizational structure. While the corporate headquarters organization has
been made leaner for delegation of more authority to the operational fronts,
several divisional companies and subsidiaries have combined two or more
product divisions into larger-scale groups as necessary, along with the
establishment of several manufacturing centers beyond the traditional
divisional borders to achieve optimum operational efficiency and resource
allocation. A number of personnel-related reforms, including those
mentioned earlier, aim at optimum utilization of human resources and the
reduction of fixed costs.
|
| |  | The evolution of a digital networking society presents Matsushita with
significant business opportunities. Responding to this, the Company, in its
Value Creation 21 plan, has centered its growth strategy on the creation of
home networking and mobile networking environments, setting the five areas
of expected growth: digital broadcasting systems, mobile communications,
semiconductors, data storage devices and display devices. At the same time,
Matsushita is also focusing resources on the development of new
service-oriented businesses, such as systems solutions and e-Net business,
over the next several years.                                                           
|
| |  | The Company currently expects that some positive effects of the Value
Creation 21 plan will begin to arise later in the current fiscal year. At
present, the recovery period of the external environment cannot be
predicted.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    






|E. |  | New Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities. In June 2000, FASB also
issued SFAS No. 138, Accounting for Certain Derivative Instruments and
Certain Hedging Activities, an amendment of SFAS No. 133. Both Statements
establish accounting and reporting standards for derivative instruments and
for hedging activities, and require that an entity recognize all derivatives
as either assets or liabilities in the balance sheet and measure those
instruments at fair value. Changes in the fair value of derivatives are
recorded each period in current earnings or other comprehensive income
(loss), depending on whether a derivative is designated as part of a hedge
transaction and the type of hedge transaction. The ineffective portion of
all hedges will be recognized in earnings. SFAS No. 133 and SFAS No. 138
are applicable for the fiscal year beginning April 1, 2001. The cumulative
effect adjustment upon the adoption of SFAS No. 133 and SFAS No. 138 was not
significant.



---



##### Table of Contents



-30-






|F. |  | Information by Segment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In accordance with the ministerial disclosure requirements under the
Securities and Exchange Law of Japan, the Company has reported sales,
operating profit, identifiable assets, depreciation and capital investment
by business segment and also has reported sales, operating profit and
identifiable assets by geographical location of companies. Business
segments correspond to categories of activity classified primarily by
markets and products. Consumer products includes video and audio
equipment, as well as home appliances and household equipment. Industrial
products includes information and communications equipment and industrial
equipment. Components includes electronic components, semiconductors,
motors and batteries.



---



##### Table of Contents



-31-



| |  | Information by segment for fiscal 2001 and 2000 is shown in the tables
below:
| |  | -----------------------------------------------------------------------------
|
| |  | By Business Segment:                                                         

|                                                                                                  |                            |              |  |                    |       |                |       |       |       |  |       | 
|------------------------------------------------------------------------------------------------- | -------------------------- | ------------ |  | ------------------ | ----- | -------------- | ----- | ----- | ----- |  | ----- | 
|                                                                                                  |                            |              |  |                    |       | Yen (billions)
|                                                                                                  |                            |              |  |                    |       |               
|                                                                                                  |                            |              |  |                    |       | 2001           |       | 2000 
|                                                                                                  |                            |              |  |                    |       |                |       |      
|Sales:                                                                                           
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Consumer products:        
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  |                            | Customers    |  |                    | 3,072 |                |       |       | 3,012 | 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  |                            | Intersegment |  |                    | 4     |                |       |       | 7     | 
|                                                                                                  |                            |              |  |                    |       |                |       |      
|                                                                                                  |                            |              |  | Total              |       |                | 3,076 |       |       |  | 3,019 | 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Industrial products:      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  |                            | Customers    |  |                    | 2,992 |                |       |       | 2,757 | 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  |                            | Intersegment |  |                    | 7     |                |       |       | 9     | 
|                                                                                                  |                            |              |  |                    |       |                |       |      
|                                                                                                  |                            |              |  | Total              |       |                | 2,999 |       |       |  | 2,766 | 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Components:               
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  |                            | Customers    |  |                    | 1,618 |                |       |       | 1,530 | 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  |                            | Intersegment |  |                    | 860   |                |       |       | 828   | 
|                                                                                                  |                            |              |  |                    |       |                |       |      
|                                                                                                  |                            |              |  | Total              |       |                | 2,478 |       |       |  | 2,358 | 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Eliminations               |              |  | (871               | )     |                |       | (844  | )    
|                                                                                                  |                            |              |  |                    |       |                |       |      
|                                                                                                  |                            |              |  | Consolidated total |       |                | 7,682 |       |       |  | 7,299 | 
|                                                                                                  |                            |              |  |                    |       |                |       |      
|                                                                                                 
|Operating profit (net sales less cost of sales and
selling,
general and administrative expenses):
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Consumer products          |              |  | 40                 |       |                |       | 34    |      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Industrial products        |              |  | 136                |       |                |       | 130   |      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Components                 |              |  | 89                 |       |                |       | 66    |      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Corporate and eliminations |              |  | (77                | )     |                |       | (71   | )    
|                                                                                                  |                            |              |  |                    |       |                |       |      
|                                                                                                  |                            |              |  | Consolidated total |       |                | 188   |       |       |  | 159   | 
|                                                                                                  |                            |              |  |                    |       |                |       |      
|Identifiable assets:                                                                             
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Consumer products          |              |  | 2,247              |       |                |       | 2,221 |      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Industrial products        |              |  | 1,973              |       |                |       | 1,942 |      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Components                 |              |  | 1,961              |       |                |       | 1,681 |      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Corporate and eliminations |              |  | 1,975              |       |                |       | 1,843 |      
|                                                                                                  |                            |              |  |                    |       |                |       |      
|                                                                                                  |                            |              |  | Consolidated total |       |                | 8,156 |       |       |  | 7,687 | 
|                                                                                                  |                            |              |  |                    |       |                |       |      
|Depreciation (including intangibles other than goodwill)*:                                       
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Consumer products          |              |  | 68                 |       |                |       | 76    |      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Industrial products        |              |  | 85                 |       |                |       | 86    |      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Components                 |              |  | 190                |       |                |       | 177   |      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Corporate and eliminations |              |  | 10                 |       |                |       | 10    |      
|                                                                                                  |                            |              |  |                    |       |                |       |      
|                                                                                                  |                            |              |  | Consolidated total |       |                | 353   |       |       |  | 349   | 
|                                                                                                  |                            |              |  |                    |       |                |       |      
|Capital investment (including intangibles other than
goodwill)*:                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Consumer products          |              |  | 82                 |       |                |       | 72    |      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Industrial products        |              |  | 98                 |       |                |       | 92    |      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Components                 |              |  | 337                |       |                |       | 179   |      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Corporate and eliminations |              |  | 14                 |       |                |       | 12    |      
|                                                                                                  |                            |              |  |                    |       |                |       |      
|                                                                                                  |                            |              |  | Consolidated total |       |                | 531   |       |       |  | 355   | 
|                                                                                                  |                            |              |  |                    |       |                |       |      



|* |  | Intangibles mainly represent patents, software and rights to public
facilities.
|- |  | -------------------------------------------------------------------------------



---



##### Table of Contents



-32-



| |  | By Geographical Location of Companies:
| |  | --------------------------------------

|                                                                                                  |                            |              |                    |        |       |                |  |        |       |       |  | 
|------------------------------------------------------------------------------------------------- | -------------------------- | ------------ | ------------------ | ------ | ----- | -------------- |  | ------ | ----- | ----- |  | 
|                                                                                                  |                            |              |                    |        |       | Yen (billions)
|                                                                                                  |                            |              |                    |        |       |               
|                                                                                                  |                            |              |                    |        |       | 2001           |  | 2000  
|                                                                                                  |                            |              |                    |        |       |                |  |       
|Sales:                                                                                           
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Japan:                    
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  |                            | Customers    |                    |        | 4,982 |                |  |        | 4,706 |      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  |                            | Intersegment |                    |        | 1,205 |                |  |        | 1,058 |      
|                                                                                                  |                            |              |                    |        |       |                |  |       
|                                                                                                  |                            |              | Total              |        |       | 6,187          |  |        |       | 5,764 | 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | North and South America:  
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  |                            | Customers    |                    |        | 1,149 |                |  |        | 1,084 |      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  |                            | Intersegment |                    |        | 30    |                |  |        | 31    |      
|                                                                                                  |                            |              |                    |        |       |                |  |       
|                                                                                                  |                            |              | Total              |        |       | 1,179          |  |        |       | 1,115 | 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Europe:                   
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  |                            | Customers    |                    |        | 623   |                |  |        | 670   |      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  |                            | Intersegment |                    |        | 31    |                |  |        | 26    |      
|                                                                                                  |                            |              |                    |        |       |                |  |       
|                                                                                                  |                            |              | Total              |        |       | 654            |  |        |       | 696   | 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Asia and Others:          
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  |                            | Customers    |                    |        | 928   |                |  |        | 839   |      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  |                            | Intersegment |                    |        | 580   |                |  |        | 462   |      
|                                                                                                  |                            |              |                    |        |       |                |  |       
|                                                                                                  |                            |              | Total              |        |       | 1,508          |  |        |       | 1,301 | 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Eliminations               |              |                    | (1,846 | )     |                |  | (1,577 | )    
|                                                                                                  |                            |              |                    |        |       |                |  |       
|                                                                                                  |                            |              | Consolidated total |        |       | 7,682          |  |        |       | 7,299 | 
|                                                                                                  |                            |              |                    |        |       |                |  |       
|                                                                                                 
|Operating profit (net sales less cost of
sales and selling, general and
administrative expenses):
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Japan                      |              |                    | 214    |       |                |  | 166    |      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | North and South America    |              |                    | 11     |       |                |  | 15     |      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Europe                     |              |                    | (6     | )     |                |  | (2     | )    
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Asia and Others            |              |                    | 44     |       |                |  | 44     |      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Corporate and eliminations |              |                    | (75    | )     |                |  | (64    | )    
|                                                                                                  |                            |              |                    |        |       |                |  |       
|                                                                                                  |                            |              | Consolidated total |        |       | 188            |  |        |       | 159   | 
|                                                                                                  |                            |              |                    |        |       |                |  |       
|Identifiable assets:                                                                             
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Japan                      |              |                    | 4,687  |       |                |  | 4,633  |      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | North and South America    |              |                    | 546    |       |                |  | 479    |      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Europe                     |              |                    | 345    |       |                |  | 292    |      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Asia and Others            |              |                    | 749    |       |                |  | 639    |      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Corporate and eliminations |              |                    | 1,829  |       |                |  | 1,644  |      
|                                                                                                  |                            |              |                    |        |       |                |  |       
|                                                                                                  |                            |              | Consolidated total |        |       | 8,156          |  |        |       | 7,687 | 
|                                                                                                  |                            |              |                    |        |       |                |  |       

|       |    |                                                                                                                                                                                                                | 
|------ | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Notes: | 1. | Corporate expenses include certain corporate R&D expenditures and
general corporate expenses.                                                                                                                 
|      
|       | 2. | Corporate assets consist of cash and cash
equivalents, time deposits, marketable securities in short-term
investments, investments and advances and other assets related
to unallocated expenses.             
|      
|       | 3. | Beginning in fiscal 2001, the Company adopted SFAS
No. 115, Accounting for Certain Investments in Debt and Equity
Securities, and accordingly, prior year figures have been
restated to reflect this change.



---



##### Table of Contents



-33-




Item 6.    Directors, Senior Management and
Employees






|A. |  | Directors and Senior Management                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Articles of Incorporation of the Company provide that the number of
Directors of the Company shall be three or more and that of Corporate
Auditors shall be three or more. Directors and Corporate Auditors shall be
elected by the general meeting of shareholders. The Board of Directors has
ultimate responsibility for administration of the Companys affairs.
Directors may, by resolution of the Board of Directors, appoint a Chairman
of the Board of Directors, a Vice Chairman of the Board of Directors, a
President and Director, and one or more Executive Vice Presidents and
Directors, Senior Managing Directors, and Managing Directors. The Chairman
of the Board of Directors, Vice Chairman of the Board of Directors,
President and Director, Executive Vice Presidents and Directors, Senior
Managing Directors, and Managing Directors are Representative Directors and
severally represent the Company. The term of office of Directors shall
expire at the conclusion of the ordinary general meeting of shareholders
with respect to the last closing of accounts within two years from their
assumption of office, and in the case of Corporate Auditors, within three
years from their assumption of office. However, they may serve any number
of consecutive terms.
|  
|   |  | The Corporate Auditors of the Company are not required to be and are not
certified public accountants. However, at least one of the Corporate
Auditors should be a person who has not been a director, general manager or
employee of the Company or any of its subsidiaries during the five-year
period prior to his election as a Corporate Auditor. Each Corporate Auditor
has the statutory duty to examine the financial statements and business
reports to be submitted by the Board of Directors at the general meeting of
shareholders and also to supervise the administration by the Directors of
the Companys affairs. They are entitled to participate in meetings of the
Board of Directors but are not entitled to vote.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   |  | The Corporate Auditors constitute the Board of Corporate Auditors. The
Board of Corporate Auditors has a statutory duty to prepare and submit its
audit report to the Board of Directors each year. A Corporate Auditor may
note his opinion in the audit report if his opinion is different from the
opinion expressed in the audit report. The Board of Corporate Auditors is
empowered to establish audit principles, methods of examination by the
Corporate Auditors of the Companys affairs and financial position and other
matters concerning the performance of the Corporate Auditors duties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |  | The Corporate Auditors may not at the same time be Directors, managers or
employees of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|   |  | Set forth below are the names of Directors and Corporate Auditors after the
ordinary general meeting of shareholders held on June 28, 2001, their dates
of birth, positions and responsibilities with Matsushita Electric Industrial
Co., Ltd., and their brief personal records.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

|                 |  |                                                            
|---------------- |  | -----------------------------------------------------------
|                
|Name             |  | Position, responsibilities and brief personal record       
|                 |  |                                                            
|(Date of birth) 
|                
|Yoichi Morishita |  | Chairman of the Board of Directors  since June 2000       
|                
|                
|                
|                
|(Jun. 23, 1934)  |  | -1987 Director of the Company;                             
|                
|                
|                
|                
|                 |  | -1992 Executive Vice President and Director of the Company;
|                
|                
|                
|                
|                 |  | -1993 President and Director of the Company.               



---



##### Table of Contents



-34-

|                    |  |                                                                                                                                                                                                                                                
|------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                   
|Name                |  | Position, responsibilities and brief personal record                                                                                                                                                                                           
|                    |  |                                                                                                                                                                                                                                                
|(Date of birth)    
|                   
|Masayuki Matsushita |  | Vice Chairman of the Board of Directors  since June 2000                                                                                                                                                                                      
|                   
|                   
|                   
|                   
|(Oct. 16, 1945)     |  | -1986 Director of the Company;                                                                                                                                                                                                                 
|                   
|                   
|                   
|                   
|                    |  | -1992 Senior Managing Director of the Company;                                                                                                                                                                                                 
|                   
|                   
|                   
|                   
|                    |  | -1996 Executive Vice President and Director of the Company.                                                                                                                                                                                    
|                   
|Kunio Nakamura      |  | President and Director  since June 2000                                                                                                                                                                                                       
|                   
|                   
|                   
|                   
|(Jul. 5, 1939)      |  | -1993 Director of the Company, and Director of Corporate
Management Division for the Americas;                                                                                                                                                 
|                   
|                   
|                   
|                   
|                    |  | -1996 Managing Director of the Company;                                                                                                                                                                                                        
|                   
|                   
|                   
|                   
|                    |  | -1997 Senior Managing Director of the Company, and
President of AVC Company.                                                                                                                                                                   
|                   
|Kazuhiko Sugiyama   |  | Executive Vice President and Director  since June 1996                                                                                                                                                                                        
|                   
|                   
|                   
|                   
|(Jan. 19, 1937)     |  | Tokyo Representative, and in charge of Systems Sales,
Electrical Supplies Sales and Advertising.                                                                                                                                               
|                   
|                   
|                   
|                   
|                    |  | -1989 Director of the Company (resigned in June 1993);                                                                                                                                                                                         
|                   
|                   
|                   
|                   
|                    |  | -1993 President of Matsushita Electronics Corporation.                                                                                                                                                                                         
|                   
|Atsushi Murayama    |  | Executive Vice President and Director  since June 2000                                                                                                                                                                                        
|                   
|                   
|                   
|                   
|(Mar. 29, 1938)     |  | In charge of Planning, Personnel and General Affairs.                                                                                                                                                                                          
|                   
|                   
|                   
|                   
|                    |  | -1995 Director of the Company;                                                                                                                                                                                                                 
|                   
|                   
|                   
|                   
|                    |  | -1998 Senior Managing Director of the Company.                                                                                                                                                                                                 
|                   
|Takashi Kawada      |  | Executive Vice President and Director  since June 2001                                                                                                                                                                                        
|                   
|                   
|                   
|                   
|(Mar. 13, 1937)     |  | In charge of Communications and Automotive Electronics
Business.                                                                                                                                                                               
|                   
|                   
|                   
|                   
|                    |  | -1989 Director of Matsushita Communication Industrial Co.,
Ltd. (MCI);                                                                                                                                                                         
|                   
|                   
|                   
|                   
|                    |  | -1993 President of MCI.                                                                                                                                                                                                                        
|                   
|Kazuo Toda          |  | Senior Managing Director  since June 1999                                                                                                                                                                                                     
|                   
|                   
|                   
|                   
|(Feb. 13, 1941)     |  | President of AVC Company, Director of Corporate Marketing
Division for Panasonic Brand, and in charge of Storage
Device Business.                                                                                                              
|                   
|                   
|                   
|                   
|                    |  | -1994 Director of the Company, and in charge of Home
Appliance Business;                                                                                                                                                                       
|                   
|                   
|                   
|                   
|                    |  | -1997 President of Home Appliance & Housing Electronics
Company.                                                                                                                                                                               
|                   
|Osamu Tanaka        |  | Senior Managing Director  since June 1999                                                                                                                                                                                                     
|                   
|                   
|                   
|                   
|(Nov. 1, 1940)      |  | In charge of Corporate Consumer Products Distribution
Division, Commodity Sales, Housing Equipment Sales,
Logistics, Corporate CS Division, Corporate Credit Sales
Division, Recycling Business Promotion, and Public and
Private Institutions.
|                   
|                   
|                   
|                   
|                    |  | -1995 Director of the Company, and Director of Corporate
Consumer Sales Division;                                                                                                                                                              
|                   
|                   
|                   
|                   
|                    |  | -1997 Managing Director of the Company.                                                                                                                                                                                                        



---



##### Table of Contents



-35-

|                 |  |                                                                                                                                    
|---------------- |  | -----------------------------------------------------------------------------------------------------------------------------------
|                
|Name             |  | Position, responsibilities and brief personal record                                                                               
|                 |  |                                                                                                                                    
|(Date of birth) 
|                
|Sukeichi Miki    |  | Senior Managing Director  since June 2001                                                                                         
|                
|                
|                
|                
|(Feb. 5, 1940)   |  | In charge of Technology, Quality, Environment, Intellectual
Property, and Overseas Research Laboratories.                          
|                
|                
|                
|                
|                 |  | -1997 Director of the Company, and in charge of multimedia
technology;                                                             
|                
|                
|                
|                
|                 |  | -1999 Managing Director of the Company, and in charge of
Technology.                                                               
|                
|Yukio Shohtoku   |  | Managing Director  since June 1999                                                                                                
|                
|                
|                
|                
|(Nov. 8, 1939)   |  | In charge of Overseas Operations.                                                                                                  
|                
|                
|                
|                
|                 |  | -1993 Associate Director of Corporate Management Division
for Asia, Oceania and the Middle East;                                   
|                
|                
|                
|                
|                 |  | -1994 Director of the Company, and Director of Corporate
Management Division for China.                                            
|                
|Takami Sano      |  | Managing Director  since June 2000                                                                                                
|                
|                
|                
|                
|(Apr. 2, 1943)   |  | In charge of Industrial Sales, Semiconductor Sales, Factory
Automation Sales, and Automotive Electronics Sales.                    
|                
|                
|                
|                
|                 |  | Director of Corporate Industrial Marketing & Sales Division.                                                                       
|                
|                
|                
|                
|                 |  | -1992 Director of Matsushita Battery Industrial Co., Ltd.;                                                                         
|                
|                
|                
|                
|                 |  | -1998 Director of the Company, and Director of Corporate
Industrial Sales Division.                                                
|                
|Susumu Koike     |  | Managing Director  since June 2000                                                                                                
|                
|                
|                
|                
|(Nov. 15, 1945)  |  | President of Semiconductor Company.                                                                                                
|                
|                
|                
|                
|                 |  | -1993 Director of Matsushita Electronics Corporation;                                                                              
|                
|                
|                
|                
|                 |  | -1998 Director of the Company, and in charge of
Semiconductor Technology.                                                          
|                
|Fumio Ohtsubo    |  | Managing Director  since June 2000                                                                                                
|                
|                
|                
|                
|(Sep. 5, 1945)   |  | Senior Vice President of AVC Company, and Business Group
Executive of AVC Network Business Group.                                  
|                
|                
|                
|                
|                 |  | -1998 Director of the Company, and Vice President of AVC
Company.                                                                  
|                
|Haruo Ueno       |  | Managing Director  since June 2001                                                                                                
|                
|                
|                
|                
|(Nov. 9, 1940)   |  | Director of Corporate Legal Affairs Division.                                                                                      
|                
|                
|                
|                
|                 |  | -1965 Joined the National Police Agency (NPA);                                                                                     
|                
|                
|                
|                
|                 |  | -1994 Joined the Company as Advisor;                                                                                               
|                
|                
|                
|                
|                 |  | -1998 Director of the Company, and Director of Corporate
Legal Affairs Division.                                                   
|                
|Hidetsugu Otsuru |  | Managing Director  since June 2001                                                                                                
|                
|                
|                
|                
|(Aug. 20, 1943)  |  | President of Display Device Company.                                                                                               
|                
|                
|                
|                
|                 |  | -1998 Director of the Company, and in charge of Corporate
Quality Administration Division and Purchasing
Administration Department;
|                
|                
|                
|                
|                 |  | -1999 President of Matsushita Electronics Corporation.                                                                             



---



##### Table of Contents



-36-

|                 |  |                                                                                                                                                                 
|---------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|                
|Name             |  | Position, responsibilities and brief personal record                                                                                                            
|                 |  |                                                                                                                                                                 
|(Date of birth) 
|                
|Yoshiaki Kushiki |  | Managing Director  since June 2001                                                                                                                             
|                
|                
|                
|                
|(Jan. 17, 1946)  |  | In charge of Multimedia Technology.                                                                                                                             
|                
|                
|                
|                
|                 |  | Director of Multimedia Development Center, and Director of                                                                                                      
|                
|                
|                
|                
|                 |  | Corporate Software Development Division.                                                                                                                        
|                
|                
|                
|                
|                 |  | -1997 Director of Multimedia Development Center;                                                                                                                
|                
|                
|                
|                
|                 |  | -1999 Director of the Company, and in charge of multimedia
  technology.                                                                                        
|                
|Josei Ito        |  | Director  since June 1994                                                                                                                                      
|                
|                
|                
|                
|(May 25, 1929)   |  | (Chairman of the Board of Nippon Life Insurance Co.)                                                                                                            
|                
|                
|                
|                
|                 |  | -1989 President of Nippon Life Insurance Co.;                                                                                                                   
|                
|                
|                
|                
|                 |  | -1997 Chairman of the Board of Nippon Life Insurance Co.                                                                                                        
|                
|Toshio Morikawa  |  | Director  since June 2000                                                                                                                                      
|                
|                
|                
|                
|(Mar. 3, 1933)   |  | (Executive Advisor of Sumitomo Mitsui Banking Corporation)                                                                                                      
|                
|                
|                
|                
|                 |  | -1997 Chairman of the Board of The Sumitomo Bank, Ltd.;                                                                                                         
|                
|                
|                
|                
|                 |  | -2001 Executive Advisor of Sumitomo Mitsui Banking
Corporation.                                                                                                 
|                
|Hiroaki Enomoto  |  | Director  since June 1996                                                                                                                                      
|                
|                
|                
|                
|(Nov. 3, 1942)   |  | Director of Tokyo Branch, and in charge of Public and
Private Institutions.                                                                                     
|                
|                
|                
|                
|                 |  | -1965 Joined the Ministry of International Trade & Industry
(MITI);                                                                                             
|                
|                
|                
|                
|                 |  | -1995 Joined the Company as Corporate Advisor;                                                                                                                  
|                
|                
|                
|                
|                 |  | -1998 Director of Tokyo Branch office, and in charge of
Public and Private Institutions.                                                                        
|                
|Toshio Sugiura   |  | Director  since June 1997                                                                                                                                      
|                
|                
|                
|                
|(Sep. 20, 1941)  |  | Director of Corporate Management Division for China.                                                                                                            
|                
|                
|                
|                
|                 |  | -1995 President of Matsushita Electric Co., (Malaysia) Bhd.;                                                                                                    
|                
|                
|                
|                
|                 |  | -1997 President of Air-conditioner Company.                                                                                                                     
|                
|Toru Ishida      |  | Director  since June 1999                                                                                                                                      
|                
|                
|                
|                
|(Mar. 21, 1944)  |  | In charge of Device Technology, Environmental Technology.                                                                                                       
|                
|                
|                
|                
|                 |  | Director of Devices Development Center, and in charge of
Production Engineering, Recycling Process Systems Business,
Corporate Environmental Solutions Division.
|                
|                
|                
|                
|                 |  | -1995 Director of Device Engineering Development Center.                                                                                                        
|                
|Tameshige Hirata |  | Director  since June 1999                                                                                                                                      
|                
|                
|                
|                
|(Jan. 11, 1946)  |  | Director of Corporate Systems Sales Division.                                                                                                                   
|                
|                
|                
|                
|                 |  | -1998 Director of Corporate Public Systems Sales Division;                                                                                                      
|                
|                
|                
|                
|                 |  | -1999 Director of Systems Solutions Division.                                                                                                                   
|                
|Tetsuya Kawakami |  | Director  since June 2000                                                                                                                                      
|                
|                
|                
|                
|(Dec. 7, 1941)   |  | In charge of Finance and Accounting.                                                                                                                            
|                
|                
|                
|                
|                 |  | -1996 General Manager of Corporate Accounting Department.                                                                                                       



---



##### Table of Contents



-37-

|                    |  |                                                                                                                                                                               
|------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                   
|Name                |  | Position, responsibilities and brief personal record                                                                                                                          
|                    |  |                                                                                                                                                                               
|(Date of birth)    
|                   
|Hideaki Iwatani     |  | Director  since June 2000                                                                                                                                                    
|                   
|                   
|                   
|                   
|(Jul. 21, 1945)     |  | Director of Corporate Management Division for the Americas.                                                                                                                   
|                   
|                   
|                   
|                   
|                    |  | -1996 President of Panasonic Consumer Electronics Company in Matsushita Electric Corporation of America.                                                                      
|                   
|Yoshitaka Hayashi   |  | Director  since June 2000                                                                                                                                                    
|                   
|                   
|                   
|                   
|(Jun. 7, 1946)      |  | President of Home Appliance & Housing Electronics Company,
Director of Corporate Marketing Division for National Brand,
and in charge of Healthcare & Medical Business Center.
|                   
|                   
|                   
|                   
|                    |  | -1999 Vice President of Home Appliance & Housing Electronics Company.                                                                                                         
|                   
|Toshihiro Sakamoto  |  | Director  since June 2000                                                                                                                                                    
|                   
|                   
|                   
|                   
|(Oct. 27, 1946)     |  | Senior Vice President of AVC Company, Business Group
Executive of Visual Network Products Business Group.                                                                     
|                   
|                   
|                   
|                   
|                    |  | -1998 President of Matsushita Electric (Taiwan) Co., Ltd.                                                                                                                     
|                   
|Masaki Akiyama      |  | Director  since June 2001                                                                                                                                                    
|                   
|                   
|                   
|                   
|(Jun. 29, 1943)     |  | Director of Corporate Systems Solutions Division.                                                                                                                             
|                   
|                   
|                   
|                   
|                    |  | -1994 Director of Matsushita Communication Industrial Co.,
Ltd. (MCI);                                                                                                        
|                   
|                   
|                   
|                   
|                    |  | -1998 Senior Managing Director of MCI.                                                                                                                                        
|                   
|Yoichiro Maekawa    |  | Director  since June 2001                                                                                                                                                    
|                   
|                   
|                   
|                   
|(Jan. 6, 1944)      |  | Director of Corporate e-Net Business Division.                                                                                                                                
|                   
|                   
|                   
|                   
|                    |  | -1997 General Manager of Corporate Planning Office.                                                                                                                           
|                   
|Tomikazu Ise        |  | Director  since June 2001                                                                                                                                                    
|                   
|                   
|                   
|                   
|(Dec. 23, 1946)     |  | Director of Corporate Management Division for Europe.                                                                                                                         
|                   
|                   
|                   
|                   
|                    |  | -1998 President of Panasonic Deutschland GmbH;                                                                                                                                
|                   
|                   
|                   
|                   
|                    |  | -1999 President of Panasonic Marketing Europe GmbH.                                                                                                                           
|                   
|Masaharu Matsushita |  | Honorary Chairman of the Board of Directors and
Executive Advisor                                                                                                            
|                   
|                   
|                   
|                   
|(Sep. 17, 1912)     |  | since June 2000                                                                                                                                                               
|                   
|                   
|                   
|                   
|                    |  | -1947 Director of the Company;                                                                                                                                                
|                   
|                   
|                   
|                   
|                    |  | -1961 President and Director of the Company;                                                                                                                                  
|                   
|                   
|                   
|                   
|                    |  | -1977 Chairman of the Board of Directors of the Company.                                                                                                                      
|                   
|Motoi Matsuda       |  | Senior Corporate Auditor  since June 2000                                                                                                                                    
|                   
|                   
|                   
|                   
|(Feb. 11, 1937)     |  | -1993 Director of the Company, and in charge of Finance and Accounting;                                                                                                       
|                   
|                   
|                   
|                   
|                    |  | -1998 Senior Managing Director of the Company.                                                                                                                                
|                   
|Yoshitomi Nagaoka   |  | Senior Corporate Auditor  since June 2001                                                                                                                                    
|                   
|                   
|                   
|                   
|(May 31, 1941)      |  | -1996 Director of the Company, and in charge of AVC
technology;                                                                                                               
|                   
|                   
|                   
|                   
|                    |  | -1997 Vice President of AVC Company, and in charge of
Technology.                                                                                                             



---



##### Table of Contents



-38-

|                 |  |                                                                          
|---------------- |  | -------------------------------------------------------------------------
|                
|Name             |  | Position, responsibilities and brief personal record                     
|                 |  |                                                                          
|(Date of birth) 
|                
|                
|                
|                
|                
|                
|                
|                
|                
|                
|                
|                
|                
|                
|                
|                
|Toshiomi Uragami |  | Corporate Auditor  since June 2000                                      
|                
|                
|                
|                
|(Nov. 4, 1935)   |  | (Executive Advisor, Sumitomo Life Insurance Co. (effective
July 3, 2001))
|                
|                
|                
|                
|                 |  | -1997 Chairman of the Board of Sumitomo Life Insurance Co.               
|                
|Kiyosuke Imai    |  | Corporate Auditor  since June 2000                                      
|                
|                
|                
|                
|(Nov. 14, 1934)  |  | (Chairman of the Board of Matsushita Electric Works, Ltd.)               
|                
|                
|                
|                
|                 |  | -2000 Chairman of the Board of Matsushita Electric Works,
Ltd.           



| |  | There are no family relationships between any Director or Corporate Auditor
and any other Director or Corporate Auditor of the Company except as
described below: 
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Masayuki Matsushita, Vice Chairman of the Board of Directors is the son of
Masaharu Matsushita, Honorary Chairman of the Board of Directors and
Executive Advisor.






|B. |  | Compensation                                                                                                                                                                                                                                                                                                                    
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The aggregate amount of remuneration, including bonuses, paid by the Company
during fiscal 2001 to all Directors and Corporate Auditors as a group (44
persons) for services in all capacities was 1,255 million yen.                                                                                                           
|  
|   |  | In accordance with customary Japanese business practices, a retiring
Director or Corporate Auditor receives a lump-sum retirement payment, which
is subject to approval of the general meeting of shareholders. Retirement
allowances provided for Directors and Corporate Auditors for fiscal 2001
amounted to 619 million yen.
|  
|   |  | For details of the Companys stock option plan for Board members and select
senior executives, see Section E of this Item 6.                                                                                                                                                                                                    



---



##### Table of Contents



-39-






|C. |  | Board Practices              
|-- |  | -----------------------------
|  
|   |  | See Section A of this Item 6.






|D. |  | Employees                                                                                                               
|-- |  | ------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Following table lists the number of consolidated full-time employees of the
Company as of March 31, 2001, 2000 and 1999:

|           |          |  |      |         |      |  |      |         |  |  |  |         | 
|---------- | -------- |  | ---- | ------- | ---- |  | ---- | ------- |  |  |  | ------- | 
|           |          |  | 2001 |         | 2000 |  | 1999
|           |          |  |      |         |      |  |     
|Employees:
|          
|          
|          
|          
|           | Domestic |  |      | 143,162 |      |  |      | 146,675 |  |  |  | 148,524 | 
|          
|          
|          
|          
|           | Overseas |  |      | 149,628 |      |  |      | 143,773 |  |  |  | 133,629 | 
|           |          |  |      |         |      |  |      |         |  |  |  |        
|          
|           | Total    |  |      | 292,790 |      |  |      | 290,448 |  |  |  | 282,153 | 
|           |          |  |      |         |      |  |      |         |  |  |  |        



| |  | Most regular employees in Japan, except management personnel, are union
members, principally of the Matsushita Electric Industrial Workers Union,
which is affiliated with the Japanese Electrical Electronic & Information
Union.                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | As is customary in Japan, the Company negotiates annually with the unions
and grants annual wage increases and semiannual bonuses. Matsushita also
renews the terms and conditions of labor contracts, other than those
relating to wages and bonuses, every other year. In recent years, the
Company has been introducing in Japan new comprehensive employment and
personnel systems which satisfy diversified needs of employees. Such
systems include an individual performance-oriented annual salary system and
an alternative payment system under which employees can receive retirement
and fringe benefits up front as an addition to their monthly salary.
|
| |  | In fiscal 1999, Matsushita also introduced a stock-price-linked remuneration
system (effective through fiscal 2001) for its employees manager level or
above whereby a modest amount linked to the Companys stock price is paid
once a year to these employees.                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | For a quarter century, Matsushita has experienced no major labor strikes or
disputes. The Company considers its labor relations to be excellent.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     






|E. |  | Share Ownership                                                                                                                                                                                                                                          
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Share ownership of all the persons listed in above A is less than one
percent of the class. The total number of the Companys voting securities
beneficially owned by the Directors and Corporate Auditors as a group as of
March 31, 2001 is as follows:

|               |  |                                               |  |                   |  |                     |      |  
|-------------- |  | --------------------------------------------- |  | ----------------- |  | ------------------- | ---- | -
|               |  | Identity of person                            |  | Number of        
|Title of class |  | or group                                      |  | shares owned      |  | Percentage of class
|               |  |                                               |  |                   |  |                    
|              
|Common Stock   |  | Directors and
Corporate Auditors
 32 persons |  | 17,375,234
shares |  |                     | 0.83 | %



---



##### Table of Contents



-40-



| |  | As far as is known to the Company, there is no arrangement, the operation of
which may at a subsequent date result in a change in control of Matsushita.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | In May 1998, the Board of Directors decided to implement the Companys first
stock option plan for Board members and select senior executives, and to
purchase the Companys own shares for transfer to them under the plan,
pursuant to Article 210-2 of the Japanese Commercial Code. Upon approval at
the ordinary general meeting of shareholders held in June 1998 and
subsequent Board of Directors resolutions, stock options (rights to
purchase common shares) were provided to the then 32 Directors on the Board
and four select senior executives in amounts ranging from 2,000 to 10,000
common shares each, exercisable from July 1, 2000 to June 30, 2004, at an
exercise price of 2,291 yen per share, which was calculated by a formula
approved by shareholders at the said annual shareholders meeting. To cover
these options the Company in early July 1998 purchased on the Tokyo Stock
Exchange (TSE) a total of 113,000 common shares with an aggregate purchase
price of approximately 252 million yen.
|
| |  | At the ordinary general meeting of shareholders held in June 1999, the
shareholders again approved a stock option plan for Board members and select
senior executives. The then 32 Directors on the Board and four select
senior executives were granted stock options at a price of 2,476 yen per
common share, exercisable from July 1, 2001 to June 30, 2005, in amounts
ranging from 2,000 to 10,000 shares each. For this purpose, the Company in
early August 1999 purchased on the TSE a total of 116,000 common shares with
an aggregate purchase price of approximately 287 million yen.                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | In June 2000, another stock option plan for Board members and select senior
executives was approved at the ordinary general meeting of shareholders.
The then 28 Directors on the Board and five select senior executives were
granted stock options ranging from 2,000 to 10,000 shares each, at a price
of 2,815 yen per common share, exercisable from July 1, 2002 through June
30, 2006. For the stock option plan, the Company in early July 2000
purchased on the TSE a total of 109,000 common shares with an aggregate
purchase price of approximately 306 million yen.                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | In June 2001, another stock option plan for Board members and select senior
executives was approved at the ordinary general meeting of shareholders.
The current 30 Directors on the Board and nine select senior executives were
granted stock options ranging from 2,000 to 10,000 shares each, at a price
of 2,163 yen per common share, exercisable from July 1, 2003 through June
30, 2007. For the stock option plan, the Company in early July 2001
purchased on the TSE a total of 128,000 common shares with an aggregate
purchase price of approximately 250 million yen.                                                                                                                                                                                                                                                                                                                                                                                                                                              



---



##### Table of Contents



-41-




Item 7.    Major Shareholders and
Related Party Transactions






|A.  |  | Major Shareholders                                                                                                                                                                                                                                                                         
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) |  | To the knowledge of the Company, no shareholders beneficially own more
than five percent of the Companys Common Stock, which is the only class
of stock it has issued. The ten major shareholders of record and their
share holdings as of the end of the last fiscal year are as follows:

|                                                     |  |                          |        |                     |  |  |      |  
|---------------------------------------------------- |  | ------------------------ | ------ | ------------------- |  |  | ---- | -
|                                                     |  | Share
ownership          |        | Percentage of total
|Name                                                 |  | (in
thousands of shares) |        | issued shares      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  |                          |        |                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|The Sumitomo Bank, Ltd.                              |  |                          | 97,648 |                     |  |  | 4.69 | %
|                                                    
|                                                    
|                                                    
|                                                    
|Japan Trustee Services Bank, Ltd. (trust account)    |  |                          | 96,026 |                     |  |  | 4.61 |  
|                                                    
|                                                    
|                                                    
|                                                    
|Nippon Life Insurance Co.                            |  |                          | 82,188 |                     |  |  | 3.95 |  
|                                                    
|                                                    
|                                                    
|                                                    
|Sumitomo Life Insurance Co.                          |  |                          | 76,764 |                     |  |  | 3.69 |  
|                                                    
|                                                    
|                                                    
|                                                    
|Matsushita Investment & Development
Co., Ltd.        |  |                          | 55,129 |                     |  |  | 2.65 |  
|                                                    
|                                                    
|                                                    
|                                                    
|The Mitsubishi Trust and Banking Co. (trust account) |  |                          | 53,885 |                     |  |  | 2.59 |  
|                                                    
|                                                    
|                                                    
|                                                    
|Moxley & Co.                                         |  |                          | 42,085 |                     |  |  | 2.02 |  
|                                                    
|                                                    
|                                                    
|                                                    
|The Asahi Bank, Ltd.                                 |  |                          | 41,704 |                     |  |  | 2.00 |  
|                                                    
|                                                    
|                                                    
|                                                    
|The Sumitomo Marine & Fire Insurance Co.             |  |                          | 36,445 |                     |  |  | 1.75 |  
|                                                    
|                                                    
|                                                    
|                                                    
|State Street Bank & Trust Co.                        |  |                          | 31,717 |                     |  |  | 1.52 |  



| | Note: |  | On April 1, 2001, The Sumitomo Bank, Ltd. merged with The Sakura
Bank, Ltd. and became Sumitomo Mitsui Banking Corporation. Sumitomo
Mitsui Banking Corporation does not beneficially own more than five
percent of the Companys Common Stock as of April 1, 2001.
| | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | A shareholder is entitled to one vote per share subject to the limitations
on voting rights set forth in the following paragraph and (Unit share
system) Voting rights of a holder of shares representing less than one
unitbelow.After effectiveness of the 2001 Amendments to the Commercial
Code, so long as the Company continues to maintain the unit share system
thereunder, a shareholder will be entitled to one voting right for each unit
of shares that he/she holds under the unit share system. See (New unit
share system)  Voting rights under the new unit share system. Except as
otherwise provided by law or by the Companys Articles of Incorporation, a
resolution can be adopted at a general meeting of shareholders by a majority
of the shares having voting rights represented at the meeting. The
Commercial Code and the Companys Articles of Incorporation provide,
however, that the quorum for the election of Directors and Corporate
Auditors shall not be less than one-third of the total number of outstanding
shares having voting rights. The Companys shareholders are not entitled to
cumulative voting in the election of Directors. A corporate shareholder,
more than one-quarter of whose outstanding shares are directly or indirectly
owned by the Company, may not exercise its voting rights in respect of the
shares of the Company. The Company has no voting rights with respect to its
own Common Stock. Shareholders may exercise their voting rights through
proxies provided that the proxies are also shareholders holding voting
rights. The Companys shareholders also may cast their votes in writing.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---



##### Table of Contents



-42-



|    |  | The Commercial Code provides that in order to amend the Articles of
Incorporation and in certain other instances, including a reduction of the
stated capital, the removal of a Director or a Corporate Auditor,
dissolution, merger or consolidation of the Company requiring shareholders
resolutions, the transfer of the whole or an important part of the business,
the taking over of the whole of the business of any other corporation, share
exchange or share transfer requiring shareholders resolutions for the
purpose of establishing 100% parent-subsidiary relationships, any offering
of new shares at a specially favorable price (or any offering of
convertible bonds or debentures with specially favorable conversion
conditions or of bonds or debentures with warrants or rights to subscribe
for new shares with specially favorable conditions) to persons other than
shareholders, or granting to Directors and/or employees rights to subscribe
for new shares if the Articles of Incorporation so permit, the quorum shall
be a majority of the total number of shares having voting rights outstanding
and the approval of the holders of at least two-thirds of the shares having
voting rights represented at the meeting is required (the special
shareholders resolution).
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | As of March 31, 2001, approximately 8.84% of the Companys Common Stock
was owned by 247 United States shareholders of record including the ADR
Depositarys nominee, Moxley & Co., considered as one shareholder of
record, owning approximately 2.02% of the total Common Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(3) |  | Matsushita is not, directly or indirectly, owned or controlled by other
corporations or by the Japanese government or any foreign government.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(4) |  | As far as is known to the Company, there is no arrangement, the operation
of which may at a subsequent date result in a change in control of
Matsushita.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            






|B. |  | Related Party Transactions
|-- |  | --------------------------
|  
|   |  | None                      






|C. |  | Interests of Experts and Counsel
|-- |  | --------------------------------
|  
|   |  | Not applicable                  






Item 8.    Financial Information






|A.  |  | Consolidated Statements and Other Financial Information                                                                                                                                                                                                                      
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) |  | Consolidated Statements                                                                                                                                                                                                                                                      
|   
|    |  | Refer to Consolidated Financial Statements and Notes to Consolidated
Financial Statements (see Item 17).                                                                                                                                                                     
|   
|    |  | Finished goods and materials sent out of Japan are mainly bound for
consolidated subsidiaries of the Matsushita Group, and are not,
therefore, recorded as exports on a consolidated basis. For this
reason, the proportion of exports to total net sales is not
significant.



---



##### Table of Contents



-43-



|(2) |  | Legal Proceedings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | In November 1991, Loral Fairchild Corporation, a Delaware corporation,
filed two lawsuits in the United States District Court for the
District of Virginia against the Company, Matsushita Electric
Corporation of America and 36 other defendants. The suits were
consolidated. All defendants were charged with infringement of two
U.S. patents by virtue of the production abroad and sale in the United
States of certain charge coupled devices (CCDs), which are used in
products such as video cameras and facsimile machines. In December
1991, this action was transferred to the United States District Court
for the Eastern District of New York. The action seeks damages,
attorneys fees and a permanent injunction. The Company has asserted
that the patents are invalid and not infringed upon by its products
incorporating CCDs. This litigation has been bifurcated between
liability and damages and has been stayed as to all defendants except
one defendant. In a first liability trial involving this defendant, a
jury held that it infringed the two U.S. patents at issue. In July
1996, the court granted, among other things, its subsequent motion for
judgment as a matter of law, overturning the verdict. Loral Fairchild
Corporation appealed this decision to the Court of Appeals for the
Federal Circuit and oral argument was held in June 1997. In June
1999, the Federal Circuit affirmed the district courts claim
construction and its non-infringement decision.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    |  | In July 1992, Matsushita Electronics Corporation (MEC), which
manufactures CCDs, commenced a suit in the United States District
Court for the Southern District of New York seeking a declaration that
MECs CCDs and all end products incorporating MECs CCDs (collectively
products) are licensed under the two U.S. patents at issue. In
April 1993, the district court granted MECs motion for summary
judgment and ruled that the products were licensed. The Court of
Appeals for the Federal Circuit affirmed the decision in September
1994, and denied Loral Fairchilds petition for rehearing in November
1994. MECs tort claim against Loral Fairchild and its parent, Loral
Corporation, concerning certain liability issues was denied by the
District Court in August 1997. The decision has not been appealed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|    |  | Matsushita is a co-defendant in a class-action lawsuit relating to the
acquisition of MCA in 1990. Certain former stockholders of MCA who
tendered their shares to Matsushita in such acquisition brought
actions in the United States District Court for the Central District
of California claiming, in part, that the Company violated Securities
and Exchange Commission Rule 14d-10 by treating the then chairman and
chief executive officer of MCA differently than other MCA stockholders
in such acquisition. The district court denied plaintiffs motion for
summary judgment and subsequently granted Matsushitas motion for
summary judgment in 1992. The United States Court of Appeals, Ninth
Circuit, reversed, in part, finding that the Company violated Rule
14d-10 and remanded for further proceedings to determine damages. The
Company has filed a petition for a writ of certiorari with the United
States Supreme Court. In February 1996, the Court reversed, finding
that the separate class-action settlement judgment rendered by the
Delaware Supreme Court is entitled to full faith and credit even
though it released claims within the exclusive jurisdiction of the
federal courts, and remanded for proceedings consistent with the
Courts opinion. In October 1997, the Ninth Circuit further reversed,
holding that it should withhold full faith and credit from the
Delaware judgment, because, as a matter of law, plaintiffs were not
adequately represented in Delaware. The Ninth Circuit reheard the
case and, in June 1999, withdrew its 1997 opinion and affirmed the
district courts 1992 decision dismissing the action. In November
1999, the United States Supreme Court denied plaintiffs petition for
a writ of certiorari. In December 1999, the Ninth Circuit issued its
decision and mandate affirming the district courts 1992 decision. On
July 20, 2000, the Ninth Circuit issued an order clarifying that its
decision and mandate does not purport to terminate the federal actions
involving those former MCA shareholders who opted out of the Delaware
settlement. Subsequently, one of the shareholders settled with the
Matsushita defendants and one action was dismissed by the district
court as untimely filed. Currently, trial is scheduled to commence on
September 11, 2001 in the remaining actions, and an appeal is pending
in the Ninth Circuit with respect to the dismissal of the
above-mentioned action.



---



##### Table of Contents



-44-



|    |  | On December 13, 1999, certain plaintiffs moved to intervene in the
above-referenced action in order to vacate the final
settlement-judgment entered by the Delaware Court of Chancery on
February 22, 1993 and affirmed by the Delaware Supreme Court on
September 21, 1993. On August 4, 2000, the Delaware Court of Chancery
denied the motions to intervene and vacate the final
settlement-judgment. On September 13, 2000, the plaintiffs filed a
Notice of Appeal with the Delaware Supreme Court. Briefing on the
appeal by the plaintiffs is complete and oral argument before the
Delaware Supreme Court sitting en banc has been scheduled for July 24,
2001.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Management is of the opinion that, based on the information currently
available, any outcome of these actions against Matsushita will not
have a material adverse effect on Matsushitas operations or financial
position.                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    |  | There are a number of other legal actions and administrative
investigations against the Company and subsidiaries. Management is of
the opinion that damages, based on the information currently
available, if any, resulting from these actions will not have a
material effect on Matsushitas results of operations or financial
position.                                                                                                                                                                                                                                                                                                                           
|   
|(3) |  | Dividend Policy                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    |  | Maximizing benefit for shareholders has always been one of the
fundamental policies of the Company. Consistent with this policy,
Matsushita has distributed regular dividends to its shareholders on a
periodic basis. The Company has also increased dividends or
instituted stock splits on certain commemorative occasions of the
Company.                                                                                                                                                                                                                                                                                                                          
|   
|    |  | At the ordinary general meeting of shareholders held on June 28, 2001,
a year-end cash dividend per share of Matsushita Electric Industrial
Co., Ltd. was approved at the rate of 6.25 yen. The Company had
already paid an interim dividend of 6.25 yen per share to each
shareholder; accordingly the annual cash dividend per share was 12.50
yen.                                                                                                                                                                                                                                                                                                                  
|   
|    |  | Matsushita plans to utilize retained earnings for future business
growth and to strengthen the corporate management structure.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         






|B. |  | Significant Changes                                                                                                   
|-- |  | ----------------------------------------------------------------------------------------------------------------------
|  
|   |  | No significant changes have occurred since the date of the annual financial
statements included in this annual report.



---



##### Table of Contents



-45-




Item 9.    The Offer and Listing






|A. |  | Offer and Listing Details                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The primary market for the Companys Common Stock is the Tokyo Stock
Exchange (TSE). The Common Stock is traded on the First Section of the TSE
and is also listed on four other stock exchanges in Japan. In addition, the
Companys Common Stock is listed on the Amsterdam Stock Exchange in the form
of original Common Stock, on the Frankfurt Stock Exchange and Duesseldorf
Stock Exchange in the form of co-ownership shares in a Global Bearer
Certificate and on the Paris Stock Exchange in the form of original Common
Stock of the Company. In the United States, the Companys American
Depositary Shares (ADSs) have been listed on and traded in the New York
Stock Exchange (NYSE) and the Pacific Exchange in the form of American
Depositary Receipts (ADRs). There may from time to time be a differential
between the Common Stocks price on exchanges outside the United States and
the market price of ADSs in the United States. The majority of Matsushita
stock traded outside of Japan is traded on the NYSE.
|  
|   |  | ADRs were originally issued pursuant to a Deposit Agreement dated as of
April 28, 1970, as amended from time to time (Deposit Agreement), among the
Company, Morgan Guaranty Trust Company of New York as Depositary
(Depositary), and the holders of ADRs. Effective December 11, 2000,
Matsushita again revised its ADR Deposit Agreement and executed a 10:1 ADS
ratio change. As a result, one ADS now represents one share of Common Stock.
ADRs evidence ADSs deposited under the Deposit Agreement with Sumitomo
Mitsui Banking Corporation, as agent of the Depositary, or successor(s) to
such agent(s).                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   |  | The following table sets forth for the periods indicated the reported high
and low sales prices of the Companys Common Stock on the TSE, and the
reported high and low sales composite prices of the Companys ADSs on the
NYSE:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

|                           |  |                      |       |                             |  |      |       |     |  |  |       |  |  |  |       | 
|-------------------------- |  | -------------------- | ----- | --------------------------- |  | ---- | ----- | --- |  |  | ----- |  |  |  | ----- | 
|                           |  | Tokyo Stock Exchange |       | New York Stock Exchange    
|                           |  |                      |       |                            
|                           |  | Price per Share of   |       | Price per American         
|                           |  | Common Stock (yen)   |       | Depositary Share (dollars)*
|                           |  |                      |       |                            
|Fiscal Year ended March 31 |  | High                 |       | Low                         |  | High |       | Low
|                           |  |                      |       |                             |  |      |       |    
|1997                       |  |                      | 2,070 |                             |  |      | 1,670 |     |  |  | 18.75 |  |  |  | 14.33 | 
|                          
|                          
|                          
|                          
|1998                       |  |                      | 2,520 |                             |  |      | 1,750 |     |  |  | 21.00 |  |  |  | 13.59 | 
|                          
|                          
|                          
|                          
|1999                       |  |                      | 2,375 |                             |  |      | 1,640 |     |  |  | 19.34 |  |  |  | 13.00 | 
|                          
|                          
|                          
|                          
|2000                       |  |                      | 3,320 |                             |  |      | 2,050 |     |  |  | 30.30 |  |  |  | 17.48 | 
|                          
|                          
|                          
|                          
|2001                       |  |                      | 3,190 |                             |  |      | 1,932 |     |  |  | 29.90 |  |  |  | 16.30 | 



---



##### Table of Contents





|                           |  |             |       |                      |       |                             |       |     |       |  |       |  |       |  |       |  |       | 
|-------------------------- |  | ----------- | ----- | -------------------- | ----- | --------------------------- | ----- | --- | ----- |  | ----- |  | ----- |  | ----- |  | ----- | 
|                           |  |             |       | Tokyo Stock Exchange |       | New York Stock Exchange    
|                           |  |             |       |                      |       |                            
|                           |  |             |       | Price per Share of   |       | Price per American         
|                           |  |             |       | Common Stock (yen)   |       | Depositary Share (dollars)*
|                           |  |             |       |                      |       |                            
|Fiscal Year ended March 31 |  | High        |       | Low                  |       | High                        |       | Low
|                           |  |             |       |                      |       |                             |       |    
|2000                      
|                          
|                          
|                          
|                          
|                           |  | 1st quarter |       |                      | 2,520 |                             |       |     | 2,135 |  |       |  | 20.50 |  |       |  | 17.48 | 
|                          
|                          
|                          
|                          
|                           |  | 2nd quarter |       |                      | 2,980 |                             |       |     | 2,050 |  |       |  | 23.70 |  |       |  | 19.87 | 
|                          
|                          
|                          
|                          
|                           |  | 3rd quarter |       |                      | 2,915 |                             |       |     | 2,050 |  |       |  | 28.91 |  |       |  | 19.33 | 
|                          
|                          
|                          
|                          
|                           |  | 4th quarter |       |                      | 3,320 |                             |       |     | 2,640 |  |       |  | 30.30 |  |       |  | 25.00 | 
|                          
|                          
|                          
|                          
|2001                      
|                          
|                          
|                          
|                          
|                           |  | 1st quarter |       |                      | 3,070 |                             |       |     | 2,410 |  |       |  | 28.99 |  |       |  | 22.80 | 
|                          
|                          
|                          
|                          
|                           |  | 2nd quarter |       |                      | 2,995 |                             |       |     | 2,660 |  |       |  | 28.05 |  |       |  | 25.10 | 
|                          
|                          
|                          
|                          
|                           |  | 3rd quarter |       |                      | 3,190 |                             |       |     | 2,430 |  |       |  | 29.90 |  |       |  | 22.63 | 
|                          
|                          
|                          
|                          
|                           |  | 4th quarter |       |                      | 2,800 |                             |       |     | 1,932 |  |       |  | 24.81 |  |       |  | 16.30 | 
|                          
|                          
|                          
|                          
|2002                      
|                          
|                          
|                          
|                          
|                           |  | 1st quarter |       |                      | 2,360 |                             |       |     | 1,901 |  |       |  | 19.15 |  |       |  | 15.60 | 
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|Most
recent 6 months       |  | High        |       | Low                  |       | High                        |       | Low
|                           |  |             |       |                      |       |                             |       |    
|January, 2001              |  |             | 2,800 |                      |       |                             | 2,550 |     |       |  | 24.81 |  |       |  | 22.06 | 
|                          
|                          
|                          
|                          
|February, 2001             |  |             | 2,625 |                      |       |                             | 2,155 |     |       |  | 22.65 |  |       |  | 18.50 | 
|                          
|                          
|                          
|                          
|March, 2001                |  |             | 2,350 |                      |       |                             | 1,932 |     |       |  | 19.30 |  |       |  | 16.30 | 
|                          
|                          
|                          
|                          
|April, 2001                |  |             | 2,360 |                      |       |                             | 2,025 |     |       |  | 18.95 |  |       |  | 16.50 | 
|                          
|                          
|                          
|                          
|May, 2001                  |  |             | 2,340 |                      |       |                             | 2,010 |     |       |  | 19.15 |  |       |  | 16.95 | 
|                          
|                          
|                          
|                          
|June, 2001                 |  |             | 2,230 |                      |       |                             | 1,901 |     |       |  | 18.15 |  |       |  | 15.60 | 



|* |  | The prices of American Depositary Shares are based upon reports by
the NYSE, with all fractional figures rounded up to the nearest two
decimal points. The prices of ADSs, prior to the December 11, 2000 ADS
ratio change, have been restated on the current basis that each ADS
represents one share of Common Stock.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------






|B. |  | Plan of Distribution
|-- |  | --------------------
|  
|   |  | Not applicable      






|C. |  | Markets                 
|-- |  | ------------------------
|  
|   |  | See Section A of Item 9.






|D. |  | Selling Shareholders
|-- |  | --------------------
|  
|   |  | Not applicable      






|E. |  | Dilution      
|-- |  | --------------
|  
|   |  | Not applicable



---



##### Table of Contents



-47-






|F. |  | Expenses of the Issue
|-- |  | ---------------------
|  
|   |  | Not applicable       
|  






|Item 10.    Additional
Information
|----------------------------------






|A. |  | Share Capital 
|-- |  | --------------
|  
|   |  | Not applicable






|B. |  | Memorandum and Articles of Association                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Organization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   |  | The Company is a joint stock corporation (kabushiki kaisha)incorporated in
Japan under the Commercial Code (shoho)of Japan. It is registered in the
Commercial Register (shogyou tokibo)maintained by the Moriguchi Branch
Office of the Osaka Legal Affairs Bureau and several other registry offices
of the Ministry of Justice.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   |  | Objects and Purposes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   |  | Article 3 of the Articles of Incorporation of the Company provides that its
purpose is to engage in the following business activities: manufacture and
sale of electric machinery and equipment, communication and electronic
equipment, lighting equipment, gas, kerosene and kitchen equipment,
machinery and equipment for building and housing, office and transportation,
medical, health and hygienic equipment, apparatus and material, optical and
precision machinery and equipment, batteries, battery-operated products,
carbon and manganese and other chemical and metal products, air conditioning
and anti-pollution equipment, industrial machinery and equipment, and other
machinery and equipment; engineering and installation of machinery and
equipment related to any of the preceding items, engineering and performance
of and contracting for other construction work; production and sale of
software; sale of iron and steel, nonferrous metals, minerals, oil, gas,
ceramics, paper, pulp, rubber, leather, fiber and their products, foods,
beverages, liquor and other alcoholics, agricultural, livestock, dairy and
marine products, animal feed and their raw materials; manufacture and sale
of drugs, quasi-drugs, cosmetics, fertilizer, poisonous and deleterious
substance and other chemical products; sale of woods and other construction
materials and general merchandise; motion picture and musical entertainment
business and promotion of sporting events; export and import of products,
materials and software mentioned above; providing repaid and maintenance
services for the products, goods and software mentioned above for itself and
on behalf of others; provisions of information and communication services,
and broadcasting business; business related to publishing, printing,
freight, forwarding, security, maintenance of buildings, dispatch of
workers, general leasing, financing, non-life insurance agency and buying,
selling maintaining and leasing of real estate; investment in various
businesses; accepting commission for investigations, research, development
and consulting related to any of the preceding items, and all other
businesses incidental or related to any of the preceding items.



---



##### Table of Contents



-48-



| |  | Directors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Under the Commercial Code, each Director has executive powers and duties to
manage the affairs of the Company and each Representative Director, who is
elected from among the Directors by the Board of Directors, has the
statutory authority to represent the Company in all respects. Under the
Commercial Code, the Directors must refrain from engaging in any business
competing with the Company unless approved by the Board of Directors and any
Director who has a material interest in the subject matter of a resolution
to be taken by the Board of Directors cannot vote in such resolution. The
total amounts of remuneration to Directors and that to Corporate Auditors
are subject to the approval of the general meeting of shareholders. Within
such authorized amounts the Board of Directors and the Board of Corporate
Auditors respectively determine the compensation to each Director and
Corporate Auditor.                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | Except as stated below, neither the Commercial Code nor the Companys
Articles of Incorporation make special provisions as to the Directors or
Corporate Auditors power to vote in connection with their compensation; the
borrowing power exercisable by a Representative Director (or a Director who
is given power by a Representative Director to exercise such power), their
retirement age or requirement to hold any shares of capital stock of the
Company. The Commercial Code specifically requires the resolution of the
Board of Directors for a corporation to acquire or dispose of material
assets; to borrow a substantial amount of money; to employ or discharge from
employment important employees, such as corporate executive officers; and to
establish, change or abolish material corporate organization such as a
branch office. The Regulations of the Board of Directors of the Company
require a resolution of the Board of Directors for the Company to borrow a
large amount of money or to give a guarantee in a large amount. There is no
written rule as to what constitutes a large amount in these contexts.
However, it has been the general practice of the Companys Board of
Directors to adopt a resolution for a borrowing or guaranteeing in an amount
not less than 10 billion yen or its equivalent.
|
| |  | Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | Set forth below is information relating to the Companys Common Stock,
including brief summaries of the relevant provisions of the Companys
Articles of Incorporation and Share Handling Regulations, as currently in
effect, and of the Commercial Code of Japan and related legislation. The
discussion of the Commercial Code below reflects certain amendments to the
Commercial Code (the 2001 Amendments) that were promulgated on June 29,
2001, and which will come into force not later than six months from their
promulgation (the effectiveness of the 2001 Amendments).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | (Authorized capital)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Article 5 of the Articles of Incorporation of the Company provides that the
total number of shares authorized to be issued by the Company is four
billion nine hundred and fifty million (4,950,000,000) shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | Under the Companys Articles of Incorporation, currently in effect, only
shares of Common Stock are issuable and 2,079,572,737 shares of Common Stock
with a par value of 50 yen per share were issued and outstanding as of March
31, 2001. The 2001 Amendments eliminate the concept of par value of
shares of capital stock. Thus, after the effectiveness of the 2001
Amendments, all shares of capital stock of the Company will have no par
value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           



---



##### Table of Contents



-49-



| |  | (Dividends)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Articles of Incorporation of the Company provide that the accounts shall
be closed on March 31 of each year and that dividends, if any, shall be paid
to shareholders, beneficial shareholders and pledgees of record as of the
end of such day. After the close of the fiscal period, the Board of
Directors prepares, among other things, a proposed allocation of profits for
dividends and other purposes; this proposal is submitted to the Corporate
Auditors of the Company and to independent certified public accountants and
then submitted for approval to the ordinary general meeting of shareholders,
which is normally held in June of each year. In addition to provisions for
dividends, if any, and for the legal reserve and other reserves, the
allocation of profits customarily includes a bonus to Directors and
Corporate Auditors. In addition to year-end dividends, the Board of
Directors may by its resolution declare a cash distribution pursuant to
Article 293-5 of the Commercial Code (an interim dividend) to
shareholders, beneficial shareholders and pledgees of record at the end of
each September 30, without shareholders approval, but subject to the
limitations described below.
|
| |  | The Commercial Code provides that a company may not make any distribution of
profit by way of dividends or interim dividends for any fiscal period unless
it has set aside in its legal reserve an amount equal to at least one-tenth
of the amount paid by way of appropriation of retained earnings for such
fiscal period until the amount of legal reserve (after the effectiveness of
the 2001 Amendments, the aggregate amount of additional paid-in capital and
legal reserve) is one-quarter of its stated capital. Under the Commercial
Code, the Company is permitted to distribute profits by way of year-end or
interim dividends out of the excess of its net assets over the aggregate of:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             



| | (i)   |  | its stated capital;                                                                                                                                                                                                                                              
| | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii)  |  | its additional paid-in capital;                                                                                                                                                                                                                                  
| | (iii) |  | its accumulated legal reserve;                                                                                                                                                                                                                                   
| | (iv)  |  | the legal reserve to be set aside in respect of the fiscal period concerned;                                                                                                                                                                                     
| | (v)   |  | the excess, if any, of unamortized expenses incurred in preparation
for commencement of business and in connection with research and
development over the aggregate of amounts referred to in (ii), (iii)
and (iv) above;                                        
| | (vi)  |  | if the Company has on its balance sheet a number of shares of its
capital stock which it has acquired for the purpose of transferring the
same to its Directors and/or employees but such shares are yet to be so
transferred, the book value of such shares; and
| | (vii) |  | if certain assets of the Company are stated at market value
pursuant to the provisions of the Commercial Code, the aggregate amount
of the difference between their market value and acquisition cost.                                                           



| |  | In the case of interim dividends, the net assets are calculated by reference
to the balance sheet as at the last closing of the Companys accounts, but
adjusted to reflect any subsequent payment by way of appropriation of
retained earnings and transfer to legal reserve in respect thereof, provided
that interim dividends may not be paid where there is a risk that at the end
of the fiscal year there might not be any excess of net assets over the
aggregate of the amounts referred to in (i) through (vii) above. In
addition, if the Companys shareholders have adopted a resolution for its
purchase of shares of its Common Stock for the purpose of transferring the
same to its Directors and/or employees or for the purpose of retiring the
same with retained earnings, the total amount of purchase price authorized
by such resolution shall, so long as such resolution has not expired, and
whether or not such purchase has been effected, be deducted from the amount
available for interim dividends. (After the effectiveness of the 2001
Amendments, item (vi) above will be eliminated.)
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---



##### Table of Contents



-50-



| |  | In Japan the ex-dividend date and the record date for dividends precede
the date of determination of the amount of the dividends to be paid.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Under its Articles of Incorporation, the Company is not obligated to pay any
dividends which are left unclaimed for a period of 3 years after the date on
which they first became payable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | (General meeting of shareholders)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | The ordinary general meeting of shareholders to settle accounts of the
Company for each fiscal year is normally held in June in each year in
Kadoma-shi, Osaka, Japan. In addition, the Company may hold an
extraordinary general meeting of shareholders whenever necessary by giving
at least 2 weeks advance notice to shareholders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Notice of a shareholders meeting setting forth the place, time and purpose
thereof, must be mailed to each shareholder having voting rights (or, in the
case of a non-resident shareholder, to his resident proxy or mailing address
in Japan) at least 2 weeks prior to the date set for the meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Any shareholder holding at least 300 units of shares (see (Unit share
system)below) or 1 percent of the total number of outstanding shares
(after the effectiveness of the 2001 Amendments, 300 voting rights or 1
percent of the total voting rights) for 6 months or more may propose a
matter to be considered at a general meeting of shareholders by submitting a
written request to a Representative Director at least 6 weeks prior to the
date set for such meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | (Voting rights)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | A shareholder is entitled to one vote per share (after the effectiveness of
the 2001 Amendments, if the Company provides or is deemed to provide in its
Articles of Incorporation for the unit of shares under the new unit share
system (see (New unit share system)below), one vote per unit) subject
to the limitations on voting rights set forth in the following paragraph and
(Unit share system)  Voting rights of a holder of shares representing
less than one unitbelow. Except as otherwise provided by law or by the
Articles of Incorporation, a resolution can be adopted at a general meeting
of shareholders by a majority of the shares having voting rights (after the
effectiveness of the 2001 Amendments, a majority of the voting rights)
represented at the meeting. The Commercial Code and the Companys Articles
of Incorporation provide, however, that the quorum for the election of
Directors and Corporate Auditors shall not be less than one-third of the
total number of outstanding shares having voting rights (after the
effectiveness of the 2001 Amendments, one-third of the total voting rights).
The Companys shareholders are not entitled to cumulative voting in the
election of Directors. A corporate shareholder, more than one-quarter of
whose outstanding shares are directly or indirectly owned by the Company,
may not exercise its voting rights with respect to shares of Common Stock of
the Company that it owns. Shareholders may exercise their voting rights
through proxies, provided that the proxies are also shareholders holding
voting rights. The Companys shareholders also may cast their votes in
writing.



---



##### Table of Contents



-51-



| |  | The Commercial Code provides that in order to amend the Articles of
Incorporation and in certain other instances, including a reduction of
stated capital, the removal of a Director or Corporate Auditor, dissolution,
merger or consolidation requiring shareholders resolution, the transfer of
the whole or an important part of the business, the taking over of the whole
of the business of any other corporation requiring shareholders resolution,
share exchange or share transfer requiring shareholders resolution for the
purpose of establishing 100 percent parent-subsidiary relationships,
splitting of the corporation into two or more corporations requiring
shareholders resolution, any offering of new shares at a specially
favorable price (or any offering of convertible bonds or bonds with
warrants to subscribe for new shares of capital stock at a specially
favorable conversion or exercise conditions) to any persons other than
shareholders or granting to Directors and/or employees rights to subscribe
for new shares if the Articles of Incorporation so permit, the quorum shall
be a majority of the total number of shares having voting rights outstanding
(after the effectiveness of the 2001 Amendments, a majority of the total
voting rights) and the approval of the holders of at least two-thirds of the
shares having voting rights (after the effectiveness of the 2001 Amendments,
two-thirds of the voting rights) represented at the meeting is required (the
special shareholders resolutions); provided that upon effectiveness of the
2001 Amendments to the Commercial Code of Japan, any amendment to the
Articles of Incorporation reducing the number of shares constituting a unit
or eliminating the provisions for the unit of shares may be made by the
resolution of the Board of Directors rather than by the special shareholders
resolution, as set forth in (New unit share system) Voting rights under
the new unit share system.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | (Subscription rights)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Holders of the Companys shares of Common Stock have no pre-emptive rights
under its Articles of Incorporation. Authorized but unissued shares may be
issued at such times and upon such terms as the Board of Directors
determines, subject to the limitations as to the offering of new shares at a
specially favorable price mentioned under (Voting rights) above. The
Board of Directors may, however, determine that shareholders shall be given
subscription rights regarding a particular issue of new shares, in which
case such rights must be given on uniform terms to all shareholders as at a
record date of which not less than 2 weeks prior public notice must be
given. Each of the shareholders to whom such rights are given must also be
given notice of the expiration thereof at least 2 weeks prior to the date on
which such rights expire.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | Rights to subscribe for new shares may be made generally transferable by the
Board of Directors. Whether the Company will make subscription rights
generally transferable in future rights offerings will depend upon the
circumstances at the time of such offerings. If subscription rights are not
made generally transferable, transfers by a non-resident of Japan or a
corporation organized under the laws of a foreign country or whose principal
office is located in a foreign country will be enforceable against the
Company and third parties only if the Companys prior written consent to
each such transfer is obtained. When such consent is necessary in the
future for the transfer of subscription rights, the Company intends to
consent, on request, to all such transfers by such a non-resident or foreign
corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | The Commercial Code permits a company to provide in its articles of
incorporation that it may, by a special shareholders resolution, grant to
its directors and/or employees rights to subscribe for new shares if there
exists a justifiable reason. The Articles of Incorporation of the Company
do not have such a provision.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       



---



##### Table of Contents



-52-



| |  | (Liquidation rights)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | In the event of a liquidation of the Company, the assets remaining after
payment of all debts and liquidation expenses and taxes will be distributed
among shareholders in proportion to the respective number of shares of
Common Stock held.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | (Record date)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | March 31 is the record date for the Companys year-end dividends. The
shareholders and beneficial shareholders who are registered as the holders
of 1,000 shares or more (after the effectiveness of the 2001 Amendments,
insofar as the Company provides or is deemed to provide in its Articles of
Incorporation for the unit of shares under the new unit share system, the
number of shares constituting one unit or more) in the Companys registers
of shareholders and/or beneficial shareholders at the end of each March 31
are also entitled to exercise shareholders rights at the ordinary general
meeting of shareholders with respect to the fiscal year ending on such March
31. September 30 is the record date for interim dividends. In addition,
the Company may set a record date for determining the shareholders and/or
beneficial shareholders entitled to other rights and for other purposes by
giving at least 2 weeks prior public notice.
|
| |  | The price of shares generally goes ex-dividends or ex-rights on Japanese
stock exchanges on the third business day prior to a record date (or if the
record date is not a business day, the fourth business day prior thereto),
for the purpose of dividends or rights offerings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | (Repurchase by the Company of its Common Stock)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | Except as otherwise permitted by the Commercial Code or the Law of Special
Measures to the Commercial Code Concerning Retirement of Shares (the
Special Retirement Law, which will be abolished upon the effectiveness of
the 2001 Amendments) as set out below, the Company or any of its
subsidiaries cannot acquire the Companys Common Stock except by means of a
reduction of capital in the manner prescribed by the Commercial Code.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | The Company may acquire shares of its Common Stock in response to a
shareholders request for purchase of his/her shares representing less than
one unit. See (Unit share system)  Right of a holder of shares
representing less than one unit to require the Company to purchase such
sharesand (New unit share system)  Repurchase by the Company of shares
constituting less than a full unitbelow. Shares so purchased must, until
the effectiveness of the 2001 Amendments, be sold or otherwise transferred
to a third party within a reasonable period thereafter.                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Under the Commercial Code and the Special Retirement Law, the Company may
acquire shares of its Common Stock for the following purposes, subject to
the authorization of shareholders at an ordinary general meeting of
shareholders (if the Articles of Incorporation provide that the shares may
be purchased for the purpose of retirement by a resolution of the Board of
Directors if the Board deems it especially necessary to do so in view of
general economic conditions, the business and financial condition of the
Company and other factors, by the resolution of the Board of Directors):                                                                                                                                                                                                                                                                                                                                                              



| | (i)  |  | for the purpose of transferring the same to its Directors and/or
employees if there exists a justifiable reason; and
| | ---- |  | --------------------------------------------------------------------------------------------------------------------
|
| | (ii) |  | for the purpose of retirement thereof with retained earnings.                                                       



---



##### Table of Contents



-53-



| |  | Acquisition by the Company of shares of its Common Stock for the purpose of (i)
above is subject to, among other things, the following restrictions:
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | the sum of the number of shares to be acquired, the number of
shares acquired but not yet transferred to its Directors and/or
employees and the number of shares subject to the subscription rights
granted to its Directors and/employees pursuant to the resolution of
the Board of Directors as authorized under the Companys Articles of
Incorporation does not exceed 10 percent of all issued and outstanding
shares;                               
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | the total amount of purchase price does not exceed the amount of
the retained earnings available for dividend payment minus the amount
to be paid by way of appropriation of retained earnings for the fiscal
year and, if any amount of retained earnings is to be capitalized, such
amount (if the purchase is made pursuant to the resolution of the Board
of Directors as referred to in the parentheses above, one-half of such
permitted amount); and
|
| | (c) |  | acquisition shall be made through a stock exchange transaction or
by way of tender offer.                                                                                                                                                                                                                                                                                                                                                                  



| |  | Acquisition by the Company of shares of its Common Stock for the purpose of
(ii) above is subject to, among other things, the same restrictions as
described in (b) and (c) above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Companys Articles of Incorporation provide that it may purchase up to
200,000,000 shares of Common Stock by a resolution of the Board of Directors
for the purpose of retiring the same with retained earnings. No such
purchase pursuant to a resolution of the Board of Directors may be made
after the conclusion of the ordinary general meeting of shareholders for the
fiscal year ending immediately after the Board resolution. No Board
resolution has been made for this purpose.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | The 2001 Amendments permit the Company to effect purchases of shares of its
Common Stock pursuant to the above authorization until the conclusion of the
ordinary general meeting of shareholders for the fiscal year ending March
31, 2002 and to hold such shares as its treasury shares regardless of the
time of any such purchase.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | Upon the effectiveness of the 2001 Amendments, the Special Retirement Law
will be abolished and the provisions of the Commercial Code with respect to
the purchase and holding by a company of its own shares for the purpose of
retirement and for transfer to its Directors or employees will be materially
amended. Under the 2001 Amendments, in order for the Company to purchase
its own shares a resolution of an ordinary general meeting of shareholders
is required with respect to (i) the total number of shares and the total
acquisition price which the Company may purchase during the period ending
the conclusion of the next ordinary general meeting of shareholders, or (ii)
if the purchase(s) is/are to be made from a specified person or persons, the
identity of such person(s). The total amount of purchase price referred to
above cannot exceed the amount which can be distributed as dividends as
described under (Dividends)above. The shareholders resolution for (ii)
above shall be by a special shareholders resolution and any shareholder who
received a convocation notice of the general meeting of shareholders where
the resolution on item (ii) above is sought may require the Company in
writing not later than 5 days prior to the date set for the meeting to
include him/her as the seller of his/her shares in the proposed purchase.
Any purchase by the Company of its shares pursuant to the shareholders
resolutions except in the case of (ii) above should be made either on the
stock exchange or by way of tender offer. Shares so purchased may be
retired by a resolution of the Board of Directors or held by the Company as
treasury shares.



---



##### Table of Contents



-54-



| |  | ("Unit" share system)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Pursuant to the Commercial Code, currently in effect, the Company has
adopted 1,000 shares as one unit of shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Transferability of shares representing less than one unit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Certificates for shares representing less than a unit may only be issued in
certain limited circumstances. Since the transfer of shares normally
requires delivery of the certificates therefor, fractions of a unit for
which no share certificates are issued are not transferable. Shares
representing less than a unit for which share certificates have been issued
continue to be transferable, but the transfer may be registered in the
Companys register of shareholders only if the transferee is already a
registered shareholder (whether in respect of units or of shares
representing less than a unit).
|
| |  | Right of a holder of shares representing less than a unit to require the
Company to purchase such shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | A holder of shares representing less than a unit may at any time require the
Company to purchase such shares at their last reported sale price on the
Osaka Securities Exchange on the day when such request is made or, if no
sale takes place on the Osaka Securities Exchange on such day, the last
reported sale price on the Tokyo Stock Exchange on such day, and if a sale
takes place on neither of such exchanges on such day, the price at which the
first sale of the shares is effected on the Osaka Securities Exchange
thereafter, less applicable brokerage commission.                                 
|
| |  | Other rights of a holder of shares representing less than a unit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | A holder of shares representing less than a unit has the following rights in
respect of such shares:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   



| | (i)   |  | the right to receive dividends (including interim dividends);                                                                                                                                                                                                                                                                   
| | ----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii)  |  | the right to receive shares and/or cash by way of a stock split or
upon consolidation or subdivision of shares, a capital decrease, merger
or consolidation, share exchange or share transfer for the purpose of
establishing 100 percent parent-subsidiary relationship or splitting of
the Company into two or more companies;
|
| | (iii) |  | the right to be allotted subscription rights with respect to new
shares, convertible bonds or bonds with warrants when such rights are
granted to shareholders;                                                                                                                                                                 
|
| | (iv)  |  | the right to participate in the distribution of residual assets in
the event of the liquidation of the Company; and                                                                                                                                                                                                             
|
| | (v)   |  | the right to require the Company to issue replacement share
certificates for lost, stolen or destroyed share certificates.                                                                                                                                                                                                      



| |  | All other rights, including voting rights, cannot be exercised with respect
to shares representing less than a unit.                                                                                                                                                                                                                                                                                                                            
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Voting rights of a holder of shares representing less than a unit                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | A holder of shares representing less than a unit cannot exercise any voting
rights with respect to such shares. In calculating the quorum for various
voting purposes, the aggregate number of shares representing less than a
unit will be excluded from the number of outstanding shares. A holder of
shares representing one or more whole units will have one vote for each unit
of such shares, except as stated in (Voting rights)above.



---



##### Table of Contents



-55-



| |  | (New "unit" share system)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | After the effectiveness of the 2001 Amendments, the unit share system
described above will be abolished and a new unit share system called
tangen-kabushiki will be introduced. Whether to adopt the new unit system
by providing in its Articles of Incorporation for the number of shares
constituting the new unit or not to do so is at the discretion of the
Company. However, under the 2001 Amendments, it is deemed that the Company
has provided in the Articles of Incorporation 1,000 shares (the same number
of shares constituting the present unit) as its new unit of shares and that
a provision is also made in the Articles of Incorporation that no share
certificate for any number less than a full unit shall be issued. Under the
2001 Amendments, any amendment to the Articles of Incorporation reducing the
number of shares constituting a unit or eliminating the provisions for the
unit of shares may be made by the resolution of the Board of Directors
rather than by the special shareholders resolution. The number of shares
constituting one unit cannot exceed 1,000 or one two-hundredth (1/200) of
all issued shares.
|
| |  | Voting rights under the new unit share system                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Under the new unit share system, shareholders shall have one voting right
for each unit of shares that they hold. Any number of shares less than a
full unit will carry no voting rights.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Share certificates for less than a unit of shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Under the new unit share system, the Company has an option either to issue
share certificates for less than a unit shares or to provide in its Articles
of Incorporation not to issue share certificates for less than a unit of
shares. As stated above, upon the effectiveness of the 2001 Amendments, the
Company is deemed to have provided in the Articles of Incorporation not to
issue share certificates for less than a unit of shares. Thus, unless the
Companys Board of Directors takes a resolution to eliminate the provision
for the unit shares from the Articles of Incorporation or the shareholders
amend the Articles of Incorporation by a special shareholders resolution to
eliminate the provision for not to issue share certificates for less than a
unit of shares, a share certificate for any number of shares less than a
full unit will in general not be issued. As the transfer of shares normally
requires the delivery of the share certificates therefor, any fraction of a
unit for which no share certificates are issued is not transferable.                                                                          
|
| |  | Repurchase by the Company of shares constituting less than a full unit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | A holder of shares constituting less than one unit may require the Company
to purchase such shares at their market value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      



---



##### Table of Contents



-56-



| |  | Effect of the unit share system on holders of ADRs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | A holder who owns ADRs evidencing less than 1,000 ADSs will indirectly own
less than a whole unit. Although, as discussed above, under the unit share
system (whether the existing unit share system or the new unit share system)
holders of less than a unit have the right to require the Company to
purchase their shares, holders of ADRs evidencing ADSs that represent other
than integral multiples of whole units are unable to withdraw the underlying
shares of capital stock representing less than a unit and, therefore, are
unable, as a practical matter, to exercise the rights to require the Company
to purchase such underlying shares unless the Companys Articles of
Incorporation are amended to eliminate the provision not to issue share
certificates for the numbers of shares less than a whole unit. As a result,
access to the Japanese markets by holders of ADRs through the withdrawal
mechanism will not be available for dispositions of shares in lots less than
a unit. The unit share system does not affect the transferability of ADSs,
which may be transferred in lots of any size.
|
| |  | Reporting of Substantial Shareholdings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | The Securities and Exchange Law of Japan requires any person who has become,
beneficially and solely or jointly, a holder of more than 5 percent of the
total issued shares of capital stock of a company listed on any Japanese
stock exchange or whose shares are traded on the over-the-counter market in
Japan to file with the Prime Minister within 5 business days a report
concerning such shareholdings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | A similar report must also be filed in respect of any subsequent change of 1
percent or more in any such holding, with certain exceptions. For this
purpose, shares issuable to such person upon conversion of convertible
securities or exercise of share subscription warrants are taken into account
in determining both the number of shares held by such holder and the
issuers total issued share capital. Copies of such report must also be
furnished to the issuer of such shares and all Japanese stock exchanges on
which the shares are listed or (in the case of shares traded
over-the-counter) the Japan Securities Dealers Association.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Except for the general limitation under Japanese anti-trust and
anti-monopoly regulations against holding of shares of capital stock of a
Japanese corporation which leads or may lead to a restraint of trade or
monopoly, and except for general limitations under the Commercial Code or
the Companys Articles of Incorporation on the rights of shareholders
applicable regardless of residence or nationality, there is no limitation
under Japanese laws and regulations applicable to the Company or under its
Articles of Incorporation on the rights of non-resident or foreign
shareholders to hold or exercise voting rights on the shares of Common Stock
of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | There is no provision in the Companys Articles of Incorporation or by-laws
that would have an effect of delaying, deferring or preventing a change in
control of the Company and that would operate only with respect to merger,
consolidation, acquisition or corporate restructuring involving the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                






|C. |  | Material Contracts                                                                                                                              
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | All contracts concluded by Matsushita during the 2 years preceding the date
of this report were entered into in the ordinary course of business.



---



##### Table of Contents



- 57 -




D.   Exchange Controls



| |  | The Japanese
Foreign Exchange
and Foreign Trade
Law, currently in
effect (the Law),
does not affect or
restrict the rights
of non-residents or
foreign
corporations to
acquire or hold
shares of Common
Stock of the
Company except that
in the event of
acquisition of
shares of Common
Stock, unless such
acquisition is made
through a
securities company
or other financial
institution, the
acquiring
non-resident or
foreign corporation
is subject to a
post-transaction
reporting
requirement under
the Law. However,
the Minister of
Finance has the
power to impose a
licensing
requirement in
certain
acquisitions in
extremely limited
circumstances.
Under the Law,
dividends paid on,
and the proceeds of
sales in Japan of,
shares of Common
Stock of the
Company held by
non-residents may
in general be
converted into any
foreign currency
and repatriated
abroad.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




E.   Taxation



| |  | The following is a general summary of the major Japanese and U.S. federal
tax consequences of the ownership, acquisition and disposition of shares of
Common Stock of the Company and of ADRs evidencing ADSs representing shares
of Common Stock of the Company by a non-resident of Japan or a non-Japanese
corporation which holds those shares or ADSs, and is not purposed to be
comprehensive to cover all situations that may be relevant to any particular
investors. Holders of shares of Common Stock of the Company or ADSs are
strongly urged to consult their tax advisers regarding their tax positions.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | For purposes of the Income Tax Convention between the United States and
Japan (the Tax Convention) and the U.S. Internal Revenue Code of 1986, as
amended (the Code), U.S. holders of ADRs will be treated as the owners of
the Common Stock underlying the ADSs evidenced by the ADRs. For the
purposes of the following discussion, a U.S. holder is a holder that:                                                                                                                                                                                                                                           



| | (i)   |  | is a resident of the United States for purposes of the Tax
Convention,                                                                                                                                                                                                                                  
| | ----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii)  |  | is a citizen of the United States,                                                                                                                                                                                                                                                                      
| | (iii) |  | does not maintain a permanent establishment or fixed base in Japan
to which ADRs or shares of Common Stock are attributable and through
which the beneficial owner carries on or has carried on business (or in
the case of an individual, performs or has performed independent
personal services), and
| | (iv)  |  | is not otherwise ineligible for benefits under the Tax Convention
with respect to income and gains derived in connection with the ADRs or
shares of Common Stock.                                                                                                                                       



| |  | Japanese Taxation of Common Stock or ADRs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Generally, a non-resident of Japan or a non-Japanese corporation is subject
to Japanese withholding tax on dividends paid by Japanese corporations.
Stock splits in themselves are not subject to Japanese income tax.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | In the absence of an applicable tax treaty, convention or agreement reducing
the maximum rate of withholding tax, the rate of Japanese withholding tax
applicable to dividends paid by Japanese corporations to non-residents of
Japan or non-Japanese corporations is 20 percent. At the date of this
document, Japan has income tax treaties, conventions or agreements whereby
the above mentioned withholding tax rate is reduced, in most cases to 15
percent for portfolio investors with, among other countries, Australia,
Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy,
Luxembourg, the Netherlands, New Zealand, Norway, Singapore, Spain, Sweden,
Switzerland, the United Kingdom and the United States.



---



##### Table of Contents



- 58 -



| |  | Under the Tax Convention, as currently in force, the maximum rate of
Japanese withholding tax which may be imposed on dividends paid by a
Japanese corporation to eligible U.S. holders generally is limited to 15
percent of the gross amount actually distributed. A non-resident holder who
is entitled to a reduced rate of Japanese withholding tax on payment of
dividends by the Company is required to submit an Application Form for
Income Tax Convention Regarding Relief from Japanese Income Tax on Dividends
in advance through the Company to the relevant tax authority before payment
of dividends. A standing proxy for a non-resident holder may provide this
application service. With respect to ADRs, this reduced rate is applicable
if the Depositary or its agent submits two Application Forms (one before
payment of dividends, the other within 8 months after the Companys fiscal
year-end). To claim this reduced rate, a non-resident holder of ADRs will
be required to file a proof of taxpayer status, residence and beneficial
ownership (as applicable) and to provide other information or documents as
may be required by the Depositary. A non-resident holder who does not
submit an application in advance will be entitled to claim a refund of
withholding taxes withheld in excess of the rate under an applicable tax
treaty from the relevant Japanese tax authority.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Gains derived by a non-resident of Japan or a non-Japanese corporation from
the sale of shares of Common Stock or ADRs outside Japan or from the sale of
shares of Common Stock within Japan by a non-resident of Japan or a
non-Japanese corporation not having a permanent establishment in Japan, are
in general not subject to Japanese income or corporation tax.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | If the Company purchases shares of its Common Stock by way of a tender offer
and retire the same with retained earnings available for dividend payment,
individual shareholders who sold the shares to the Company in such tender
offer who are residents of Japan or non-residents of Japan having a
permanent establishment within Japan, if such purchases are made on or
before March 31, 2002, will be subject to Japanese taxation applicable to
gains realized by individuals from sales of shares  26 percent separate
taxation upon filing tax returns (although up to March 31, 2003, the
taxpayers may choose a 1.05 percent withholding tax on the gross sales
proceeds). However, this is an interim measure applicable to the period
ending March 31, 2002 and after such date, unless the present treatment is
extended, a similar treatment as those currently applicable to foreign
corporations having a permanent establishment within Japan as discussed in
the next sentence will be applicable. If the sellers are foreign
corporations having a permanent establishment within Japan, the portion of
the proceeds received from the Company corresponding to the excess over the
aggregate of the portions attributable to stated capital and additional
paid-in capital will be deemed dividends and subject to taxation on
dividends and the rest of the net proceeds will be subject to taxation
treatment on gains realized from sales of shares. For non-resident
individuals having no permanent establishment within Japan, no Japanese
income tax will accrue, except in certain exceptional circumstances. For
foreign corporations having no permanent establishment within Japan, the
portion of the proceeds received from the Company which is deemed dividends
as discussed in the third sentence of this paragraph will be subject to
withholding income tax (generally 20 percent, subject to applicable income
tax treaty provisions); otherwise, except in certain exceptional cases, no
further Japanese tax will be imposed.
|
| |  | Japanese inheritance or gift tax at progressive rates may be payable by an
individual who has acquired shares of Common Stock or ADRs as a legatee,
heir or donee even though neither the individual nor the deceased nor donor
is a Japanese resident.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Holders of shares of Common Stock or ADRs should consult their tax advisers
regarding the effect of these taxes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        



---



##### Table of Contents



- 59 -



| |  | United States Taxation of Common Stock or ADRs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The following is a summary of certain United States federal income tax
consequences of the ownership shares of Common Stock or ADRs by a U.S.
holder. This summary is based on United States tax laws, including the
United States Internal Revenue Code of 1986, as amended, and on the
Convention all of which are subject to change possibly with retroactive
effect.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Taxation of dividends                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Subject to the passive foreign investment company (PFIC) rules discussed
below, U.S. holders will include in gross income the gross amount of any
dividends received (before reduction for Japanese withholding taxes) to the
extent paid out of the Companys current or accumulated earnings and profits
(as determined for United States federal income tax purposes) as ordinary
income. The dividend will not be eligible for the dividends-received
deduction allowed to United States corporations in respect of dividends
received from other United States corporations. The amount of the dividend
will be the U.S. dollar value of the Japanese yen payments made, determined
at the spot Japanese yen/U.S. dollar rate on the date the dividend is
includible in the U.S. holders income.                                                                                                                                                                                                                                     
|
| |  | Subject to certain limitations, the Japanese tax withheld in accordance with
the Convention will be creditable against the U.S. holders United States
federal income tax liability. For foreign tax credit limitation purposes,
the dividend will be income from sources without the United States, but
generally will be treated separately, together with other items of passive
income and financial services income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Taxation of capital gains                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Subject to the PFIC rules discussed below, upon a sale or other disposition
of shares of Common Stock or ADRs, a U.S. holder will recognize gain or loss
in an amount equal to the difference between the U.S. dollar value of the
amount realized and the U.S. holders tax basis (determined in U.S. dollars)
in such shares of Common Stock or ADRs. Generally, such gain or loss will
be capital gain or loss and will be long-term capital gain or loss if the
U.S. holders holding period for such shares of Common Stock or ADRs exceeds
1 year. Any such gain or loss will be income or loss from sources within
the United States for foreign tax credit limitation purposes.                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Transfers of retained earnings and sales of Common Stocks to the Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | A transfer of retained earnings or legal reserve to stated capital is
treated as a dividend payment for Japanese tax purposes subject to
withholding tax. A sale of shares of Common Stock or ADRs to the Company
results in a deemed dividend to the selling shareholders to the extent that
the sales price exceeds the aggregate of the stated capital and the capital
surplus attributable to the shares sold. Transfers of retained earnings or
legal reserves to stated capital and deemed dividends that may result from
sales of shares of Common Stock to the Company are not generally taxable
events for United States federal income tax purposes and therefore would not
give rise to foreign source income and U.S. holders would not be able to use
the foreign tax credit arising from any Japanese withholding tax imposed on
such transactions unless they can apply the credit (subject to limitations)
against U.S. tax due or other foreign source income in the appropriate
category for foreign tax credit purposes.



---



##### Table of Contents



- 60 -



| |  | Passive foreign investment company considerations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Company believes that shares of Common Stock and ADRs should not be
treated as stock of a PFIC for United States federal income tax purposes,
but this conclusion is a factual determination made annually and thus may be
subject to change. If the Company were to be treated as a PFIC (unless a
U.S. holder elects to be taxed annually on a mark-to-market basis with
respect to the shares of Common Stock or ADRs), gain realized on the sale or
other disposition of shares of Common Stock or ADRs would in general not be
treated as capital gain, and a U.S. holder would be treated as if such
holder had realized such gain and certain excess distributions ratably
over the holders holding period for the shares of Common Stock or ADRs and
would be taxed at the highest tax rate in effect for each such year to which
the gain was allocated, together with an interest charge in respect of the
tax attributable to each such year.




F.   Dividends and Paying Agents



| |  | Not applicable
| |  | --------------




G.   Statement by Experts



| |  | Not applicable
| |  | --------------




H.   Documents on Display



| |  | According to the Securities Exchange Act of 1934, as amended, Matsushita is
subject to the requirements of informational disclosure. Matsushita files
various reports and other information, including this annual report
on Form 20-F, to the U.S. Securities and Exchange Commission, the New York Stock
Exchange and Pacific Exchange. These reports may be inspected at the following sites.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | U.S. Securities and Exchange Commission:  
450 Fifth Street, N.W., Washington D.C. 20549
| |  |  | ----------------------------------------------------------------------------------------
|
| |  |  | New York Stock Exchange:  
20 Broad Street, New York, New York 10005                    
|
| |  |  | Pacific Exchange:  
301 Pine Street, San Francisco, California 94104                    



| |  | Form 20-F is also available at the Electronic Data Gathering, Analysis,
Retrieval system (EDGAR) website which is maintained by the U.S. Securities
and Exchange Commission.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | U.S. Securities and Exchange Commission Home Page:  
http://www.sec.gov
| |  |  | -----------------------------------------------------------------------




I.    Subsidiary Information



| |  | Not applicable
| |  | --------------



---



##### Table of Contents



- 61 -




Item 11.   Quantitative and Qualitative Disclosures about Market Risk

The Company is exposed to market risk, including changes of foreign exchange
rates, interest rates and prices of marketable securities. In order to hedge
the risks of changes in foreign exchange rates and interest rates, the Company
uses derivative financial instruments. The Company does not hold or issue
financial instruments for trading purposes. Although the use of derivative
financial instruments exposes the Company to the risk of credit-related losses
in the event of nonperformance by counterparties, the Company believes that
such risk is minor because of the high credit rating of the counterparties.

Equity Price Risk

The Company holds available-for-sale securities included in short-term
investments and investments and advances. In general, highly-liquid and low
risk instruments are preferred in the portfolio. Available-for-sale securities
included in investments and advances are held as longer term investments. The
Company does not hold marketable securities for trading purposes.

Maturities, costs and fair values of available-for-sale securities were as
follows at March 31, 2001 and 2000:

|                                      |  |                |         |       |  |      |         |       |  |  |         |      |  |  |           | 
|------------------------------------- |  | -------------- | ------- | ----- |  | ---- | ------- | ----- |  |  | ------- | ---- |  |  | --------- | 
|                                      |  | Yen (millions)
|                                      |  |               
|                                      |  | 2001           |         | 2000 
|                                      |  |                |         |      
|                                      |  |                |         |       |  | Fair |         |       |  |  |         | Fair
|                                      |  | Cost           |         | value |  | Cost |         | value
|                                      |  |                |         |       |  |      |         |      
|Due within one year                   |  |                | 11,401  |       |  |      | 11,421  |       |  |  | 132,238 |      |  |  | 132,314   | 
|                                     
|                                     
|                                     
|                                     
|Due after one year through five years |  |                | 173,167 |       |  |      | 172,050 |       |  |  | 113,426 |      |  |  | 112,517   | 
|                                     
|                                     
|                                     
|                                     
|Due after five years                  |  |                |        |       |  |      |        |       |  |  | 2,000   |      |  |  | 2,000     | 
|                                     
|                                     
|                                     
|                                     
|Equity securities                     |  |                | 369,972 |       |  |      | 533,421 |       |  |  | 377,069 |      |  |  | 756,820   | 
|                                      |  |                |         |       |  |      |         |       |  |  |         |      |  |  |           | 
|                                      |  |                | 554,540 |       |  |      | 716,892 |       |  |  | 624,733 |      |  |  | 1,003,651 | 
|                                      |  |                |         |       |  |      |         |       |  |  |         |      |  |  |           | 

Foreign Exchange Risk

The primary purpose of the Companys foreign currency hedging activities is to
protect against the volatility associated with foreign currency transactions.
The Company primarily utilizes forward exchange contracts and options with a
duration of less than a few months. The Company also enters into foreign
exchange contracts from time to time to hedge the risk of fluctuation in
foreign currency exchange rates associated with long-term debt that is
denominated in foreign currencies. Foreign exchange contracts related to such
long-term debt have the same maturity as the underlying debt.



---



##### Table of Contents



- 62 -

The following table provides the contract amounts and fair values of foreign
exchange contracts, primarily hedging U.S. dollar revenues, at March 31, 2001
and 2000. Amounts related to foreign exchange contracts entered into in
connection with long-term debt denominated in foreign currencies which
eliminate all foreign currency exposures, are shown in the table of Interest
Rate Risk.

|                                             |                            |  |                |         |       |  |          |        |       |  |        |         |  |  |     |       | 
|-------------------------------------------- | -------------------------- |  | -------------- | ------- | ----- |  | -------- | ------ | ----- |  | ------ | ------- |  |  | --- | ----- | 
|                                             |                            |  | Yen (millions)
|                                             |                            |  |               
|                                             |                            |  | 2001           |         | 2000 
|                                             |                            |  |                |         |      
|                                             |                            |  | Contract       |         | Fair  |  | Contract |        | Fair 
|                                             |                            |  | amount         |         | value |  | amount   |        | value
|                                             |                            |  |                |         |       |  |          |        |      
|Forward:                                    
|                                            
|                                            
|                                            
|                                            
|                                             | To sell foreign currencies |  |                | 350,087 |       |  |          | (4,997 | )     |  |        | 373,417 |  |  |     | 3,439 | 
|                                            
|                                            
|                                            
|                                            
|                                             | To buy foreign currencies  |  |                | 109,523 |       |  |          | 2,283  |       |  |        | 82,444  |  |  |     | 171   | 
|                                            
|                                            
|                                            
|                                            
|Options purchased to sell foreign currencies |                            |  | 16,430         |         |       |  | (334     | )      |       |  | 26,711 |         |  |  | 119 |      
|                                            
|                                            
|                                            
|                                            
|Options purchased to buy foreign currencies  |                            |  | 34,412         |         |       |  | 1,327    |        |       |  | 1,260  |         |  |  | 11  |      
|                                            
|                                            
|                                            
|                                            
|Options written to buy foreign currencies    |                            |  | 24,956         |         |       |  | (1,483   | )      |       |  | 24,820 |         |  |  | (74 | )    
|                                            
|                                            
|                                            
|                                            
|Options written to sell foreign currencies   |                            |  | 40,080         |         |       |  | 246      |        |       |  | 4,734  |         |  |  | (89 | )    

Interest Rate Risk

The Companys exposure to market risk for changes in interest rates relates
principally to its debt obligations. The Company has long-term debt primarily
with fixed rates. Interest rate swaps may be entered into from time to time by
the Company to hedge cash flows of interests and fair values of debt. However,
interest rate swaps utilized by the Company at March 31, 2001 and 2000 were not
material.

The following tables provide information about the Companys financial
instruments that are sensitive to changes in interest rates at March 31, 2001
and 2000. The table presents principal cash flows by expected maturity dates,
related weighted average interest rates and fair values of financial
instruments.

|                                           |                                                                   |          |  |          |   |       |       |                                                          |         |      |  |         |         |      |       |         |         |       |  |        |         |  |  |        |        |  |  |        |        |        |  |        |        |  |       |         |         | 
|------------------------------------------ | ----------------------------------------------------------------- | -------- |  | -------- | - | ----- | ----- | -------------------------------------------------------- | ------- | ---- |  | ------- | ------- | ---- | ----- | ------- | ------- | ----- |  | ------ | ------- |  |  | ------ | ------ |  |  | ------ | ------ | ------ |  | ------ | ------ |  | ----- | ------- | ------- | 
|                                           |                                                                   |          |  |          |   |       |       | Yen (millions)                                          
|                                           |                                                                   |          |  |          |   |       |       |                                                         
|                                           |                                                                   |          |  |          |   |       |       | Carrying amount and maturity date (as of March 31, 2001)
|                                           |                                                                   |          |  |          |   |       |       |                                                         
|                                           |                                                                   |          |  | Average 
|                                           |                                                                   |          |  | interest |   |       |       |                                                          |         |      |  |         |         |      |       |         |         |       |  |        |         |  |  |        |        |  |  |        |        | There- |  | Fair  
|                                           |                                                                   |          |  | rate     |   | Total |       | 2002                                                     |         | 2003 |  | 2004    |         | 2005 |       | 2006    |         | after |  | value 
|                                           |                                                                   |          |  |          |   |       |       |                                                          |         |      |  |         |         |      |       |         |         |       |  |       
|Long-term debt, including
current portion:
|                                          
|                                          
|                                          
|                                          
|                                           | Japanese yen
convertible bonds                                    |          |  | 1.2      | % |       |       | 241,934                                                  |         |      |  | 98,708  |         |      |       | 16,999  |         |       |  | 97,744 |         |  |  | 11,483 |        |  |  | 17,000 |        |        |  |        |        |  |       | 332,641 |        
|                                          
|                                          
|                                          
|                                          
|                                           | Straight bonds issued
by a subsidiary                             |          |  | 1.8      | % |       |       | 50,000                                                   |         |      |  | 5,000   |         |      |       |         |         |       |  | 5,000  |         |  |  |        |        |  |  | 10,000 |        |        |  | 30,000 |        |  |       | 51,535  |        
|                                          
|                                          
|                                          
|                                          
|                                           | U.S. dollar unsecured
bonds                                       |          |  | 5.8      | % |       |       | 123,785                                                  |         |      |  |         |         |      |       | 123,785 |         |       |  |        |         |  |  |        |        |  |  |        |        |        |  |        |        |  |       | 126,874 |        
|                                          
|                                          
|                                          
|                                          
|                                           | Unsecured yen loans
from banks and
insurance companies
and others |          |  | 1.2      | % |       |       | 393,392                                                  |         |      |  | 165,229 |         |      |       | 96,986  |         |       |  | 72,568 |         |  |  | 41,241 |        |  |  | 16,246 |        |        |  | 1,122  |        |  |       | 392,648 |        
|                                          
|                                           |                                                                   | Subtotal |  |          |   |       |       |                                                          | 809,111 |      |  |         | 268,937 |      |       |         | 237,770 |       |  |        | 175,312 |  |  |        | 52,724 |  |  |        | 43,246 |        |  |        | 31,122 |  |       |         | 903,698 | 
|                                          
|                                          
|                                          
|                                          
|Foreign exchange
contracts                 |                                                                   |          |  |          |   |       | 1,367 |                                                          |         |      |  |         |         |      | 1,367 |         |         |       |  |        |         |  |  |        |        |  |  |        |        |        |  |        |        |  | 1,399 |        
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                   | Total    |  |          |   |       |       |                                                          | 810,478 |      |  |         | 268,937 |      |       |         | 239,137 |       |  |        | 175,312 |  |  |        | 52,724 |  |  |        | 43,246 |        |  |        | 31,122 |  |       |         | 905,097 | 
|                                          



---



##### Table of Contents



- 63 -

|                                           |                                                                   |          |  |          |   |       |        |                                                          |         |      |  |         |         |      |  |         |         |       |        |         |         |  |  |        |         |  |  |        |        |        |  |        |        |  |        |         |         | 
|------------------------------------------ | ----------------------------------------------------------------- | -------- |  | -------- | - | ----- | ------ | -------------------------------------------------------- | ------- | ---- |  | ------- | ------- | ---- |  | ------- | ------- | ----- | ------ | ------- | ------- |  |  | ------ | ------- |  |  | ------ | ------ | ------ |  | ------ | ------ |  | ------ | ------- | ------- | 
|                                           |                                                                   |          |  |          |   |       |        | Yen (millions)                                          
|                                           |                                                                   |          |  |          |   |       |        |                                                         
|                                           |                                                                   |          |  |          |   |       |        | Carrying amount and maturity date (as of March 31, 2000)
|                                           |                                                                   |          |  |          |   |       |        |                                                         
|                                           |                                                                   |          |  | Average 
|                                           |                                                                   |          |  | interest |   |       |        |                                                          |         |      |  |         |         |      |  |         |         |       |        |         |         |  |  |        |         |  |  |        |        | There- |  | Fair  
|                                           |                                                                   |          |  | rate     |   | Total |        | 2001                                                     |         | 2002 |  | 2003    |         | 2004 |  | 2005    |         | after |        | value  
|                                           |                                                                   |          |  |          |   |       |        |                                                          |         |      |  |         |         |      |  |         |         |       |        |        
|Long-term debt, including
current portion:
|                                          
|                                          
|                                          
|                                          
|                                           | Japanese yen
convertible bonds                                    |          |  | 1.5      | % |       |        | 263,874                                                  |         |      |  | 21,000  |         |      |  | 98,893  |         |       |        | 16,999  |         |  |  | 98,499 |         |  |  | 11,483 |        |        |  | 17,000 |        |  |        | 446,953 |        
|                                          
|                                          
|                                          
|                                          
|                                           | Straight bonds issued
by a subsidiary                             |          |  | 1.9      | % |       |        | 20,000                                                   |         |      |  |         |         |      |  | 5,000   |         |       |        |         |         |  |  | 5,000  |         |  |  |        |        |        |  | 10,000 |        |  |        | 20,250  |        
|                                          
|                                          
|                                          
|                                          
|                                           | U.S. dollar unsecured
bonds                                       |          |  | 5.8      | % |       |        | 105,950                                                  |         |      |  |         |         |      |  |         |         |       |        | 105,950 |         |  |  |        |         |  |  |        |        |        |  |        |        |  |        | 106,086 |        
|                                          
|                                          
|                                          
|                                          
|                                           | Unsecured yen loans
from banks and
insurance companies
and others |          |  | 1.7      | % |       |        | 402,978                                                  |         |      |  | 147,079 |         |      |  | 128,186 |         |       |        | 75,027  |         |  |  | 40,228 |         |  |  | 11,759 |        |        |  | 699    |        |  |        | 402,328 |        
|                                          
|                                           |                                                                   | Subtotal |  |          |   |       |        |                                                          | 792,802 |      |  |         | 168,079 |      |  |         | 232,079 |       |        |         | 197,976 |  |  |        | 143,727 |  |  |        | 23,242 |        |  |        | 27,699 |  |        |         | 975,617 | 
|                                          
|                                          
|                                          
|                                          
|Foreign exchange
contracts                 |                                                                   |          |  |          |   |       | 19,117 |                                                          |         |      |  |         |         |      |  |         |         |       | 19,117 |         |         |  |  |        |         |  |  |        |        |        |  |        |        |  | 19,106 |        
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                   | Total    |  |          |   |       |        |                                                          | 811,919 |      |  |         | 168,079 |      |  |         | 232,079 |       |        |         | 217,093 |  |  |        | 143,727 |  |  |        | 23,242 |        |  |        | 27,699 |  |        |         | 994,723 | 
|                                          






Item 12.   Description of Securities Other than Equity Securities

Not applicable



---



##### Table of Contents



- 64 -




PART II






Item 13.   Defaults, Dividend Arrearages and Delinquencies

None






Item 14.   Material Modifications to the Rights of Security Holders and Use of Proceeds

None






Item 15.   [ Reserved ]






Item 16.   [ Reserved ]



---



##### Table of Contents



- 65 -




PART III




Item 17.   Financial Statements

Index of Consolidated Financial Statements of Matsushita Electric Industrial
Co., Ltd. and Subsidiaries:

|                                                            |                                                                                                                                                    |  |      |     | 
|----------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                            |                                                                                                                                                    |  | Page
|                                                            |                                                                                                                                                    |  |     
|                                                            | Independent Auditors Report                                                                                                                       |  |      | 66  | 
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Consolidated Balance Sheets as of March 31, 2001 and 2000                                                                                          |  |      | 67  | 
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Consolidated Statements of Income for the years ended
March 31, 2001, 2000 and 1999                                                                |  |      | 69  | 
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Consolidated Statements of Stockholders Equity for the years ended
March 31, 2001, 2000 and 1999                                                  |  |      | 70  | 
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Consolidated Statements of Cash Flows for the years ended
March 31, 2001, 2000 and 1999                                                            |  |      | 72  | 
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Notes to Consolidated Financial Statements                                                                                                         |  |      | 74  | 
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|Schedule for the years ended March 31, 2001, 2000 and 1999:
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Schedule II          Valuation and Qualifying Accounts and Reserves
                            
for the years ended March 31, 2001, 2000 and 1999 |  |      | 101 | 

All other schedules are omitted as permitted by the rules and regulations of
the Securities and Exchange Commission as the required information is presented
in the consolidated financial statements or notes thereto, or the schedules are
not applicable.

Financial statements of nonconsolidated subsidiaries and affiliates 20% to 50%
owned are omitted because none of such subsidiaries and affiliates constitute a
significant subsidiary.



---



##### Table of Contents



- 66 -

Independent Auditors
Report

The Board of Directors and Stockholders
Matsushita Electric Industrial Co., Ltd.:

We have audited the consolidated financial statements of Matsushita Electric
Industrial Co., Ltd. and subsidiaries as listed in the accompanying index. In
connection with our audits of the consolidated financial statements, we also
have audited the financial statement schedule as listed in the accompanying
index. These consolidated financial statements and financial statement
schedule are the responsibility of the Companys management. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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
audits provide a reasonable basis for our opinion.

The segment information required to be disclosed in financial statements under
accounting principles generally accepted in the United States of America is not
presented in the accompanying consolidated financial statements. Foreign
issuers are presently exempted from such disclosure requirement in Securities
Exchange Act filings with the United States Securities and Exchange Commission.

In our report dated May 10, 2000, we expressed an opinion that the 2000 and
1999 consolidated financial statements of Matsushita Electric Industrial Co.,
Ltd. and subsidiaries presented fairly, in all material respects, the financial
position, the results of their operations and their cash flows in conformity
with accounting principles generally accepted in the United States of America
except for the effects of the departure from Statement of Financial Accounting
Standards No. 115 in accounting for certain investments in debt and equity
securities and except for the omission of the segment information. As
described in Note 1(i) of the notes to the consolidated financial statements,
Matsushita Electric Industrial Co., Ltd. and subsidiaries have changed their
method of accounting for such investments in debt and equity securities and
restated their 2000 and 1999 consolidated financial statements to conform with
accounting principles generally accepted in the United States of America.
Accordingly, our present opinion on the 2000 and 1999 consolidated financial
statements, as presented herein, is different from that expressed in our
previous report.

In our opinion, except for the omission of the segment information discussed in
the third paragraph, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Matsushita
Electric Industrial Co., Ltd. and subsidiaries as of March 31, 2001 and 2000,
and the results of their operations and their cash flows for each of the years
in the three-year period ended March 31, 2001, in conformity with accounting
principles generally accepted in the United States of America. Also in our
opinion, the related financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.

|                                                                               |  |  |      | 
|------------------------------------------------------------------------------ |  |  | ---- | 
|                                                                               |  |  | KPMG | 
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Osaka, Japan
April 27, 2001, except as to Note 10,
which is as of July 2, 2001



---



##### Table of Contents



- 67 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Consolidated Balance Sheets

March 31, 2001 and 2000

|                                           |                                         |                                    |                                   |                      |                |           |           |           |           |           | 
|------------------------------------------ | --------------------------------------- | ---------------------------------- | --------------------------------- | -------------------- | -------------- | --------- | --------- | --------- | --------- | --------- | 
|                                           |                                         |                                    |                                   |                      | Yen (millions)
|                                           |                                         |                                    |                                   |                      |               
|                                           |                                         |                                    |                                   |                      | 2001           |           | 2000     
|Assets                                     |                                         |                                    |                                   | (Restated-Note 1(i))
|                                           |                                         |                                    |                                   |                     
|Current assets:                           
|                                          
|                                          
|                                          
|                                          
|                                           | Cash and cash equivalents (Note 7)      |                                    |                                   | 848,878              |                |           |           | 1,116,262 |          
|                                          
|                                          
|                                          
|                                          
|                                           | Time deposits (Note 7)                  |                                    |                                   | 527,145              |                |           |           | 340,000   |          
|                                          
|                                          
|                                          
|                                          
|                                           | Short-term investments (Notes 4 and 15) |                                    |                                   | 11,421               |                |           |           | 136,883   |          
|                                          
|                                          
|                                          
|                                          
|                                           | Trade receivables (Note 7):            
|                                          
|                                          
|                                          
|                                          
|                                           |                                         | Related companies (Note 3)         |                                   |                      | 21,945         |           |           |           | 20,731    |          
|                                          
|                                          
|                                          
|                                          
|                                           |                                         | Notes                              |                                   |                      | 106,334        |           |           |           | 92,939    |          
|                                          
|                                          
|                                          
|                                          
|                                           |                                         | Accounts                           |                                   |                      | 1,310,329      |           |           |           | 1,226,043 |          
|                                          
|                                          
|                                          
|                                          
|                                           |                                         | Allowance for doubtful receivables |                                   |                      | (42,530        | )         |           |           | (42,098   | )        
|                                           |                                         |                                    |                                   |                      |                |           |           |          
|                                           |                                         |                                    | Net trade receivables             |                      |                | 1,396,078 |           |           |           | 1,297,615 | 
|                                           |                                         |                                    |                                   |                      |                |           |           |          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                           | Inventories (Notes 2 and 7)             |                                    |                                   | 1,047,615            |                |           |           | 942,205   |          
|                                          
|                                          
|                                          
|                                          
|                                           | Other current assets (Note 9)           |                                    |                                   | 486,812              |                |           |           | 417,650   |          
|                                           |                                         |                                    |                                   |                      |                |           |           |          
|                                           |                                         |                                    | Total current assets              |                      |                | 4,317,949 |           |           |           | 4,250,615 | 
|                                           |                                         |                                    |                                   |                      |                |           |           |          
|                                          
|                                          
|                                          
|                                          
|                                          
|Noncurrent receivables (Note 5)            |                                         |                                    | 246,419                           |                      |                |           | 268,288   |          
|                                          
|                                          
|                                          
|                                          
|                                          
|Investments and advances (Notes 4 and 15):
|                                          
|                                          
|                                          
|                                          
|                                           | Associated companies (Note 3)           |                                    |                                   | 336,221              |                |           |           | 328,816   |          
|                                          
|                                          
|                                          
|                                          
|                                           | Other investments and advances          |                                    |                                   | 1,175,116            |                |           |           | 1,316,614 |          
|                                           |                                         |                                    |                                   |                      |                |           |           |          
|                                           |                                         |                                    | Total investments and advances    |                      |                | 1,511,337 |           |           |           | 1,645,430 | 
|                                           |                                         |                                    |                                   |                      |                |           |           |          
|                                          
|                                          
|                                          
|                                          
|                                          
|Property, plant and equipment (Note 6):   
|                                          
|                                          
|                                          
|                                          
|                                           | Land                                    |                                    |                                   | 223,910              |                |           |           | 220,971   |          
|                                          
|                                          
|                                          
|                                          
|                                           | Buildings                               |                                    |                                   | 1,265,932            |                |           |           | 1,212,634 |          
|                                          
|                                          
|                                          
|                                          
|                                           | Machinery and equipment                 |                                    |                                   | 3,188,884            |                |           |           | 3,021,725 |          
|                                          
|                                          
|                                          
|                                          
|                                           | Construction in progress                |                                    |                                   | 152,126              |                |           |           | 89,512    |          
|                                           |                                         |                                    |                                   |                      |                |           |           |          
|                                           |                                         |                                    | 4,830,852                         |                      |                |           | 4,544,842 |          
|                                          
|                                          
|                                          
|                                          
|                                           | Less accumulated depreciation           |                                    |                                   | 3,252,791            |                |           |           | 3,144,157 |          
|                                           |                                         |                                    |                                   |                      |                |           |           |          
|                                           |                                         |                                    | Net property, plant and equipment |                      |                | 1,578,061 |           |           |           | 1,400,685 | 
|                                           |                                         |                                    |                                   |                      |                |           |           |          
|Other assets (Note 9)                      |                                         |                                    | 502,522                           |                      |                |           | 390,057   |          
|                                           |                                         |                                    |                                   |                      |                |           |           |          
|                                           |                                         |                                    | 8,156,288                         |                      |                |           | 7,955,075 |          
|                                           |                                         |                                    |                                   |                      |                |           |           |          

See accompanying Notes to Consolidated Financial Statements.



---



##### Table of Contents



- 68 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Consolidated Balance Sheets

March 31, 2001 and 2000

|                                                 |                                                                                     |                                                              |                                         |                                                     |          |                |           |           |          |         |           |  
|------------------------------------------------ | ----------------------------------------------------------------------------------- | ------------------------------------------------------------ | --------------------------------------- | --------------------------------------------------- | -------- | -------------- | --------- | --------- | -------- | ------- | --------- | -
|                                                 |                                                                                     |                                                              |                                         |                                                     |          | Yen (millions)
|                                                 |                                                                                     |                                                              |                                         |                                                     |          |               
|                                                 |                                                                                     |                                                              |                                         |                                                     |          | 2001           |           | 2000     
|Liabilities and Stockholders' Equity             |                                                                                     |                                                              |                                         | (Restated-Note 1(i))                               
|                                                 |                                                                                     |                                                              |                                         |                                                    
|Current liabilities:                            
|                                                
|                                                
|                                                
|                                                
|                                                 | Short-term borrowings, including current portion of long-term debt
(Notes 7 and 15) |                                                              |                                         | 470,965                                             |          |                |           | 424,461   |         
|                                                
|                                                
|                                                
|                                                
|                                                 | Commercial paper                                                                    |                                                              |                                         | 77,494                                              |          |                |           | 42,408    |         
|                                                
|                                                
|                                                
|                                                
|                                                 | Trade payables:                                                                    
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                     |                                                              | Related companies (Note 3)              |                                                     |          | 18,860         |           |           |          | 19,094  |          
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                     |                                                              | Notes                                   |                                                     |          | 73,430         |           |           |          | 56,724  |          
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                     |                                                              | Accounts                                |                                                     |          | 585,433        |           |           |          | 581,132 |          
|                                                 |                                                                                     |                                                              |                                         |                                                     |          |                |           |          
|                                                 |                                                                                     |                                                              |                                         | Total trade payables                                |          |                | 677,723   |           |          |         | 656,950   |  
|                                                 |                                                                                     |                                                              |                                         |                                                     |          |                |           |          
|                                                
|                                                
|                                                
|                                                
|                                                
|                                                 | Accrued income taxes (Note 9)                                                       |                                                              |                                         | 55,343                                              |          |                |           | 81,964    |         
|                                                
|                                                
|                                                
|                                                
|                                                 | Accrued payroll                                                                     |                                                              |                                         | 158,697                                             |          |                |           | 153,441   |         
|                                                
|                                                
|                                                
|                                                
|                                                 | Other accrued expenses                                                              |                                                              |                                         | 663,541                                             |          |                |           | 551,426   |         
|                                                
|                                                
|                                                
|                                                
|                                                 | Deposits and advances from customers                                                |                                                              |                                         | 114,179                                             |          |                |           | 109,563   |         
|                                                
|                                                
|                                                
|                                                
|                                                 | Employees deposits                                                                 |                                                              |                                         | 153,147                                             |          |                |           | 150,109   |         
|                                                
|                                                
|                                                
|                                                
|                                                 | Other current liabilities                                                           |                                                              |                                         | 321,698                                             |          |                |           | 287,000   |         
|                                                 |                                                                                     |                                                              |                                         |                                                     |          |                |           |          
|                                                 |                                                                                     |                                                              |                                         | Total current liabilities                           |          |                | 2,692,787 |           |          |         | 2,457,322 |  
|                                                 |                                                                                     |                                                              |                                         |                                                     |          |                |           |          
|                                                
|                                                
|                                                
|                                                
|                                                
|Noncurrent liabilities:                         
|                                                
|                                                
|                                                
|                                                
|                                                 | Long-term debt (Notes 7 and 15)                                                     |                                                              |                                         | 541,541                                             |          |                |           | 643,840   |         
|                                                
|                                                
|                                                
|                                                
|                                                 | Retirement and severance benefits (Note 8)                                          |                                                              |                                         | 558,396                                             |          |                |           | 528,878   |         
|                                                
|                                                
|                                                
|                                                
|                                                 | Other liabilities (Note 9)                                                          |                                                              |                                         | 23,075                                              |          |                |           | 46,292    |         
|                                                 |                                                                                     |                                                              |                                         |                                                     |          |                |           |          
|                                                 |                                                                                     |                                                              |                                         | Total noncurrent liabilities                        |          |                | 1,123,012 |           |          |         | 1,219,010 |  
|                                                 |                                                                                     |                                                              |                                         |                                                     |          |                |           |          
|Minority interests                               |                                                                                     |                                                              | 567,809                                 |                                                     |          |                | 594,414   |          
|                                                
|                                                
|                                                
|                                                
|                                                
|                                                
|                                                
|                                                
|                                                
|Stockholders equity:                           
|                                                
|                                                
|                                                
|                                                
|                                                 | Common stock of 50 yen par value (Notes 7 and 10):                                 
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                     | Authorized - 4,950,000,000 shares                            |                                         |                                                     |          |                |           |           |          |        
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                     | Issued - 2,079,572,737 shares (2,062,671,309 shares in 2000) |                                         |                                                     | 210,994  |                |           |           | 209,708  |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Capital surplus (Notes 7 and 10)                                                    |                                                              |                                         | 621,267                                             |          |                |           | 570,964   |         
|                                                
|                                                
|                                                
|                                                
|                                                 | Legal reserve (Note 10)                                                             |                                                              |                                         | 88,251                                              |          |                |           | 86,553    |         
|                                                
|                                                
|                                                
|                                                
|                                                 | Retained earnings (Note 10)                                                         |                                                              |                                         | 2,924,071                                           |          |                |           | 2,911,665 |         
|                                                
|                                                
|                                                
|                                                
|                                                 | Accumulated other comprehensive income (loss) (Notes 4 and 11):                    
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                     | Cumulative translation adjustments                           |                                         |                                                     | (150,027 | )              |           |           | (294,711 | )      
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                     | Unrealized holding gains of available-for-sale securities    |                                         |                                                     | 78,863   |                |           |           | 200,690  |        
|                                                 |                                                                                     |                                                              |                                         |                                                     |          |                |           |          
|                                                 |                                                                                     |                                                              |                                         | Total accumulated other comprehensive income (loss) |          |                | (71,164   | )         |          |         | (94,021   | )
|                                                 |                                                                                     |                                                              |                                         |                                                     |          |                |           |          
|                                                 | Treasury stock, at cost (Note 10):                                                 
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                     |                                                              | 295,000 shares (229,000 shares in 2000) |                                                     |          | (739           | )         |           |          | (540    | )        
|                                                 |                                                                                     |                                                              |                                         |                                                     |          |                |           |          
|                                                
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                     |                                                              |                                         | Total stockholders equity                          |          |                | 3,772,680 |           |          |         | 3,684,329 |  
|                                                
|Commitments and contingent liabilities (Note 16)
|                                                 |                                                                                     |                                                              |                                         |                                                     |          |                |           |          
|                                                 |                                                                                     |                                                              | 8,156,288                               |                                                     |          |                | 7,955,075 |          
|                                                 |                                                                                     |                                                              |                                         |                                                     |          |                |           |          

See accompanying Notes to Consolidated Financial Statements.



---



##### Table of Contents



- 69 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Consolidated Statements of Income

Years ended March 31, 2001, 2000 and 1999

|                                                             |                                                        |                            |                                                                                          |           |                |           |         |           |                      |           |         |           |           |           | 
|------------------------------------------------------------ | ------------------------------------------------------ | -------------------------- | ---------------------------------------------------------------------------------------- | --------- | -------------- | --------- | ------- | --------- | -------------------- | --------- | ------- | --------- | --------- | --------- | 
|                                                             |                                                        |                            |                                                                                          |           | Yen (millions)
|                                                             |                                                        |                            |                                                                                          |           |               
|                                                             |                                                        |                            |                                                                                          |           | 2001           |           | 2000    |           | 1999                
|                                                             |                                                        |                            |                                                                                          |           |                |           |         |           | (Restated-Note 1(i))
|                                                             |                                                        |                            |                                                                                          |           |                |           |         |           |                      |           |         |           |          
|Revenues:                                                   
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Net sales:                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                        | Related companies (Note 3) |                                                                                          |           | 171,756        |           |         |           | 168,774              |           |         |           | 204,339   |          
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                        | Other                      |                                                                                          |           | 7,509,805      |           |         |           | 7,130,613            |           |         |           | 7,435,780 |          
|                                                             |                                                        |                            |                                                                                          |           |                |           |         |           |                      |           |         |          
|                                                             |                                                        |                            | Total net sales                                                                          |           |                | 7,681,561 |         |           |                      | 7,299,387 |         |           |           | 7,640,119 | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Interest income                                        |                            |                                                                                          | 43,712    |                |           |         | 42,949    |                      |           |         | 54,430    |          
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Dividends received                                     |                            |                                                                                          | 12,237    |                |           |         | 14,674    |                      |           |         | 9,865     |          
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Other income (Notes 4 and 13)                          |                            |                                                                                          | 54,082    |                |           |         | 135,746   |                      |           |         | 52,638    |          
|                                                             |                                                        |                            |                                                                                          |           |                |           |         |           |                      |           |         |          
|                                                             |                                                        |                            | Total revenues                                                                           |           |                | 7,791,592 |         |           |                      | 7,492,756 |         |           |           | 7,757,052 | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|Costs and expenses:                                         
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Cost of sales (Notes 3 and 13)                         |                            |                                                                                          | 5,481,314 |                |           |         | 5,190,791 |                      |           |         | 5,346,914 |          
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Selling, general and administrative expenses (Note 13) |                            |                                                                                          | 2,011,843 |                |           |         | 1,949,542 |                      |           |         | 2,099,521 |          
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Interest expense                                       |                            |                                                                                          | 43,538    |                |           |         | 46,237    |                      |           |         | 62,083    |          
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Other deductions (Notes 4, 5, 6 and 13)                |                            |                                                                                          | 154,162   |                |           |         | 87,581    |                      |           |         | 46,241    |          
|                                                             |                                                        |                            |                                                                                          |           |                |           |         |           |                      |           |         |          
|                                                             |                                                        |                            | Total costs and expenses                                                                 |           |                | 7,690,857 |         |           |                      | 7,274,151 |         |           |           | 7,554,759 | 
|                                                             |                                                        |                            |                                                                                          |           |                |           |         |           |                      |           |         |          
|                                                             |                                                        |                            | Income before income taxes                                                               |           |                | 100,735   |         |           |                      | 218,605   |         |           |           | 202,293   | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|Provision for income taxes (Note 9):                        
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Current                                                |                            |                                                                                          | 117,855   |                |           |         | 178,445   |                      |           |         | 152,303   |          
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Deferred                                               |                            |                                                                                          | (67,994   | )              |           |         | (41,430   | )                    |           |         | 12,076    |          
|                                                             |                                                        |                            |                                                                                          |           |                |           |         |           |                      |           |         |          
|                                                             |                                                        |                            | 49,861                                                                                   |           |                |           | 137,015 |           |                      |           | 164,379 |          
|                                                             |                                                        |                            |                                                                                          |           |                |           |         |           |                      |           |         |          
|                                                             |                                                        |                            | Income before minority interests
and equity in earnings (losses) of
associated companies |           |                | 50,874    |         |           |                      | 81,590    |         |           |           | 37,914    | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|Minority interests                                           |                                                        |                            | 22,125                                                                                   |           |                |           | (941    | )         |                      |           | 8,330   |          
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|Equity in earnings (losses) of associated
companies (Note 3) |                                                        |                            | 12,751                                                                                   |           |                |           | 17,178  |           |                      |           | (5,338  | )        
|                                                             |                                                        |                            |                                                                                          |           |                |           |         |           |                      |           |         |          
|                                                             |                                                        |                            | Net income                                                                               |           |                | 41,500    |         |           |                      | 99,709    |         |           |           | 24,246    | 
|                                                             |                                                        |                            |                                                                                          |           |                |           |         |           |                      |           |         |          
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                        |                            |                                                                                          |           |                | Yen      
|                                                             |                                                        |                            |                                                                                          |           |                |          
|Net income per share of common stock (Note 12):             
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Basic                                                  |                            |                                                                                          |           |                | 19.96     |         |           |                      | 48.35     |         |           |           | 11.60     | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Diluted                                                |                            |                                                                                          |           |                | 19.56     |         |           |                      | 46.36     |         |           |           | 11.58     | 

See accompanying Notes to Consolidated Financial Statements.



---



##### Table of Contents



- 70 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Consolidated Statements of Stockholders Equity

Years ended March 31, 2001, 2000 and 1999

|                                                         |                                                                                                |  |                |           |                      |  |      |           |   |  |  |           |  
|-------------------------------------------------------- | ---------------------------------------------------------------------------------------------- |  | -------------- | --------- | -------------------- |  | ---- | --------- | - |  |  | --------- | -
|                                                         |                                                                                                |  | Yen (millions)
|                                                         |                                                                                                |  |               
|                                                         |                                                                                                |  | 2001           |           | 2000                 |  | 1999
|                                                         |                                                                                                |  |                |           | (Restated-Note 1(i))
|                                                         |                                                                                                |  |                |           |                     
|                                                        
|                                                        
|                                                        
|                                                        
|Common
stock (Notes 10 and 13):                         
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Balance at beginning of year                                                                   |  |                | 209,708   |                      |  |      | 209,444   |   |  |  | 209,416   |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Conversion of bonds                                                                            |  |                | 470       |                      |  |      | 264       |   |  |  | 28        |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Stock issued under exchange offering                                                           |  |                | 816       |                      |  |      |          |   |  |  |          |  
|                                                         |                                                                                                |  |                |           |                      |  |      |           |   |  |  |          
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Balance at end of year                                                                         |  |                | 210,994   |                      |  |      | 209,708   |   |  |  | 209,444   |  
|                                                         |                                                                                                |  |                |           |                      |  |      |           |   |  |  |          
|                                                        
|                                                        
|                                                        
|                                                        
|Capital surplus (Notes 10 and 13):                      
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Balance at beginning of year                                                                   |  |                | 570,964   |                      |  |      | 567,696   |   |  |  | 570,628   |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Conversion of bonds                                                                            |  |                | 470       |                      |  |      | 264       |   |  |  | 28        |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Stock issued under exchange offering                                                           |  |                | 49,291    |                      |  |      |          |   |  |  |          |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Transfer from retained earnings due to a merger of a
subsidiary                                |  |                | 1,511     |                      |  |      |          |   |  |  |          |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Transfer of ownership arising on capital transactions by
consolidated and associated companies |  |                | (969      | )                    |  |      | 3,004     |   |  |  | (2,960    | )
|                                                         |                                                                                                |  |                |           |                      |  |      |           |   |  |  |          
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Balance at end of year                                                                         |  |                | 621,267   |                      |  |      | 570,964   |   |  |  | 567,696   |  
|                                                         |                                                                                                |  |                |           |                      |  |      |           |   |  |  |          
|                                                        
|                                                        
|                                                        
|                                                        
|Legal reserve (Note 10):                                
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Balance at beginning of year                                                                   |  |                | 86,553    |                      |  |      | 86,112    |   |  |  | 84,039    |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Transfer from retained earnings                                                                |  |                | 1,698     |                      |  |      | 441       |   |  |  | 2,073     |  
|                                                         |                                                                                                |  |                |           |                      |  |      |           |   |  |  |          
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Balance at end of year                                                                         |  |                | 88,251    |                      |  |      | 86,553    |   |  |  | 86,112    |  
|                                                         |                                                                                                |  |                |           |                      |  |      |           |   |  |  |          
|                                                        
|                                                        
|                                                        
|                                                        
|                                                        
|Retained earnings (Note 10):                            
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Balance at beginning of year                                                                   |  |                | 2,911,665 |                      |  |      | 2,841,268 |   |  |  | 2,944,282 |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Net income                                                                                     |  |                | 41,500    |                      |  |      | 99,709    |   |  |  | 24,246    |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Cash dividends                                                                                 |  |                | (25,885   | )                    |  |      | (28,871   | ) |  |  | (26,304   | )
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Transfer to legal reserve                                                                      |  |                | (1,698    | )                    |  |      | (441      | ) |  |  | (2,073    | )
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Transfer to capital surplus due to a merger of a subsidiary                                    |  |                | (1,511    | )                    |  |      |          |   |  |  |          |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Retirement of treasury stock                                                                   |  |                |          |                      |  |      |          |   |  |  | (98,883   | )
|                                                         |                                                                                                |  |                |           |                      |  |      |           |   |  |  |          
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Balance at end of year                                                                         |  |                | 2,924,071 |                      |  |      | 2,911,665 |   |  |  | 2,841,268 |  
|                                                         |                                                                                                |  |                |           |                      |  |      |           |   |  |  |          
|                                                        
|                                                        
|                                                        
|                                                        
|                                                        
|Accumulated other comprehensive income (loss) (Note 11):
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Balance at beginning of year                                                                   |  |                | (94,021   | )                    |  |      | (62,117   | ) |  |  | 45,317    |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Other comprehensive income (loss), net of tax                                                  |  |                | 22,857    |                      |  |      | (31,904   | ) |  |  | (107,434  | )
|                                                         |                                                                                                |  |                |           |                      |  |      |           |   |  |  |          
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Balance at end of year                                                                         |  |                | (71,164   | )                    |  |      | (94,021   | ) |  |  | (62,117   | )
|                                                         |                                                                                                |  |                |           |                      |  |      |           |   |  |  |          

(Continued)



---



##### Table of Contents



- 71 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Consolidated Statements of Stockholders Equity

Years ended March 31, 2001, 2000 and 1999

|                                                     |                                                |                                                           |  |                |          |                      |  |        |          |   |  |         |          |  
|---------------------------------------------------- | ---------------------------------------------- | --------------------------------------------------------- |  | -------------- | -------- | -------------------- |  | ------ | -------- | - |  | ------- | -------- | -
|                                                     |                                                |                                                           |  | Yen (millions)
|                                                     |                                                |                                                           |  |               
|                                                     |                                                |                                                           |  | 2001           |          | 2000                 |  | 1999  
|                                                     |                                                |                                                           |  |                |          | (Restated-Note 1(i))
|                                                     |                                                |                                                           |  |                |          |                     
|Treasury stock (Note 10):                           
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Balance at beginning of year                   |                                                           |  | (540           | )        |                      |  | (252   | )        |   |  |        |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Repurchase of common stock                     |                                                           |  | (307           | )        |                      |  | (288   | )        |   |  | (99,135 | )       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Exercise of stock options                      |                                                           |  | 83             |          |                      |  |       |          |   |  |        |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Sale of treasury stock                         |                                                           |  | 25             |          |                      |  |       |          |   |  |        |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Retirement of treasury stock                   |                                                           |  |               |          |                      |  |       |          |   |  | 98,883  |         
|                                                     |                                                |                                                           |  |                |          |                      |  |        |          |   |  |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Balance at end of year                         |                                                           |  | (739           | )        |                      |  | (540   | )        |   |  | (252    | )       
|                                                     |                                                |                                                           |  |                |          |                      |  |        |          |   |  |        
|                                                     |                                                |                                                           |  |                |          |                      |  |        |          |   |  |        
|Disclosure of comprehensive income (loss) (Note 11):
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Net income                                     |                                                           |  | 41,500         |          |                      |  | 99,709 |          |   |  | 24,246  |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Other comprehensive income (loss), net of tax:
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                | Translation adjustments                                   |  |                | 144,684  |                      |  |        | (139,946 | ) |  |         | (122,257 | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                | Unrealized holding gains of
available-for-sale securities |  |                | (121,827 | )                    |  |        | 108,042  |   |  |         | 14,823   |  
|                                                     |                                                |                                                           |  |                |          |                      |  |        |          |   |  |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Total comprehensive income (loss)              |                                                           |  | 64,357         |          |                      |  | 67,805 |          |   |  | (83,188 | )       
|                                                     |                                                |                                                           |  |                |          |                      |  |        |          |   |  |        

See accompanying Notes to Consolidated Financial Statements.



---



##### Table of Contents



- 72 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years ended March 31, 2001, 2000 and 1999

|                                                |  |                                                                                   |                                                                       |  |                |          |      |  |                      |          |   |  |          |          |  
|----------------------------------------------- |  | --------------------------------------------------------------------------------- | --------------------------------------------------------------------- |  | -------------- | -------- | ---- |  | -------------------- | -------- | - |  | -------- | -------- | -
|                                                |  |                                                                                   |                                                                       |  | Yen (millions)
|                                                |  |                                                                                   |                                                                       |  |               
|                                                |  |                                                                                   |                                                                       |  | 2001           |          | 2000 |  | 1999                
|                                                |  |                                                                                   |                                                                       |  |                |          |      |  | (Restated-Note 1(i))
|                                                |  |                                                                                   |                                                                       |  |                |          |      |  |                     
|Cash flows from operating activities (Note 13):
|                                               
|                                               
|                                               
|                                               
|                                                |  | Net income                                                                        |                                                                       |  | 41,500         |          |      |  | 99,709               |          |   |  | 24,246   |         
|                                               
|                                               
|                                               
|                                               
|                                                |  | Adjustments to reconcile net income to net cash
provided by operating activities:
|                                               
|                                               
|                                               
|                                               
|                                                |  |                                                                                   | Depreciation and amortization                                         |  |                | 374,102  |      |  |                      | 364,966  |   |  |          | 373,155  |  
|                                               
|                                               
|                                               
|                                               
|                                                |  |                                                                                   | Net gain on sale of investments                                       |  |                | (13,706  | )    |  |                      | (98,278  | ) |  |          | (14,198  | )
|                                               
|                                               
|                                               
|                                               
|                                                |  |                                                                                   | Provision for doubtful receivables                                    |  |                | 16,449   |      |  |                      | 11,980   |   |  |          | 13,505   |  
|                                               
|                                               
|                                               
|                                               
|                                                |  |                                                                                   | Deferred income taxes                                                 |  |                | (67,994  | )    |  |                      | (41,430  | ) |  |          | 12,076   |  
|                                               
|                                               
|                                               
|                                               
|                                                |  |                                                                                   | Impairment loss on long-lived assets (Note 6)                         |  |                |         |      |  |                      | 19,565   |   |  |          |         |  
|                                               
|                                               
|                                               
|                                               
|                                                |  |                                                                                   | Minority interests                                                    |  |                | 22,125   |      |  |                      | (941     | ) |  |          | 8,330    |  
|                                               
|                                               
|                                               
|                                               
|                                                |  |                                                                                   | (Increase) decrease in trade receivables                              |  |                | (69,146  | )    |  |                      | (28,889  | ) |  |          | (37,724  | )
|                                               
|                                               
|                                               
|                                               
|                                                |  |                                                                                   | (Increase) decrease in inventories                                    |  |                | (56,335  | )    |  |                      | 17,564   |   |  |          | 36,587   |  
|                                               
|                                               
|                                               
|                                               
|                                                |  |                                                                                   | (Increase) decrease in other current assets                           |  |                | 27,682   |      |  |                      | (14,274  | ) |  |          | (21,951  | )
|                                               
|                                               
|                                               
|                                               
|                                                |  |                                                                                   | (Increase) decrease in noncurrent receivables                         |  |                | 21,656   |      |  |                      | 6,387    |   |  |          | 6,527    |  
|                                               
|                                               
|                                               
|                                               
|                                                |  |                                                                                   | Increase (decrease) in trade payables                                 |  |                | (4,284   | )    |  |                      | 30,042   |   |  |          | 2,213    |  
|                                               
|                                               
|                                               
|                                               
|                                                |  |                                                                                   | Increase (decrease) in accrued income taxes                           |  |                | (28,839  | )    |  |                      | 261      |   |  |          | (7,743   | )
|                                               
|                                               
|                                               
|                                               
|                                                |  |                                                                                   | Increase (decrease) in accrued expenses and
other current liabilities |  |                | 101,747  |      |  |                      | 65,995   |   |  |          | 29,994   |  
|                                               
|                                               
|                                               
|                                               
|                                                |  |                                                                                   | Increase (decrease) in retirement and severance
benefits              |  |                | 26,789   |      |  |                      | 34,625   |   |  |          | 42,231   |  
|                                               
|                                               
|                                               
|                                               
|                                                |  |                                                                                   | Other                                                                 |  |                | 706      |      |  |                      | 8,854    |   |  |          | 31,903   |  
|                                                |  |                                                                                   |                                                                       |  |                |          |      |  |                      |          |   | 
|                                               
|                                               
|                                               
|                                               
|                                               
|                                                |  |                                                                                   | Net cash provided by operating
activities                             |  |                | 392,452  |      |  |                      | 476,136  |   |  |          | 499,151  |  
|                                                |  |                                                                                   |                                                                       |  |                |          |      |  |                      |          |   | 
|                                               
|                                               
|                                               
|                                               
|                                               
|Cash flows from investing activities (Note 13):
|                                               
|                                               
|                                               
|                                               
|                                                |  | Proceeds from sale of short-term investments                                      |                                                                       |  | 145,870        |          |      |  | 259,485              |          |   |  | 376,174  |         
|                                               
|                                               
|                                               
|                                               
|                                                |  | Purchase of short-term investments                                                |                                                                       |  | (105,127       | )        |      |  | (278,243             | )        |   |  | (362,062 | )       
|                                               
|                                               
|                                               
|                                               
|                                                |  | Proceeds from disposition of investments and advances                             |                                                                       |  | 110,405        |          |      |  | 146,885              |          |   |  | 84,014   |         
|                                               
|                                               
|                                               
|                                               
|                                                |  | Increase in investments and advances                                              |                                                                       |  | (71,203        | )        |      |  | (71,186              | )        |   |  | (137,456 | )       
|                                               
|                                               
|                                               
|                                               
|                                                |  | Capital expenditures                                                              |                                                                       |  | (480,844       | )        |      |  | (331,475             | )        |   |  | (359,037 | )       
|                                               
|                                               
|                                               
|                                               
|                                                |  | Increase in time deposits                                                         |                                                                       |  | (160,576       | )        |      |  | (340,000             | )        |   |  |         |         
|                                               
|                                               
|                                               
|                                               
|                                                |  | Other                                                                             |                                                                       |  | (21,113        | )        |      |  | 10,180               |          |   |  | 20,612   |         
|                                                |  |                                                                                   |                                                                       |  |                |          |      |  |                      |          |   | 
|                                                |  |                                                                                   | Net cash used in investing activities                                 |  |                | (582,588 | )    |  |                      | (604,354 | ) |  |          | (377,755 | )
|                                                |  |                                                                                   |                                                                       |  |                |          |      |  |                      |          |   | 

(Continued)



---



##### Table of Contents



- 73 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years ended March 31, 2001, 2000 and 1999

|                                                             |                                                                |                                       |           |                |   |      |           |                      |   |  |           |          |   | 
|------------------------------------------------------------ | -------------------------------------------------------------- | ------------------------------------- | --------- | -------------- | - | ---- | --------- | -------------------- | - |  | --------- | -------- | - | 
|                                                             |                                                                |                                       |           | Yen (millions)
|                                                             |                                                                |                                       |           |               
|                                                             |                                                                |                                       |           | 2001           |   | 2000 |           | 1999                
|                                                             |                                                                |                                       |           |                |   |      |           | (Restated-Note 1(i))
|                                                             |                                                                |                                       |           |                |   |      |           |                     
|Cash
flows from financing activities (Note 13):             
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Decrease in short-term borrowings                              |                                       |           | (44,573        | ) |      |           | (156,619             | ) |  |           | (100,202 | )
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Increase in deposits and advances
from customers and employees |                                       |           | 3,822          |   |      |           | 7,576                |   |  |           | 3,441    |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Proceeds from long-term debt                                   |                                       |           | 380,185        |   |      |           | 240,485              |   |  |           | 186,717  |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Repayments of long-term debt                                   |                                       |           | (415,838       | ) |      |           | (269,915             | ) |  |           | (388,233 | )
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Dividends paid                                                 |                                       |           | (25,885        | ) |      |           | (28,871              | ) |  |           | (26,304  | )
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Dividends paid to minority interests                           |                                       |           | (8,027         | ) |      |           | (8,377               | ) |  |           | (9,998   | )
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Repurchase of common stock (Note 10)                           |                                       |           | (307           | ) |      |           | (288                 | ) |  |           | (99,135  | )
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Decrease of treasury stock (Note 10)                           |                                       |           | 108            |   |      |           |                     |   |  |           |         |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Other                                                          |                                       |           | (2,211         | ) |      |           |                     |   |  |           |         |  
|                                                             |                                                                |                                       |           |                |   |      |           |                      |   |  |           |          |  
|                                                             |                                                                | Net cash
used in financing activities |           | (112,726       | ) |      |           | (216,009             | ) |  |           | (433,714 | )
|                                                             |                                                                |                                       |           |                |   |      |           |                      |   |  |           |         
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|Effect of exchange rate changes on cash and cash equivalents |                                                                |                                       | 35,478    |                |   |      | (73,096   | )                    |   |  | (60,323   | )       
|                                                             |                                                                |                                       |           |                |   |      |           |                      |   |  |           |         
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|Net increase (decrease) in cash and cash equivalents         |                                                                |                                       | (267,384  | )              |   |      | (417,323  | )                    |   |  | (372,641  | )       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|Cash and cash equivalents at beginning of year               |                                                                |                                       | 1,116,262 |                |   |      | 1,533,585 |                      |   |  | 1,906,226 |         
|                                                             |                                                                |                                       |           |                |   |      |           |                      |   |  |           |         
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|Cash and cash equivalents at end of year                     |                                                                |                                       | 848,878   |                |   |      | 1,116,262 |                      |   |  | 1,533,585 |         
|                                                             |                                                                |                                       |           |                |   |      |           |                      |   |  |           |         

See accompanying Notes to Consolidated Financial Statements.



---



##### Table of Contents



- 74 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2001, 2000 and 1999



|(1) |  | Summary of Significant
Accounting Policies
|--- |  | ------------------------------------------



| | (a) |  | Description of Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Matsushita Electric Industrial Co., Ltd. (hereinafter, the Company,
including consolidated subsidiaries, unless the context otherwise
requires) is one of the worlds leading producers of electronic and
electric products. The Company currently offers a comprehensive range
of products, systems and components for consumer, business and
industrial use based on sophisticated electronics and precision
technology. Most of the Companys products are marketed under several
trade names, including Panasonic, National, Technics, Quasar,
Victor and JVC.
|
| |     |  | Sales in fiscal 2001 were categorized as follows: video and audio
equipment23%, home appliances and household equipment17%,
information and communications equipment28%, industrial
equipment11%, and components21%. A sales breakdown in fiscal 2001
by geographical market was as follows: Japan53%, North and South
America18%, Europe11%, and Asia and Others18%.                                                                                                                                                                                                  
|
| |     |  | The Company is not dependent on a single supplier, and has no
significant difficulty in obtaining raw materials from suppliers.                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | (b) |  | Basis of Presentation of Consolidated Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |     |  | The Company and its domestic subsidiaries maintain their books of
account in conformity with financial accounting standards of Japan,
and its foreign subsidiaries in conformity with those of the countries
of their domicile.                                                                                                                                                                                                                                                                                                                                                 
|
| |     |  | The consolidated financial statements presented herein have been
prepared in a manner and reflect the adjustments which are necessary
to conform with accounting principles generally accepted in the United
States of America.                                                                                                                                                                                                                                                                                                                                                 
|
| | (c) |  | Principles of Consolidation (See Note 3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |     |  | The consolidated financial statements include the accounts of the
Company and its subsidiaries. Significant intercompany accounts and
transactions have been eliminated on consolidation.                                                                                                                                                                                                                                                                                                                                                                                       
|
| |     |  | Investments in certain associated companies in which the Companys
ownership is 20% to 50% are stated at their underlying net equity
value after elimination of intercompany profits.                                                                                                                                                                                                                                                                                                                                                                                           



---



##### Table of Contents



- 75 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |     |  | The difference between the cost and underlying net equity
at acquisition of investments in subsidiaries and associated
companies accounted for on an equity basis is allocated to
identifiable assets based on fair market value at the date of
acquisition. The unallocated portion of the difference, which is
recognized as goodwill, is being amortized over a ten- to
forty-year period.                                                                                                                                                                                                                                                                                                                                         
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (d) |  | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |     |  | The Company recognizes revenue when persuasive evidence of
an arrangement exists, delivery has occurred or services have
been rendered, the sellers price to the buyer is fixed or
determinable, and collectibility is reasonably assured.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |     |  | In December 1999, the Securities and Exchange Commission
issued Staff Accounting Bulletin (SAB) No. 101, Revenue
Recognition in Financial Statements. SAB No. 101 as amended,
summarizes certain of the United States Securities and Exchange
Commissions views in applying generally accepted accounting
principles to revenue recognition in financial statements and
provides guidance on revenue recognition issues in the absence of
authoritative literature addressing a specific arrangement or a
specific industry. The Company adopted SAB No. 101 for the year
ended March 31, 2001. Adoption of this guidance did not have a
material effect on the Companys consolidated financial position
or results of operations.
|
| | (e) |  | Leases                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |     |  | Certain subsidiaries of the Company lease machinery and equipment.
Leases of such assets are principally accounted for as direct
financing leases and included in Trade receivablesAccounts and
Noncurrent receivables in the accompanying balance sheets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | (f) |  | Inventories (See Note 2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |     |  | Finished goods and work in process are stated at the lower of cost
(average) or market. Raw materials are stated at cost, principally on
a first-in, first-out basis, not in excess of current replacement
cost.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | (g) |  | Foreign Currency Translation (See Note 11)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |     |  | Foreign currency financial statements are translated in accordance
with Statement of Financial Accounting Standards (SFAS) No. 52,
Foreign Currency Translation, under which all assets and liabilities
are translated into yen at year-end rates and income and expense
accounts are translated at weighted average rates. Adjustments
resulting from the translation of financial statements are reflected
under the caption, Accumulated other comprehensive income (loss), a
separate component of stockholders equity.                                                                                                                                                                                                      



---



##### Table of Contents



- 76 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (h) |  | Property, Plant and Equipment                                                                                                                                        
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Property, plant and equipment is stated at cost. Depreciation is
computed primarily using the declining balance method based on the
following estimated useful lives:

|                        |  |  |               | 
|----------------------- |  |  | ------------- | 
|Buildings               |  |  | 5 to 50 years | 
|                       
|                       
|                       
|                       
|Machinery and equipment |  |  | 2 to 10 years | 



| | (i) |  | Investments in Available-for-Sale Securities (See Notes 4 and
11)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The Company adopted SFAS No. 115, Accounting for Certain Investments
in Debt and Equity Securities, in the fiscal year beginning April 1,
2000, and accordingly, prior year figures have been restated to
reflect this change.                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |     |  | SFAS No. 115 requires that certain investments in debt and equity
securities be classified as held-to-maturity, trading, or
available-for-sale securities. The Company classifies its existing
marketable equity securities other than investments in associated
companies and all debt securities as available-for-sale.
Available-for-sale securities are carried at fair value with
unrealized holding gains or losses included as a component of
accumulated other comprehensive income (loss), net of applicable
taxes.                                                                                                                                                                       
|
| |     |  | Individual securities classified as available-for-sale are reduced to
net realizable value by a charge to income for other than temporary
declines in fair value. Realized gains and losses are determined on
the average cost method and are reflected in income.                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |     |  | As a result of the application of SFAS No. 115, total assets increased
268,192 million yen, stockholders equity increased 217,138 million
yen and comprehensive income increased 108,042 million yen in the
consolidated financial statements as of and for the year ended March
31, 2000, and net income increased 10,705 million yen and
comprehensive income increased 25,528 million yen in the consolidated
financial statements for the year ended March 31, 1999.                                                                                                                                                                                                                          
|
| | (j) |  | Noncurrent Receivables (See Note 5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |     |  | Noncurrent receivables are recorded at cost, less the related
allowance for impaired receivables. A loan is considered to be
impaired when, based on current information and events, it is probable
that a creditor will be unable to collect all amounts due according to
the contractual terms of the loan agreement. When a loan is
considered to be impaired, the amount of impairment is measured based
on the present value of expected future cash flows or the fair value
of the collateral. Cash receipts on impaired receivables are applied
to reduce the principal amount of such receivables until the principal
has been recovered and are recognized as interest income, thereafter.



---



##### Table of Contents



- 77 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (k) |  | Income Taxes (See Note 9)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit
carryforwards.                                                                                                                                                                                                                                                                                                                            
|
| |     |  | Income taxes have not been accrued for undistributed earnings of
foreign subsidiaries and associated companies, as these amounts are
considered to be reinvested indefinitely. Calculation of the
unrecognized deferred tax liability related to these earnings is not
practicable.                                                                                                                                                                                                                                                                                                                                                                                                
|
| | (l) |  | Advertising (See Note 13)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |     |  | Advertising costs are expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | (m) |  | Net Income per Share (See Notes 7, 10 and 12)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |     |  | The Company accounts for net income per share in accordance with SFAS
No. 128, Earnings per Share. This Statement establishes standards
for computing net income per share and requires dual presentation of
basic and diluted net income per share on the face of the income
statement for all entities with complex capital structures.                                                                                                                                                                                                                                                                                                                                        
|
| |     |  | Under SFAS No. 128, basic net income per share is computed based on
the weighted average number of common shares outstanding during each
period, and diluted net income per share assumes the dilution that
could occur if securities or other contracts to issue common stock
were exercised or converted into common stock or resulted in the
issuance of common stock.                                                                                                                                                                                                                                                                                                          
|
| | (n) |  | Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |     |  | Cash equivalents include all highly liquid debt instruments purchased
with a maturity of three months or less.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | (o) |  | Derivative Financial Instruments (See Notes 14 and 15)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |     |  | Derivative financial instruments utilized by the Company and its
subsidiaries are comprised principally of foreign exchange contracts
used to hedge currency risk. Gains and losses on derivatives used to
hedge existing assets or liabilities denominated in foreign currencies
are recognized in income currently, as are the offsetting foreign
exchange gains and losses on the items hedged. Gains and losses
related to qualifying hedges of firm commitments denominated in
foreign currencies are deferred and recognized in income when the
transaction occurs. Derivative financial instruments that do not meet
the criteria for hedge accounting are marked to market.



---



##### Table of Contents



- 78 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (p) |  | Impairment of Long-Lived Assets and Long-Lived Assets to Be
Disposed Of
(See Note 6)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The Company accounts for long-lived assets in accordance with the
provisions of SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. This
Statement requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to future net cash
flows (undiscounted and without interest charges) expected to be
generated by the asset. If such assets are considered to be impaired,
the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets.
Assets to be disposed of are reported at the lower of carrying amount
or fair value less cost to sell.                                                                                                                                                       
|
| | (q) |  | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |     |  | Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and
the disclosure of contingent assets and liabilities to prepare these
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | (r) |  | New Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |     |  | In June 1998, the Financial Accounting Standards Board (FASB) issued
SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities. In June 2000, FASB also issued SFAS No. 138, Accounting
for Certain Derivative Instruments and Certain Hedging Activities, an
amendment of SFAS No. 133. Both Statements establish accounting and
reporting standards for derivative instruments and for hedging
activities, and require that an entity recognize all derivatives as
either assets or liabilities in the balance sheet and measure those
instruments at fair value. Changes in the fair value of derivatives
are recorded each period in current earnings or other comprehensive
income (loss), depending on whether a derivative is designated as part
of a hedge transaction and the type of hedge transaction. The
ineffective portion of all hedges will be recognized in earnings.
SFAS No. 133 and SFAS No. 138 are applicable for the fiscal year
beginning April 1, 2001. The cumulative effect adjustment upon the
adoption of SFAS No. 133 and SFAS No. 138 was not significant.



---



##### Table of Contents



- 79 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|(2) |  | Inventories                                                      
|--- |  | -----------------------------------------------------------------
|   
|    |  | Inventories at March 31, 2001 and 2000 are summarized as follows:

|                |  |  |                |           |      |  |         |         | 
|--------------- |  |  | -------------- | --------- | ---- |  | ------- | ------- | 
|                |  |  | Yen (millions)
|                |  |  |               
|                |  |  | 2001           |           | 2000
|                |  |  |                |           |     
|               
|               
|               
|               
|Finished goods  |  |  | 516,972        |           |      |  | 479,439 |        
|               
|               
|               
|               
|Work in process |  |  | 187,309        |           |      |  | 168,066 |        
|               
|               
|               
|               
|Raw materials   |  |  | 343,334        |           |      |  | 294,700 |        
|                |  |  |                |           |      |  |         |         | 
|               
|               
|               
|               
|               
|                |  |  |                | 1,047,615 |      |  |         | 942,205 | 
|                |  |  |                |           |      |  |         |         | 



|(3) |  | Investments in and
Transactions with Associated Companies                                                                                                                                                                                                                                                                
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Certain financial information in respect of associated companies at
March 31, 2001 and 2000 and for the three years ended March 31, 2001
is shown below. The most significant of these associated companies is
Matsushita Electric Works, Ltd. (MEW). At March 31, 2001, the Company
has a 32.4% equity ownership in MEW.

|                               |            |  |                |         |      |  |           |         | 
|------------------------------ | ---------- |  | -------------- | ------- | ---- |  | --------- | ------- | 
|                               |            |  | Yen (millions)
|                               |            |  |               
|                               |            |  | 2001           |         | 2000
|                               |            |  |                |         |     
|                              
|                              
|                              
|                              
|Current assets                 |            |  | 851,026        |         |      |  | 955,235   |        
|                              
|                              
|                              
|                              
|Other assets                   |            |  | 1,552,170      |         |      |  | 1,421,067 |        
|                               |            |  |                |         |      |  |           |        
|                               |            |  | 2,403,196      |         |      |  | 2,376,302 |        
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|Current liabilities            |            |  | 585,769        |         |      |  | 631,560   |        
|                              
|                              
|                              
|                              
|Other liabilities              |            |  | 869,257        |         |      |  | 809,695   |        
|                               |            |  |                |         |      |  |           |        
|                              
|                              
|                              
|                              
|                              
|                               | Net assets |  |                | 948,170 |      |  |           | 935,047 | 
|                               |            |  |                |         |      |  |           |        
|                              
|                              
|                              
|                              
|                              
|Companys equity in net assets |            |  | 279,266        |         |      |  | 267,454   |        
|                               |            |  |                |         |      |  |           |        

|                  |  |                |           |      |  |      |           |  |  |  |           |  
|----------------- |  | -------------- | --------- | ---- |  | ---- | --------- |  |  |  | --------- | -
|                  |  | Yen (millions)
|                  |  |               
|                  |  | 2001           |           | 2000 |  | 1999
|                  |  |                |           |      |  |     
|                 
|                 
|                 
|                 
|Net sales         |  |                | 1,807,373 |      |  |      | 1,835,138 |  |  |  | 2,175,672 |  
|                 
|                 
|                 
|                 
|Gross profit      |  |                | 492,107   |      |  |      | 500,373   |  |  |  | 502,972   |  
|                 
|                 
|                 
|                 
|Net income (loss) |  |                | 8,399     |      |  |      | 47,651    |  |  |  | (11,829   | )



---



##### Table of Contents



- 80 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |  | Purchases and dividends received from associated companies for the three
years ended March 31, 2001 are as follows:
| |  | -------------------------------------------------------------------------------------------------------------------

|                   |  |                |         |      |  |      |         |  |  |  |         | 
|------------------ |  | -------------- | ------- | ---- |  | ---- | ------- |  |  |  | ------- | 
|                   |  | Yen (millions)
|                   |  |               
|                   |  | 2001           |         | 2000 |  | 1999
|                   |  |                |         |      |  |     
|                  
|                  
|                  
|                  
|                  
|Purchases from     |  |                | 177,865 |      |  |      | 235,599 |  |  |  | 258,881 | 
|                  
|                  
|                  
|                  
|Dividends received |  |                | 5,089   |      |  |      | 7,935   |  |  |  | 10,995  | 



| |  | Retained earnings include undistributed earnings of associated companies
in the amount of 89,413 million yen and 81,660 million yen, respectively,
as of March 31, 2001 and 2000.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Investments in associated companies include equity securities which have
quoted market values at March 31, 2001 and 2000 compared with related
carrying amounts as follows:      

|                |  |                |         |      |  |  |         | 
|--------------- |  | -------------- | ------- | ---- |  |  | ------- | 
|                |  | Yen (millions)
|                |  |               
|                |  | 2001           |         | 2000
|                |  |                |         |     
|               
|               
|               
|               
|               
|Carrying amount |  |                | 278,199 |      |  |  | 272,343 | 
|               
|               
|               
|               
|Market value    |  |                | 355,851 |      |  |  | 310,311 | 



|(4) |  | Investments in
Available-for-Sale Securities                                                                                                                                                                                                               
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | As discussed in Note 1(i), the Company adopted SFAS No. 115,
Accounting for Certain Investments in Debt and Equity Securities, in
the fiscal year beginning April 1, 2000, and accordingly, prior year
figures have been restated to reflect this change.
|   
|    |  | The Company classifies its existing marketable equity securities other
than investments in associated companies and all debt securities as
available-for-sale.                                                                                             



---



##### Table of Contents



- 81 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |  | The cost, fair value, gross unrealized holding gains, and gross unrealized
holding losses of available-for-sale securities included in short-term
investments and investments and advances at March 31, 2001 and 2000 are as
follows:
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |        |        | 
|----------- | ------------------------------------- |  | -------------- | ------- | ----- |  | ------- | ------- | ------- |  | ---------- | ------- | ---------- |  | ------ | ------ | 
|            |                                       |  | Yen (millions)
|            |                                       |  |               
|            |                                       |  | 2001          
|            |                                       |  |               
|            |                                       |  |                |         |       |  |         |         |         |  | Gross      |         | Gross     
|            |                                       |  |                |         |       |  |         |         |         |  | unrealized |         | unrealized
|            |                                       |  |                |         |       |  | Fair    |         | holding |  | holding   
|            |                                       |  | Cost           |         | value |  | gains   |         | losses 
|            |                                       |  |                |         |       |  |         |         |        
|Current:   
|           
|           
|           
|           
|            | Japanese and foreign government bonds |  |                | 3,288   |       |  |         | 3,299   |         |  |            | 21      |            |  |        | 10     | 
|           
|           
|           
|           
|            | Convertible and straight bonds        |  |                | 3,042   |       |  |         | 3,046   |         |  |            | 5       |            |  |        | 1      | 
|           
|           
|           
|           
|            | Investment trusts                     |  |                | 77      |       |  |         | 77      |         |  |            |        |            |  |        |       | 
|           
|           
|           
|           
|            | Other debt securities                 |  |                | 4,994   |       |  |         | 4,999   |         |  |            | 5       |            |  |        |       | 
|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |        |       
|           
|           
|           
|           
|           
|            |                                       |  | 11,401         |         |       |  | 11,421  |         |         |  | 31         |         |            |  | 11     |       
|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |        |       
|           
|           
|           
|           
|           
|Noncurrent:
|           
|           
|           
|           
|            | Equity securities                     |  |                | 369,972 |       |  |         | 533,421 |         |  |            | 179,305 |            |  |        | 15,856 | 
|           
|           
|           
|           
|            | Japanese and foreign government bonds |  |                | 58,441  |       |  |         | 57,056  |         |  |            | 70      |            |  |        | 1,455  | 
|           
|           
|           
|           
|            | Convertible and straight bonds        |  |                | 6,973   |       |  |         | 6,953   |         |  |            | 17      |            |  |        | 37     | 
|           
|           
|           
|           
|            | Investment trusts                     |  |                | 68,418  |       |  |         | 67,889  |         |  |            | 48      |            |  |        | 577    | 
|           
|           
|           
|           
|            | Other debt securities                 |  |                | 39,335  |       |  |         | 40,152  |         |  |            | 817     |            |  |        |       | 
|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |        |       
|           
|           
|           
|           
|           
|            |                                       |  | 543,139        |         |       |  | 705,471 |         |         |  | 180,257    |         |            |  | 17,925 |       
|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |        |       



---



##### Table of Contents



- 82 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |       |       | 
|----------- | ------------------------------------- |  | -------------- | ------- | ----- |  | ------- | ------- | ------- |  | ---------- | ------- | ---------- |  | ----- | ----- | 
|            |                                       |  | Yen (millions)
|            |                                       |  |               
|            |                                       |  | 2000          
|            |                                       |  |               
|            |                                       |  |                |         |       |  |         |         |         |  | Gross      |         | Gross     
|            |                                       |  |                |         |       |  |         |         |         |  | unrealized |         | unrealized
|            |                                       |  |                |         |       |  | Fair    |         | holding |  | holding   
|            |                                       |  | Cost           |         | value |  | gains   |         | losses 
|            |                                       |  |                |         |       |  |         |         |        
|Current:   
|           
|           
|           
|           
|            | Equity securities                     |  |                | 2,478   |       |  |         | 4,569   |         |  |            | 2,091   |            |  |       |      | 
|           
|           
|           
|           
|            | Japanese and foreign government bonds |  |                | 84,748  |       |  |         | 84,795  |         |  |            | 47      |            |  |       |      | 
|           
|           
|           
|           
|            | Convertible and straight bonds        |  |                | 14,619  |       |  |         | 14,648  |         |  |            | 29      |            |  |       |      | 
|           
|           
|           
|           
|            | Investment trusts                     |  |                | 74      |       |  |         | 74      |         |  |            |        |            |  |       |      | 
|           
|           
|           
|           
|            | Other debt securities                 |  |                | 32,797  |       |  |         | 32,797  |         |  |            |        |            |  |       |      | 
|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |       |      
|           
|           
|           
|           
|           
|            |                                       |  | 134,716        |         |       |  | 136,883 |         |         |  | 2,167      |         |            |  |      |      
|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |       |      
|           
|           
|           
|           
|           
|Noncurrent:
|           
|           
|           
|           
|            | Equity securities                     |  |                | 374,591 |       |  |         | 752,251 |         |  |            | 377,660 |            |  |       |      | 
|           
|           
|           
|           
|            | Japanese and foreign government bonds |  |                | 5,128   |       |  |         | 5,071   |         |  |            |        |            |  |       | 57    | 
|           
|           
|           
|           
|            | Convertible and straight bonds        |  |                | 1,863   |       |  |         | 1,874   |         |  |            | 11      |            |  |       |      | 
|           
|           
|           
|           
|            | Investment trusts                     |  |                | 95,804  |       |  |         | 94,942  |         |  |            | 210     |            |  |       | 1,072 | 
|           
|           
|           
|           
|            | Other debt securities                 |  |                | 12,631  |       |  |         | 12,630  |         |  |            |        |            |  |       | 1     | 
|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |       |      
|           
|           
|           
|           
|           
|            |                                       |  | 490,017        |         |       |  | 866,768 |         |         |  | 377,881    |         |            |  | 1,130 |      
|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |       |      



| |                                                                                                      
| | -----------------------------------------------------------------------------------------------------
| | Maturities of investments in available-for-sale securities at March 31,
2001 and 2000 are as follows:

| |                                       |  |                |         |       |  |      |         |       |  |  |         |      |  |  |           |  | 
| | ------------------------------------- |  | -------------- | ------- | ----- |  | ---- | ------- | ----- |  |  | ------- | ---- |  |  | --------- |  | 
| |                                       |  | Yen (millions)
| |                                       |  |               
| |                                       |  | 2001           |         | 2000 
| |                                       |  |                |         |      
| |                                       |  |                |         |       |  | Fair |         |       |  |  |         | Fair
| |                                       |  | Cost           |         | value |  | Cost |         | value
| |                                       |  |                |         |       |  |      |         |      
| |                                      
|
|
|
|
| | Due within one year                   |  |                | 11,401  |       |  |      | 11,421  |       |  |  | 132,238 |      |  |  | 132,314   | 
|
|
|
|
| | Due after one year through
five years |  |                | 173,167 |       |  |      | 172,050 |       |  |  | 113,426 |      |  |  | 112,517   | 
|
|
|
|
| | Due after five years                  |  |                |        |       |  |      |        |       |  |  | 2,000   |      |  |  | 2,000     | 
|
|
|
|
| | Equity securities                     |  |                | 369,972 |       |  |      | 533,421 |       |  |  | 377,069 |      |  |  | 756,820   | 
| |                                       |  |                |         |       |  |      |         |       |  |  |         |      |  |  |           | 
| |                                      
|
|
|
|
| |                                       |  |                | 554,540 |       |  |      | 716,892 |       |  |  | 624,733 |      |  |  | 1,003,651 | 
| |                                       |  |                |         |       |  |      |         |       |  |  |         |      |  |  |           | 



---



##### Table of Contents



- 83 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|    |  | Proceeds from sale of available-for-sale securities for the years ended
March 31, 2001, 2000 and 1999 were 202,023 million yen, 326,811 million
yen and 434,082 million yen, respectively. The gross realized gains for
the years ended March 31, 2001, 2000 and 1999 were 16,638 million yen,
40,590 million yen and 14,594 million yen, respectively. The gross
realized losses for the years ended March 31, 2001, 2000 and 1999 were
2,932 million yen, 878 million yen and 396 million yen, respectively. The
cost of securities sold in computing gross realized gains and losses is
determined by the average cost method.                                                                       
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(5) |  | Noncurrent Receivables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    |  | The recorded investment in noncurrent receivables for which impairment
has been recognized at March 31, 2001 and 2000 was 3,332 million yen
and 4,903 million yen, respectively. Related allowance for doubtful
receivables was not significant at March 31, 2001 and 2000. The
average recorded investment in impaired receivables during the years
ended March 31, 2001, 2000 and 1999 was 4,347 million yen, 6,462
million yen and 13,126 million yen, respectively. Additions charged
to bad debt expenses were not significant for the years ended March
31, 2001, 2000 and 1999. Write-downs charged against the allowance
were not significant for the years ended March 31, 2001, 2000 and
1999.
|   
|(6) |  | Long-Lived Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    |  | The Company periodically reviews the recorded value of its long-lived
assets to determine if the future cash flows to be derived from these
properties will be sufficient to recover the remaining recorded asset
values. As discussed in Note 1(p), the Company accounts for
impairment of long-lived assets in accordance with SFAS No. 121.                                                                                                                                                                                                                                                                                                                                                          
|   
|    |  | The Company recognized an impairment loss of 19,565 million yen during
fiscal 2000 related to the write-down of the machinery and equipment
to manufacture CRTs and other components.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    |  | As the prices of these products significantly decreased due to highly
competitive market conditions, the Company projected that the future
business of subsidiaries manufacturing those products would result in
a net operating loss.                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    |  | An impairment loss recorded in fiscal 2000 is included in other
deductions of costs and expenses in the consolidated statements of
income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              



---



##### Table of Contents



- 84 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|(7) |  | Long-term Debt and
Short-term Borrowings                     
|--- |  | -------------------------------------------------------------
|   
|    |  | Long-term debt at March 31, 2001 and 2000 is set forth below:

|                                                                                                                                                               |  |                |         |      |  |  |         | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | ---- |  |  | ------- | 
|                                                                                                                                                               |  | Yen (millions)
|                                                                                                                                                               |  |               
|                                                                                                                                                               |  | 2001           |         | 2000
|                                                                                                                                                               |  |                |         |     
|Convertible bonds, due 2002, interest 1.3%                                                                                                                     |  |                | 98,708  |      |  |  | 98,893  | 
|                                                                                                                                                              
|                                                                                                                                                              
|                                                                                                                                                              
|                                                                                                                                                              
|Convertible bonds, due 2004, interest 1.4%                                                                                                                     |  |                | 97,744  |      |  |  | 98,499  | 
|                                                                                                                                                              
|                                                                                                                                                              
|                                                                                                                                                              
|                                                                                                                                                              
|Convertible bonds issued by subsidiaries,
due 2002 and 2005,
interest 0.35%1.5%                                                                               |  |                | 45,482  |      |  |  | 66,482  | 
|                                                                                                                                                              
|                                                                                                                                                              
|                                                                                                                                                              
|                                                                                                                                                              
|U.S. dollar unsecured bonds, due 2002,
effective interest 5.8%                                                                                                 |  |                | 125,152 |      |  |  | 125,067 | 
|                                                                                                                                                              
|                                                                                                                                                              
|                                                                                                                                                              
|                                                                                                                                                              
|Straight bonds issued by a subsidiary, due
20012007,
interest 1.38%2.15%                                                                                     |  |                | 50,000  |      |  |  | 20,000  | 
|                                                                                                                                                              
|                                                                                                                                                              
|                                                                                                                                                              
|                                                                                                                                                              
|Unsecured yen loans from banks and
insurance companies,
principally by financial subsidiaries, due 20002006,
effective interest 1.2% in 2001 and 1.7%
in 2000 |  |                | 393,392 |      |  |  | 402,930 | 
|                                                                                                                                                              
|                                                                                                                                                              
|                                                                                                                                                              
|                                                                                                                                                              
|Other long-term debt                                                                                                                                           |  |                |        |      |  |  | 48      | 
|                                                                                                                                                               |  |                |         |      |  |  |         | 
|                                                                                                                                                               |  |                | 810,478 |      |  |  | 811,919 | 
|                                                                                                                                                              
|                                                                                                                                                              
|                                                                                                                                                              
|                                                                                                                                                              
|Less current portion                                                                                                                                           |  |                | 268,937 |      |  |  | 168,079 | 
|                                                                                                                                                               |  |                |         |      |  |  |         | 
|                                                                                                                                                              
|                                                                                                                                                              
|                                                                                                                                                              
|                                                                                                                                                              
|                                                                                                                                                              
|                                                                                                                                                               |  |                | 541,541 |      |  |  | 643,840 | 
|                                                                                                                                                               |  |                |         |      |  |  |         | 



| |  | The aggregate annual maturities of long-term debt after March 31, 2001 are
as follows:
| |  | --------------------------------------------------------------------------------------

|                      |      |  |                |         | 
|--------------------- | ---- |  | -------------- | ------- | 
|                      |      |  | Yen (millions)
|                      |      |  |               
|                     
|                     
|                     
|                     
|                     
|Year ending March 31:
|                     
|                     
|                     
|                     
|                      | 2002 |  |                | 268,937 | 
|                     
|                     
|                     
|                     
|                      | 2003 |  |                | 239,137 | 
|                     
|                     
|                     
|                     
|                      | 2004 |  |                | 175,312 | 
|                     
|                     
|                     
|                     
|                      | 2005 |  |                | 52,724  | 
|                     
|                     
|                     
|                     
|                      | 2006 |  |                | 43,246  | 



| |  | As is customary in Japan, short-term and long-term bank loans are made
under general agreements which provide that security and guarantees for
future and present indebtedness will be given upon request of the bank,
and that the bank shall have the right, as the obligations become due, or
in the event of their default, to offset cash deposits against such
obligations due to the bank.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---



##### Table of Contents



- 85 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|    |  | Each of the loan agreements grants the lender the right to request
additional security or mortgages on property, plant and equipment. At
March 31, 2001 and 2000, short-term loans subject to such general
agreements amounted to 88,069 million yen and 151,970 million yen,
respectively. The balance of short-term loans represents borrowings under
commercial paper, acceptances and short-term loans of foreign
subsidiaries. The weighted average interest rates on short-term
borrowings outstanding at March 31, 2001 and 2000 were 4.2% and 3.1%,
respectively.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Acceptances payable by foreign subsidiaries, in the amount of 187 million
yen and 242 million yen at March 31, 2001 and 2000, respectively, are
secured by a portion of the cash, accounts receivable and inventories of
such subsidiaries. The amount of assets pledged is not calculable.                                                                                                                                                                                                                                                                              
|   
|    |  | The 1.3% convertible bonds maturing in 2002 are currently redeemable at
the option of the Company at prices ranging from 101% of principal to 100%
of principal, and are currently convertible into approximately 60,931,000
shares of common stock at 1,620 yen per share.                                                                                                                                                                                                                                                                                              
|   
|    |  | The 1.4% convertible bonds maturing in 2004 are redeemable from 2000 at
the option of the Company at prices ranging from 103% of principal to 100%
of principal, and are currently convertible into approximately 60,336,000
shares of common stock at 1,620 yen per share.                                                                                                                                                                                                                                                                                              
|   
|    |  | The convertible bonds maturing through 2005 issued by subsidiaries are
redeemable at the option of the subsidiaries at prices ranging from 104%
of principal to 100% of principal near maturity.                                                                                                                                                                                                                                                                                                                                                                         
|   
|(8) |  | Retirement and Severance
Benefits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    |  | The Company and certain subsidiaries have contributory, funded benefit
pension plans covering substantially all employees who meet
eligibility requirements. Benefits under the plans are primarily
based on the combination of years of service and compensation.                                                                                                                                                                                                                                                                                                       
|   
|    |  | The contributory, funded benefit pension plans include a portion of
social security tax calculated in accordance with the Welfare Pension
Insurance Law. The Company and certain subsidiaries contribute to the
pension funds as well as to the social security tax portion. The
employees contribute only to the social security tax portion.                                                                                                                                                                                                                           
|   
|    |  | In addition to the plans described above, upon retirement or
termination of employment for reasons other than dismissal, employees
are entitled to lump-sum payments based on the current rate of pay and
length of service. If the termination is involuntary or caused by
death, the severance payment is greater than in the case of voluntary
termination. The lump-sum payment plans are not funded.                                                                                                                                                                



---



##### Table of Contents



- 86 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |  |  | Effective April 1, 1999, the Company adopted SFAS No. 87, Employers
Accounting for Pensions, and SFAS No. 132, Employers Disclosures about
Pensions and Other Postretirement Benefits, for the contributory, funded
benefit pension plans and the unfunded lump-sum payment plans, as the
effect of the current discount rate of actuarial assumptions on the
pension funded status is expected to have a material effect in subsequent
years. However, the effect of this change on consolidated financial
statements for the year ended March 31, 2000 was not significant. Prior
year consolidated financial statements have not been restated as the
effects of the implementation of SFAS No. 87 and SFAS No. 132 are
immaterial.
| |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Net periodic benefit cost for the contributory, funded benefit pension
plans and the unfunded lump-sum payment plans of the Company for the years
ended March 31, 2001 and 2000 consisted of the following components:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

|                                               |  |                |         |      |  |  |         |  
|---------------------------------------------- |  | -------------- | ------- | ---- |  |  | ------- | -
|                                               |  | Yen (millions)
|                                               |  |               
|                                               |  | 2001           |         | 2000
|                                               |  |                |         |     
|                                              
|                                              
|                                              
|                                              
|                                              
|Service cost  benefits earned during the year |  |                | 89,737  |      |  |  | 86,391  |  
|                                              
|                                              
|                                              
|                                              
|Interest cost on projected benefit obligation  |  |                | 84,665  |      |  |  | 84,619  |  
|                                              
|                                              
|                                              
|                                              
|Expected return on plan assets                 |  |                | (57,415 | )    |  |  | (49,389 | )
|                                              
|                                              
|                                              
|                                              
|Amortization of net transition obligation      |  |                | 9,972   |      |  |  | 9,972   |  
|                                              
|                                              
|                                              
|                                              
|Recognized actuarial loss                      |  |                | 11,054  |      |  |  | 15,561  |  
|                                               |  |                |         |      |  |  |         |  
|                                              
|                                              
|                                              
|                                              
|                                              
|Net periodic benefit cost                      |  |                | 138,013 |      |  |  | 147,154 |  
|                                               |  |                |         |      |  |  |         |  





---



##### Table of Contents



- 87 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |  | Reconciliation of beginning and ending balances of the benefit obligations
of the contributory, funded benefit pension plans and the unfunded
lump-sum payment plans and the fair value of the plan assets, and
actuarial assumptions used at March 31, 2001 and 2000 are as follows:
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                            |                                                |  |                |           |      |  |          |           |  
|----------------------------------------------------------- | ---------------------------------------------- |  | -------------- | --------- | ---- |  | -------- | --------- | -
|                                                            |                                                |  | Yen (millions)
|                                                            |                                                |  |               
|                                                            |                                                |  | 2001           |           | 2000
|                                                            |                                                |  |                |           |     
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|Change in benefit obligations:                             
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Benefit obligations at beginning of year       |  |                | 2,136,223 |      |  |          | 1,951,275 |  
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Service cost                                   |  |                | 89,737    |      |  |          | 86,391    |  
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Interest cost                                  |  |                | 84,665    |      |  |          | 84,619    |  
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Plan participants contributions               |  |                | 13,902    |      |  |          | 13,714    |  
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Prior service cost                             |  |                | (64,171   | )    |  |          |          |  
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Actuarial loss                                 |  |                | 39,341    |      |  |          | 64,649    |  
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Benefits paid                                  |  |                | (68,965   | )    |  |          | (60,399   | )
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Foreign currency exchange impact               |  |                | 4,478     |      |  |          | (4,026    | )
|                                                            |                                                |  |                |           |      |  |          |          
|                                                            | Benefit obligations at end of year             |  |                | 2,235,210 |      |  |          | 2,136,223 |  
|                                                            |                                                |  |                |           |      |  |          |          
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|Change in plan assets:                                     
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Fair value of plan assets at beginning of year |  |                | 1,410,872 |      |  |          | 1,191,545 |  
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Actual return on plan assets                   |  |                | (134,692  | )    |  |          | 164,084   |  
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Employer contributions                         |  |                | 78,084    |      |  |          | 67,797    |  
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Plan participants contributions               |  |                | 13,902    |      |  |          | 13,714    |  
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Benefits paid                                  |  |                | (31,260   | )    |  |          | (23,652   | )
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Foreign currency exchange impact               |  |                | 3,731     |      |  |          | (2,616    | )
|                                                            |                                                |  |                |           |      |  |          |          
|                                                            | Fair value of plan assets at end of year       |  |                | 1,340,637 |      |  |          | 1,410,872 |  
|                                                            |                                                |  |                |           |      |  |          |          
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|Funded status                                               |                                                |  | (894,573       | )         |      |  | (725,351 | )        
|                                                            |                                                |  |                |           |      |  |          |          
|
|Unrecognized net transition obligation                      |                                                |  | 13,270         |           |      |  | 23,242   |          
|                                                           
|                                                           
|                                                           
|                                                           
|Unrecognized prior service cost                             |                                                |  | (64,171        | )         |      |  |         |          
|                                                           
|                                                           
|                                                           
|                                                           
|Unrecognized actuarial loss                                 |                                                |  | 387,078        |           |      |  | 173,231  |          
|                                                            |                                                |  |                |           |      |  |          |          
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|Accrued retirement and severance benefits
recognized in the
|                                                            | consolidated balance sheet                     |  |                | (558,396  | )    |  |          | (528,878  | )
|                                                            |                                                |  |                |           |      |  |          |          
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|Actuarial assumptions:                                     
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Discount rate                                  |  |                | 4.0%      |      |  |          | 4.0%     
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Expected return on plan assets                 |  |                | 4.0%      |      |  |          | 4.0%     
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Rate of compensation increase                  |  |                | 2.6%      |      |  |          | 2.6%     





---



##### Table of Contents



- 88 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |  | Prior to April 1, 1999, the Company did not adopt SFAS No. 87 for the
contributory, funded benefit pension plans of the Company as the effects
on the consolidated financial statements of the implementation of SFAS No.
87 were immaterial.                                                                                                                                                                                                                                                                                                                                                                         
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Pension costs, excluding the social security tax portion, for the year
ended March 31, 1999 amounted to 79,570 million yen. The contributions to
the plans for the year ended March 31, 1999 for the portion of social
security tax were 28,197 million yen. Approximately half of the portion
of social security tax was contributed by the employees and half was
contributed by the companies.                                                                                                                                                                                                                     
|
| |  | In addition, prior to April 1, 1999, retirement and severance benefit
liabilities in the consolidated balance sheet were stated at the amount of
the vested benefit obligation under the unfunded lump-sum payment plans,
which would exist if all employees voluntarily terminated their employment
at that date. Such liability exceeded the projected benefit obligation
under the lump-sum payment plans. Benefit costs of the lump-sum payment
plans represented benefit payments plus or minus the change in the vested
benefit obligation and amounted to 49,306 million yen for the year ended
March 31, 1999.





---



##### Table of Contents



- 89 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|(9) |  | Income Taxes                                                                                                   
|--- |  | ---------------------------------------------------------------------------------------------------------------
|   
|    |  | Income before income taxes and income taxes for the three years ended
March 31, 2001 are summarized as follows:

|      |                            |          |                    |         |                |         |         |         |        |        |  |         |         |         | 
|----- | -------------------------- | -------- | ------------------ | ------- | -------------- | ------- | ------- | ------- | ------ | ------ |  | ------- | ------- | ------- | 
|      |                            |          |                    |         | Yen (millions)
|      |                            |          |                    |         |               
|      |                            |          |                    |         | Domestic       |         | Foreign |         | Total 
|      |                            |          |                    |         |                |         |         |         |       
|2001:
|     
|     
|     
|     
|      | Income before income taxes |          |                    | 49,542  |                |         |         | 51,193  |        |        |  | 100,735 |        
|     
|     
|     
|     
|      | Income taxes:             
|     
|     
|     
|     
|      |                            | Current  |                    |         | 95,820         |         |         |         | 22,035 |        |  |         | 117,855 |        
|     
|     
|     
|     
|      |                            | Deferred |                    |         | (68,585        | )       |         |         | 591    |        |  |         | (67,994 | )      
|      |                            |          |                    |         |                |         |         |         |        |        |  |        
|     
|      |                            |          | Total income taxes |         |                | 27,235  |         |         |        | 22,626 |  |         |         | 49,861  | 
|      |                            |          |                    |         |                |         |         |         |        |        |  |        
|     
|     
|     
|     
|     
|2000:
|     
|     
|     
|     
|      | Income before income taxes |          |                    | 99,538  |                |         |         | 119,067 |        |        |  | 218,605 |        
|     
|     
|     
|     
|      | Income taxes:             
|     
|     
|     
|     
|      |                            | Current  |                    |         | 125,155        |         |         |         | 53,290 |        |  |         | 178,445 |        
|     
|     
|     
|     
|      |                            | Deferred |                    |         | (33,251        | )       |         |         | (8,179 | )      |  |         | (41,430 | )      
|      |                            |          |                    |         |                |         |         |         |        |        |  |        
|     
|      |                            |          | Total income taxes |         |                | 91,904  |         |         |        | 45,111 |  |         |         | 137,015 | 
|      |                            |          |                    |         |                |         |         |         |        |        |  |        
|     
|     
|     
|     
|     
|1999:
|     
|     
|     
|     
|      | Income before income taxes |          |                    | 153,047 |                |         |         | 49,246  |        |        |  | 202,293 |        
|     
|     
|     
|     
|      | Income taxes:             
|     
|     
|     
|     
|      |                            | Current  |                    |         | 117,925        |         |         |         | 34,378 |        |  |         | 152,303 |        
|     
|     
|     
|     
|      |                            | Deferred |                    |         | 15,810         |         |         |         | (3,734 | )      |  |         | 12,076  |        
|      |                            |          |                    |         |                |         |         |         |        |        |  |        
|     
|      |                            |          | Total income taxes |         |                | 133,735 |         |         |        | 30,644 |  |         |         | 164,379 | 
|      |                            |          |                    |         |                |         |         |         |        |        |  |        



| |  | For the year ended March 31, 1999, domestic income taxes, deferred include
the impact of 50,052 million yen, attributable to adjustments of net
deferred tax assets to reflect reductions in Japans corporate income tax
rate.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





---



##### Table of Contents



- 90 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |  | The Company and its subsidiaries are subject to a number of taxes based on
earnings which, in aggregate, resulted in an average normal tax rate of
approximately 41.9% for the years ended March 31, 2001 and 2000 and 47.6%
for the year ended March 31, 1999.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The effective rates for the years differ from the normal tax rates for the
following reasons:                                                                                                                                                                  

|                   |                                                                                              |  |      |      |      |  |      |      |   |  |      |      |  
|------------------ | -------------------------------------------------------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  | ---- | ---- | -
|                   |                                                                                              |  | 2001 |      | 2000 |  | 1999
|                   |                                                                                              |  |      |      |      |  |     
|                  
|                  
|                  
|                  
|                  
|Normal tax rate    |                                                                                              |  | 41.9 | %    |      |  | 41.9 | %    |   |  | 47.6 | %   
|                  
|                  
|                  
|                  
|                   | Tax credit for increased research expenses                                                   |  |      | (2.8 | )    |  |      | (1.3 | ) |  |      | (0.9 | )
|                  
|                  
|                  
|                  
|                   | Lower tax rates of overseas subsidiaries                                                     |  |      | (7.5 | )    |  |      | (3.2 | ) |  |      | (9.6 | )
|                  
|                  
|                  
|                  
|                   | Expenses not deductible for tax purposes                                                     |  |      | 11.2 |      |  |      | 6.6  |   |  |      | 7.6  |  
|                  
|                  
|                  
|                  
|                   | Change in valuation allowance allocated
to income tax expenses                               |  |      | 5.4  |      |  |      | 18.7 |   |  |      | 6.8  |  
|                  
|                  
|                  
|                  
|                   | Adjustments of deferred tax assets and
liabilities for enacted changes in tax
laws and rates |  |      |     |      |  |      |     |   |  |      | 24.8 |  
|                  
|                  
|                  
|                  
|                   | Other                                                                                        |  |      | 1.3  |      |  |      |     |   |  |      | 5.0  |  
|                   |                                                                                              |  |      |      |      |  |      |      |   |  |      |     
|                  
|                  
|                  
|                  
|                  
|Effective tax rate |                                                                                              |  | 49.5 | %    |      |  | 62.7 | %    |   |  | 81.3 | %   
|                   |                                                                                              |  |      |      |      |  |      |      |   |  |      |     



| |  | The significant components of deferred income tax expenses for the three
years ended March 31, 2001 are as follows:
| |  | -------------------------------------------------------------------------------------------------------------------

|                                                                                             |  |                |         |      |  |      |         |   |  |  |         |  
|-------------------------------------------------------------------------------------------- |  | -------------- | ------- | ---- |  | ---- | ------- | - |  |  | ------- | -
|                                                                                             |  | Yen (millions)
|                                                                                             |  |               
|                                                                                             |  | 2001           |         | 2000 |  | 1999
|                                                                                             |  |                |         |      |  |     
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Deferred tax expense (exclusive of the effects
of other components listed below)             |  |                | (73,447 | )    |  |      | (82,267 | ) |  |  | (51,821 | )
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Adjustments of deferred tax assets and
liabilities for enacted changes in tax laws
and rates |  |                |        |      |  |      |        |   |  |  | 50,052  |  
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Increase in the balance of valuation allowance
for deferred tax assets                       |  |                | 5,453   |      |  |      | 40,837  |   |  |  | 13,845  |  
|                                                                                             |  |                |         |      |  |      |         |   |  |  |         |  
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                             |  |                | (67,994 | )    |  |      | (41,430 | ) |  |  | 12,076  |  
|                                                                                             |  |                |         |      |  |      |         |   |  |  |         |  





---



##### Table of Contents



- 91 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |  | The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at March
31, 2001 and 2000 are presented below:
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                          |                                                                                                |                                      |  |                |         |      |  |          |          |  
|------------------------- | ---------------------------------------------------------------------------------------------- | ------------------------------------ |  | -------------- | ------- | ---- |  | -------- | -------- | -
|                          |                                                                                                |                                      |  | Yen (millions)
|                          |                                                                                                |                                      |  |               
|                          |                                                                                                |                                      |  | 2001           |         | 2000
|                          |                                                                                                |                                      |  |                |         |     
|Deferred tax assets:     
|                         
|                         
|                         
|                         
|                          | Inventory valuation                                                                            |                                      |  | 98,749         |         |      |  | 87,229   |         
|                         
|                         
|                         
|                         
|                          | Expenses accrued for financial statement purposes
but not currently included in taxable income |                                      |  | 180,465        |         |      |  | 145,235  |         
|                         
|                         
|                         
|                         
|                          | Depreciation                                                                                   |                                      |  | 135,719        |         |      |  | 130,556  |         
|                         
|                         
|                         
|                         
|                          | Retirement and severance benefits                                                              |                                      |  | 149,540        |         |      |  | 124,979  |         
|                         
|                         
|                         
|                         
|                          | Tax loss carryforwards                                                                         |                                      |  | 76,920         |         |      |  | 73,709   |         
|                         
|                         
|                         
|                         
|                          | Other                                                                                          |                                      |  | 103,613        |         |      |  | 99,644   |         
|                          |                                                                                                |                                      |  |                |         |      |  |         
|                         
|                         
|                         
|                         
|                          |                                                                                                | Total gross deferred tax assets      |  |                | 745,006 |      |  |          | 661,352  |  
|                         
|                         
|                         
|                         
|                          |                                                                                                | Less valuation allowance             |  |                | 80,807  |      |  |          | 75,720   |  
|                          |                                                                                                |                                      |  |                |         |      |  |         
|                         
|                         
|                         
|                         
|                          |                                                                                                | Net deferred tax assets              |  |                | 664,199 |      |  |          | 585,632  |  
|                         
|Deferred tax liabilities:
|                         
|                         
|                         
|                         
|                          | Purchase accounting step-up of identifiable assets                                             |                                      |  | (3,971         | )       |      |  | (2,723   | )       
|                         
|                         
|                         
|                         
|                          | Net unrealized holding gains of
available-for-sale securities                                  |                                      |  | (65,968        | )       |      |  | (159,123 | )       
|                         
|                         
|                         
|                         
|                          | Other                                                                                          |                                      |  | (25,345        | )       |      |  | (25,809  | )       
|                          |                                                                                                |                                      |  |                |         |      |  |         
|                         
|                         
|                         
|                         
|                          |                                                                                                | Total gross deferred tax liabilities |  |                | (95,284 | )    |  |          | (187,655 | )
|                          |                                                                                                |                                      |  |                |         |      |  |         
|                         
|                          |                                                                                                | Net deferred tax assets              |  |                | 568,915 |      |  |          | 397,977  |  
|                          |                                                                                                |                                      |  |                |         |      |  |         



| |  | The net change in total valuation allowance for the years ended March 31,
2001 and 2000 were increases of 5,087 million yen and 37,445 million yen,
respectively.                                 
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | At March 31, 2001, certain subsidiaries had, for tax reporting purposes,
net operating loss carryforwards of approximately 196,676 million yen,
which will generally expire between 2002 and 2021.





---



##### Table of Contents



- 92 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |  | Net deferred tax assets and liabilities at March 31, 2001 and 2000 are
reflected in the accompanying consolidated balance sheets under the
following captions:
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  |                |         |      |  |  |         |  
|----------------------- |  | -------------- | ------- | ---- |  |  | ------- | -
|                        |  | Yen (millions)
|                        |  |               
|                        |  | 2001           |         | 2000
|                        |  |                |         |     
|                       
|                       
|                       
|                       
|                       
|Other current assets    |  |                | 309,432 |      |  |  | 252,168 |  
|                       
|                       
|                       
|                       
|Other assets            |  |                | 282,558 |      |  |  | 192,101 |  
|                       
|                       
|                       
|                       
|Other liabilities       |  |                | (23,075 | )    |  |  | (46,292 | )
|                        |  |                |         |      |  |  |         |  
|                       
|Net deferred tax assets |  |                | 568,915 |      |  |  | 397,977 |  
|                        |  |                |         |      |  |  |         |  



|(10) |  | Stockholders Equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | In accordance with the Japanese Commercial Code, at least 50% of the
amount of converted debt must be credited to the common stock account.
The Company issued 580,241 shares, 326,535 shares and 26,464 shares in
connection with the conversion of bonds for the years ended March 31,
2001, 2000 and 1999, respectively.                                                                                                                                                                    
|    
|     |  | On April 1, 2000, the Company issued 16,321,187 shares under exchange
offering in connection with the integration of two subsidiaries.                                                                                                                                                                                                                                                                                                                                                         
|    
|     |  | For the year ended March 31, 1999, 50,000,000 shares of the Companys
common stock were repurchased from the market and retired for an aggregate
cost of 98,883 million yen. The entire repurchase cost of retired shares
was charged to retained earnings in accordance with the Japanese
Commercial Code.                                                                                                                                                                                    
|    
|     |  | The Japanese Commercial Code provides that an amount equal to at least 10%
of appropriations paid in cash be appropriated as a legal reserve until
such reserve equals 25% of stated capital. This reserve is not available
for dividends but may be used to reduce a deficit or may be transferred to
stated capital.                                                                                                                                                                         
|    
|     |  | Cash dividends and transfers to the legal reserve charged to retained
earnings during the three years ended March 31, 2001 represent dividends
paid out during the periods and related appropriation to the legal
reserve. The accompanying consolidated financial statements do not
include any provision for the semi-annual dividend of 6.25 yen per share,
totaling 12,995 million yen, proposed in June 2001 in respect of the year
ended March 31, 2001 or for the related appropriation.





---



##### Table of Contents



- 93 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |  | The Companys directors and certain senior executives may be granted
options to purchase the Companys common stock. All stock options have a
four-year term and become fully exercisable two years from the date of
grant. Information with respect to stock options is as follows:
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                           |                                              |  |           |         |                      |  |       |       | 
|-------------------------- | -------------------------------------------- |  | --------- | ------- | -------------------- |  | ----- | ----- | 
|                           |                                              |  | Number    |         | Weighted average    
|                           |                                              |  | of shares |         | exercise price (yen)
|                           |                                              |  |           |         |                     
|                          
|                          
|                          
|                          
|                          
|Balance at March 31, 1998  |                                              |  |          |         |                      |  |      |      
|                          
|                          
|                          
|                          
|                           | Granted                                      |  |           | 113,000 |                      |  |       | 2,291 | 
|                           |                                              |  |           |         |                      |  |       |      
|Balance at March 31, 1999  |                                              |  | 113,000   |         |                      |  | 2,291 |      
|                          
|                          
|                          
|                          
|                           | Granted                                      |  |           | 116,000 |                      |  |       | 2,476 | 
|                           |                                              |  |           |         |                      |  |       |      
|Balance at March 31, 2000  |                                              |  | 229,000   |         |                      |  | 2,385 |      
|                          
|                          
|                          
|                          
|                           | Granted                                      |  |           | 109,000 |                      |  |       | 2,815 | 
|                          
|                          
|                          
|                          
|                           | Exercised                                    |  |           | (33,000 | )                    |  |       | 2,291 | 
|                          
|                          
|                          
|                          
|                           | Forfeited                                    |  |           | (10,000 | )                    |  |       | 2,291 | 
|                           |                                              |  |           |         |                      |  |       |      
|Balance at March 31, 2001,
|                           | weighted average remaining life  4.38 years |  | 295,000   |         |                      |  | 2,557 |      
|                           |                                              |  |           |         |                      |  |       |      



| |  | The Company applies Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations in
accounting for its stock option plans described above. Accordingly, as
the option price at the date of grant exceeded the fair market value of
common shares, no compensation costs have been recognized in connection
with the plans. If the accounting provision of SFAS No. 123, Accounting
for Stock Based Compensation, had been adopted, the impact on the
Companys net income for the three years ended March 31, 2001 would not be
material.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Treasury stock reserved for options at March 31, 2001 and 2000 was 295,000
shares and 229,000 shares, respectively. In accordance with the Japanese
Commercial Code, there are certain restrictions on payment of dividends in
connection with the treasury stock repurchased for stock options. As a
result of restrictions on the treasury stock repurchased for stock
options, retained earnings of approximately 739 million yen at March 31,
2001 are restricted as to the payment of cash dividends.                                                                                              
|
| |  | On June 28, 2001, the annual shareholders meeting approved that the
Companys stock option rights would be allotted to 30 directors and 9
senior executives at amounts ranging from 2,000 to 10,000 common shares
each. These stock option rights are exercisable from July 1, 2003 to June
30, 2007. Pursuant to such authorization in June 2001, 128,000 common
shares were repurchased on July 2, 2001.                                                                                                                                                                                             





---



##### Table of Contents



- 94 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|(11) |  | Other Comprehensive Income (Loss)                                                                       
|---- |  | --------------------------------------------------------------------------------------------------------
|    
|     |  | Components of other comprehensive income (loss) for the three years ended
March 31, 2001 are as follows:

|                                   |                                                            |                                                                    |  |                |  |  |  |          |          |         |  |            |         |   |  |          |          |   |  |  |  | 
|---------------------------------- | ---------------------------------------------------------- | ------------------------------------------------------------------ |  | -------------- |  |  |  | -------- | -------- | ------- |  | ---------- | ------- | - |  | -------- | -------- | - |  |  |  | 
|                                   |                                                            |                                                                    |  | Yen (millions)
|                                   |                                                            |                                                                    |  |                |  |  |  |         
|                                   |                                                            |                                                                    |  |                |  |  |  | Pre-tax  |          | Tax     |  | Net-of-tax
|                                   |                                                            |                                                                    |  |                |  |  |  | amount   |          | expense |  | amount    
|                                   |                                                            |                                                                    |  |                |  |  |  |          |          |         |  |           
|For the year ended March 31, 2001:
|                                  
|                                  
|                                  
|                                  
|                                   | Translation adjustments                                    |                                                                    |  |                |  |  |  | 144,684  |          |         |  |           |         |   |  | 144,684  |         
|                                  
|                                  
|                                  
|                                  
|                                   | Unrealized holding gains of
available-for-sale securities:
|                                  
|                                  
|                                  
|                                  
|                                   |                                                            | Unrealized holding gains
(losses) arising during the
period        |  |                |  |  |  |          | (192,578 | )       |  |            | 78,714  |   |  |          | (113,864 | )
|                                  
|                                  
|                                  
|                                  
|                                   |                                                            | Less: Reclassification
adjustment for gains included in
net income |  |                |  |  |  |          | (13,706  | )       |  |            | 5,743   |   |  |          | (7,963   | )
|                                   |                                                            |                                                                    |  |                |  |  |  |          |          |         |  |            |         |   |  |         
|                                   |                                                            | Net unrealized gains (losses)                                      |  |                |  |  |  |          | (206,284 | )       |  |            | 84,457  |   |  |          | (121,827 | )
|                                   |                                                            |                                                                    |  |                |  |  |  |          |          |         |  |            |         |   |  |         
|                                   |                                                            | Other comprehensive income (loss)                                  |  |                |  |  |  |          | (61,600  | )       |  |            | 84,457  |   |  |          | 22,857   |  
|                                   |                                                            |                                                                    |  |                |  |  |  |          |          |         |  |            |         |   |  |         
|                                  
|                                  
|                                  
|                                  
|                                  
|For the year ended March 31, 2000:
|                                  
|                                  
|                                  
|                                  
|                                   | Translation adjustments                                    |                                                                    |  |                |  |  |  | (139,946 | )        |         |  |           |         |   |  | (139,946 | )       
|                                  
|                                  
|                                  
|                                  
|                                   | Unrealized holding gains of
available-for-sale securities:
|                                  
|                                  
|                                  
|                                  
|                                   |                                                            | Unrealized holding gains
(losses) arising during the
period        |  |                |  |  |  |          | 225,671  |         |  |            | (94,556 | ) |  |          | 131,115  |  
|                                  
|                                  
|                                  
|                                  
|                                   |                                                            | Less: Reclassification
adjustment for gains included in
net income |  |                |  |  |  |          | (39,712  | )       |  |            | 16,639  |   |  |          | (23,073  | )
|                                   |                                                            |                                                                    |  |                |  |  |  |          |          |         |  |            |         |   |  |         
|                                   |                                                            | Net unrealized gains (losses)                                      |  |                |  |  |  |          | 185,959  |         |  |            | (77,917 | ) |  |          | 108,042  |  
|                                   |                                                            |                                                                    |  |                |  |  |  |          |          |         |  |            |         |   |  |         
|                                   |                                                            | Other comprehensive income (loss)                                  |  |                |  |  |  |          | 46,013   |         |  |            | (77,917 | ) |  |          | (31,904  | )
|                                   |                                                            |                                                                    |  |                |  |  |  |          |          |         |  |            |         |   |  |         
|                                  
|                                  
|                                  
|                                  
|                                  
|For the year ended March 31, 1999:
|                                  
|                                  
|                                  
|                                  
|                                   | Translation adjustments                                    |                                                                    |  |                |  |  |  | (122,257 | )        |         |  |           |         |   |  | (122,257 | )       
|                                  
|                                  
|                                  
|                                  
|                                   | Unrealized holding gains of
available-for-sale securities:
|                                  
|                                  
|                                  
|                                  
|                                   |                                                            | Unrealized holding gains
(losses) arising during the
period        |  |                |  |  |  |          | 42,486   |         |  |            | (20,223 | ) |  |          | 22,263   |  
|                                  
|                                  
|                                  
|                                  
|                                   |                                                            | Less: Reclassification
adjustment for gains included in
net income |  |                |  |  |  |          | (14,198  | )       |  |            | 6,758   |   |  |          | (7,440   | )
|                                   |                                                            |                                                                    |  |                |  |  |  |          |          |         |  |            |         |   |  |         
|                                   |                                                            | Net unrealized gains (losses)                                      |  |                |  |  |  |          | 28,288   |         |  |            | (13,465 | ) |  |          | 14,823   |  
|                                   |                                                            |                                                                    |  |                |  |  |  |          |          |         |  |            |         |   |  |         
|                                   |                                                            | Other comprehensive income (loss)                                  |  |                |  |  |  |          | (93,969  | )       |  |            | (13,465 | ) |  |          | (107,434 | )
|                                   |                                                            |                                                                    |  |                |  |  |  |          |          |         |  |            |         |   |  |         





---



##### Table of Contents



- 95 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|(12) |  | Net Income per Share                                                                                                                                                 
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | A reconciliation of the numerators and denominators of the basic and
diluted net income per share computation for the three years ended March
31, 2001 is as follows:

|                                            |                                            |  |                |     |      |  |         |     |  |  |        |     | 
|------------------------------------------- | ------------------------------------------ |  | -------------- | --- | ---- |  | ------- | --- |  |  | ------ | --- | 
|                                            |                                            |  | Yen (millions)
|                                            |                                            |  |               
|                                            |                                            |  | 2001           |     | 2000 |  | 1999   
|                                            |                                            |  |                |     |      |  |        
|                                           
|                                           
|                                           
|                                           
|                                           
|Net income available to common stockholders |                                            |  | 41,500         |     |      |  | 99,709  |     |  |  | 24,246 |    
|                                           
|                                           
|                                           
|                                           
|Effect of assumed conversions:             
|                                           
|                                           
|                                           
|                                           
|                                            | Convertible bonds, due 2002, interest 1.3% |  |                | 747 |      |  |         | 747 |  |  |        | 674 | 
|                                           
|                                           
|                                           
|                                           
|                                            | Convertible bonds, due 2004, interest 1.4% |  |                | 795 |      |  |         | 802 |  |  |        |    | 
|                                            |                                            |  |                |     |      |  |         |     |  |  |        |    
|                                           
|Diluted net income                          |                                            |  | 43,042         |     |      |  | 101,258 |     |  |  | 24,920 |    
|                                            |                                            |  |                |     |      |  |         |     |  |  |        |    

|                                        |                    |                         |               |      |                  |      |               |      |            |  |               | 
|--------------------------------------- | ------------------ | ----------------------- | ------------- | ---- | ---------------- | ---- | ------------- | ---- | ---------- |  | ------------- | 
|                                        |                    |                         |               |      | Number of shares
|                                        |                    |                         |               |     
|                                        |                    |                         |               | 2001 |                  | 2000 |               | 1999
|                                        |                    |                         |               |      |                  |      |               |     
|                                       
|                                       
|                                       
|                                       
|                                       
|Average common shares outstanding       |                    |                         | 2,079,235,871 |      |                  |      | 2,062,295,743 |      |            |  | 2,089,988,449 | 
|                                       
|                                       
|                                       
|                                       
|Dilutive effect of assumed conversions: |                   
|                                       
|                                       
|                                       
|                                       
|                                        | Convertible bonds,
|                                        |                    | due 2002, interest 1.3% |               |      | 60,941,152       |      |               |      | 61,090,690 |  |               | 
|                                       
|                                       
|                                       
|                                       
|                                        | Convertible bonds,
|                                        |                    | due 2004, interest 1.4% |               |      | 60,376,132       |      |               |      | 60,941,462 |  |               | 
|                                       
|                                       
|                                       
|                                       
|                                        | Stock options      |                         | 23,848        |      |                  |      | 15,403        |      |            |  |              | 
|                                        |                    |                         |               |      |                  |      |               |      |            |  |               | 
|                                       
|Diluted common shares outstanding       |                    |                         | 2,200,577,003 |      |                  |      | 2,184,343,298 |      |            |  | 2,151,105,939
|                                        |                    |                         |               |      |                  |      |               |      |            |  |               | 

|                      |         |  |      |       |      |  |      |       |  |  |  |       | 
|--------------------- | ------- |  | ---- | ----- | ---- |  | ---- | ----- |  |  |  | ----- | 
|                      |         |  | Yen 
|                      |         |  |     
|                      |         |  | 2001 |       | 2000 |  | 1999
|                      |         |  |      |       |      |  |     
|                     
|                     
|                     
|                     
|                     
|Net income per share:
|                     
|                     
|                     
|                     
|                      | Basic   |  |      | 19.96 |      |  |      | 48.35 |  |  |  | 11.60 | 
|                     
|                     
|                     
|                     
|                      | Diluted |  |      | 19.56 |      |  |      | 46.36 |  |  |  | 11.58 | 



| |  | Approximately 136 million of the potential common shares were excluded
from the computation of diluted net income per share for the year ended
March 31, 1999, because their inclusion would have had an antidilutive
effect on net income per share.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





---



##### Table of Contents



- 96 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|(13) |  | Supplementary Information to the Statements of Income and Cash Flows                                                                                        
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | Research and development costs, advertising costs and shipping and
handling costs charged to income for the three years ended March 31, 2001
are as follows:

|                               |  |                |         |      |  |      |         |  |  |  |         | 
|------------------------------ |  | -------------- | ------- | ---- |  | ---- | ------- |  |  |  | ------- | 
|                               |  | Yen (millions)
|                               |  |               
|                               |  | 2001           |         | 2000 |  | 1999
|                               |  |                |         |      |  |     
|                              
|                              
|                              
|                              
|                              
|Research and development costs |  |                | 543,804 |      |  |      | 525,557 |  |  |  | 499,986 | 
|                              
|                              
|                              
|                              
|Advertising costs              |  |                | 112,139 |      |  |      | 114,587 |  |  |  | 128,285 | 
|                              
|                              
|                              
|                              
|Shipping and handling costs    |  |                | 149,563 |      |  |      | 152,387 |  |  |  | 159,177 | 



| |  | Included in other deductions of costs and expenses for the year ended
March 31, 2001 is a loss of 100,195 million yen associated with the
implementation of the regional-based employee remuneration system and
early retirement program in several domestic subsidiaries.                 
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Included in other income of revenues for the year ended March 31, 2000 is
a gain of 58,566 million yen from the sale of EPCOS AG shares, a German
electronic components manufacturing joint venture, held by a subsidiary,
upon its initial public offering.                               
|
| |  | Included in other deductions of costs and expenses for the year ended
March 31, 1999 is a loss of 11,277 million yen related to liquidation of a
U.S. joint venture for production of computer peripherals components.                                                                     
|
| |  | Foreign exchange losses of 6,730 million yen is included in other
deductions of costs and expenses for the year ended March 31, 2001.
Foreign exchange gains and losses included in the consolidated statements
of income for the years ended March 31, 2000 and 1999 were not
significant.
|
| |  | Shipping and handling costs are included in selling, general and
administrative expenses in the consolidated statements of income.                                                                                                                                                         





---



##### Table of Contents



- 97 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |  | Income taxes and interest expenses paid and noncash investing and
financing activities for the three years ended March 31, 2001 are as
follows:
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------

|                                               |                                          |  |                |         |      |  |      |         |  |  |  |         | 
|---------------------------------------------- | ---------------------------------------- |  | -------------- | ------- | ---- |  | ---- | ------- |  |  |  | ------- | 
|                                               |                                          |  | Yen (millions)
|                                               |                                          |  |               
|                                               |                                          |  | 2001           |         | 2000 |  | 1999
|                                               |                                          |  |                |         |      |  |     
|                                              
|                                              
|                                              
|                                              
|                                              
|a) Cash paid:                                 
|                                              
|                                              
|                                              
|                                              
|                                               | Interest                                 |  |                | 48,985  |      |  |      | 47,729  |  |  |  | 70,672  | 
|                                              
|                                              
|                                              
|                                              
|                                               | Income taxes                             |  |                | 146,694 |      |  |      | 178,184 |  |  |  | 160,046 | 
|                                              
|b) Noncash investing and financing activities:
|                                              
|                                              
|                                              
|                                              
|                                               | Conversion of bonds                      |  |                | 940     |      |  |      | 528     |  |  |  | 56      | 
|                                              
|                                              
|                                              
|                                              
|                                               | Transfer of ownership arising on capital | 
|                                               | transactions by consolidated and        
|                                               | associated
companies                     |  |                | 969     |      |  |      | 3,004   |  |  |  | 2,960   | 
|                                              
|                                              
|                                              
|                                              
|                                               | Stock issued under exchange offering     |  |                | 50,107  |      |  |      |        |  |  |  |        | 



|(14) |  | Foreign Exchange Contracts                                                                                                                                                                                                                                                                                                                                                                                                         
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | The Company and its subsidiaries operate internationally, giving rise to
significant exposure to market risks arising from changes in foreign
exchange rates. Derivative financial instruments are comprised
principally of foreign exchange contracts utilized by the Company and some
of its subsidiaries to hedge these risks. The Company and its
subsidiaries do not hold or issue financial instruments for trading
purposes.
|    
|     |  | The Company and its subsidiaries are exposed to credit risk in the event
of nonperformance by counterparties to foreign exchange contracts, but
such risk is considered minor because of the high credit rating of the
counterparties.                                                                                                                                                                                             
|    
|     |  | The contract amounts of foreign exchange contracts at March 31, 2001 and
2000 are as follows:                                                                                                                                                                                                                                                                                                                                      

|                                             |                            |  |                |         |      |  |        |         | 
|-------------------------------------------- | -------------------------- |  | -------------- | ------- | ---- |  | ------ | ------- | 
|                                             |                            |  | Yen (millions)
|                                             |                            |  |               
|                                             |                            |  | 2001           |         | 2000
|                                             |                            |  |                |         |     
|                                            
|                                            
|                                            
|                                            
|                                            
|Forward:                                    
|                                            
|                                            
|                                            
|                                            
|                                             | To sell foreign currencies |  |                | 350,087 |      |  |        | 373,417 | 
|                                            
|                                            
|                                            
|                                            
|                                             | To buy foreign currencies  |  |                | 109,523 |      |  |        | 82,444  | 
|                                            
|                                            
|                                            
|                                            
|Options purchased to sell foreign currencies |                            |  | 16,430         |         |      |  | 26,711 |        
|                                            
|                                            
|                                            
|                                            
|Options purchased to buy foreign currencies  |                            |  | 34,412         |         |      |  | 1,260  |        
|                                            
|                                            
|                                            
|                                            
|Options written to buy foreign currencies    |                            |  | 24,956         |         |      |  | 24,820 |        
|                                            
|                                            
|                                            
|                                            
|Options written to sell foreign currencies   |                            |  | 40,080         |         |      |  | 4,734  |        





---



##### Table of Contents



- 98 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|     |  | The Company and its subsidiaries enter into forward exchange contracts and
options to hedge firm commitments expected to be denominated in foreign
currencies, principally U.S. dollars. The terms of these foreign exchange
contracts rarely extend beyond a few months.
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(15) |  | Fair Value of Financial Instruments                                                                                                                                                                                                                                      
|    
|     |  | The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to
estimate that value:                                                                                                    
|    
|     |  | Cash and cash equivalents, Time deposits, Trade receivables, Short-term
borrowings, Trade payables and Accrued expenses                                                                                                                                                  
|    
|     |  | The carrying amount approximates fair value because of the short maturity
of these instruments.                                                                                                                                                                          
|    
|     |  | Short-term investments                                                                                                                                                                                                                                                   
|    
|     |  | The fair value of short-term investments is estimated based on quoted
market prices.                                                                                                                                                                                     
|    
|     |  | Noncurrent receivables                                                                                                                                                                                                                                                   
|    
|     |  | The carrying amount which is generally stated at the net realizable value
approximates fair value.                                                                                                                                                                       
|    
|     |  | Investments and advances                                                                                                                                                                                                                                                 
|    
|     |  | The fair value of investments and advances is estimated based on the
quoted market prices or the present value of future cash flows using
appropriate current discount rates.                                                                                            
|    
|     |  | Long-term debt                                                                                                                                                                                                                                                           
|    
|     |  | The fair value of long-term debt is estimated based on the quoted market
prices or the present value of future cash flows using appropriate current
discount rates.                                                                                                      
|    
|     |  | Derivative financial instruments                                                                                                                                                                                                                                         
|    
|     |  | The fair value of derivative financial instruments, consisting principally
of foreign exchange contracts, all of which are used for hedging purposes,
are estimated by obtaining quotes from brokers.                                                                    





---



##### Table of Contents



- 99 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |  | The estimated fair values of financial instruments, all of which are held
or issued for purposes other than trading, at March 31, 2001 and 2000 are
as follows:
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                  |              |                                           |        |                |           |       |        |          |           |       |         |   |           |   |         |   |           |  
|----------------------------------------------------------------- | ------------ | ----------------------------------------- | ------ | -------------- | --------- | ----- | ------ | -------- | --------- | ----- | ------- | - | --------- | - | ------- | - | --------- | -
|                                                                  |              |                                           |        | Yen (millions)
|                                                                  |              |                                           |        |               
|                                                                  |              |                                           |        | 2001           |           | 2000 
|                                                                  |              |                                           |        |                |           |      
|                                                                  |              |                                           |        | Carrying       |           | Fair  |        | Carrying |           | Fair 
|                                                                  |              |                                           |        | amount         |           | value |        | amount   |           | value
|                                                                  |              |                                           |        |                |           |       |        |          |           |      
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Non-derivatives:                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Assets:     
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |              | Short-term investments                    |        |                | 11,421    |       |        |          | 11,421    |       |         |   | 136,883   |   |         |   | 136,883   |  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |              | Investments and advances                  |        |                | 1,008,170 |       |        |          | 1,009,122 |       |         |   | 1,161,757 |   |         |   | 1,164,740 |  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Liabilities:
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |              | Long-term debt,
including current
portion |        |                | (809,111  | )     |        |          | (903,698  | )     |         |   | (792,802  | ) |         |   | (975,617  | )
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Derivatives relating to
long-term debt, including
current portion |              |                                           | (1,367 | )              |           |       | (1,399 | )        |           |       | (19,117 | ) |           |   | (19,106 | )



|     |  | Limitations                                                                                                                                                                                                                                                                                                                                                                                         
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial
instruments. These estimates are subjective in nature and involve
uncertainties and matters of significant judgments and therefore cannot be
determined with precision. Changes in assumptions could significantly
affect the estimates.                        
|    
|(16) |  | Commitments and Contingent Liabilities                                                                                                                                                                                                                                                                                                                                                              
|    
|     |  | At March 31, 2001, commitments outstanding for the purchase of property,
plant and equipment approximated 50,379 million yen. Contingent
liabilities at March 31, 2001 for discounted export bills of exchange and
guarantees of loans amounted to approximately 105,246 million yen,
including 78,965 million yen for loans guaranteed principally on behalf of
associated companies and customers.
|    
|     |  | There are a number of legal actions against the Company and certain
subsidiaries. Management is of the opinion that damages, if any,
resulting from these actions will not have a material effect on the
Companys consolidated financial statements.                                                                                                                                               





---



##### Table of Contents



- 100 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|(17) |  | Quarterly Financial Data (Unaudited)                                                                                                               
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | Quarterly net sales, net income (loss) and net income (loss) per
share for the two years ended March 31, 2001 are set forth in the
following table:

|              |  |                                              |           |        |  |                   |         |                   |  |            |        |            |  |  |        |  
|------------- |  | -------------------------------------------- | --------- | ------ |  | ----------------- | ------- | ----------------- |  | ---------- | ------ | ---------- |  |  | ------ | -
|              |  | Yen (millions), except per share information
|              |  |                                             
|              |  | 2001                                        
|              |  |                                             
|              |  |                                              |           |        |  | Net               |         | Net income        |  | Net income
|              |  | Net                                          |           | income |  | (loss) per share: |         | (loss) per share:
|              |  | sales                                        |           | (loss) |  | basic (yen)       |         | diluted (yen)    
|              |  |                                              |           |        |  |                   |         |                  
|Quarter ended
|             
|             
|             
|             
|             
|             
|             
|             
|             
|June 30       |  |                                              | 1,772,375 |        |  |                   | 9,399   |                   |  |            | 4.52   |            |  |  | 4.45   |  
|             
|             
|             
|             
|September 30  |  |                                              | 1,964,666 |        |  |                   | 41,973  |                   |  |            | 20.19  |            |  |  | 19.25  |  
|             
|             
|             
|             
|December 31   |  |                                              | 1,992,628 |        |  |                   | 22,782  |                   |  |            | 10.96  |            |  |  | 10.53  |  
|             
|             
|             
|             
|March 31      |  |                                              | 1,951,892 |        |  |                   | (32,654 | )                 |  |            | (15.70 | )          |  |  | (15.70 | )
|             
|             
|              |  | Yen (millions), except per share information
|              |  |                                             
|              |  | 2000                                        
|              |  |                                             
|              |  |                                              |           |        |  |                   |         |                   |  | Net
income |        | Net
income
|              |  | Net                                          |           | Net    |  | per share:        |         | per share:       
|              |  | sales                                        |           | income |  | basic (yen)       |         | diluted (yen)    
|              |  |                                              |           |        |  |                   |         |                  
|Quarter ended
|             
|             
|             
|             
|             
|             
|             
|             
|             
|June 30       |  |                                              | 1,755,406 |        |  |                   | 9,552   |                   |  |            | 4.63   |            |  |  | 4.55   |  
|             
|             
|             
|             
|September 30  |  |                                              | 1,837,286 |        |  |                   | 24,514  |                   |  |            | 11.89  |            |  |  | 11.40  |  
|             
|             
|             
|             
|December 31   |  |                                              | 1,866,736 |        |  |                   | 60,656  |                   |  |            | 29.41  |            |  |  | 27.95  |  
|             
|             
|             
|             
|March 31      |  |                                              | 1,839,959 |        |  |                   | 4,987   |                   |  |            | 2.42   |            |  |  | 2.42   |  





---



##### Table of Contents



- 101 -

Schedule II

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Valuation and Qualifying Accounts and Reserves

(In millions of yen)

Years ended March 31, 2001, 2000 and 1999

|                                              |      |  |           |        |         |  |         |        |          |  |             |        |             |  |         |       |     |  |  |        |   |  |  |        | 
|--------------------------------------------- | ---- |  | --------- | ------ | ------- |  | ------- | ------ | -------- |  | ----------- | ------ | ----------- |  | ------- | ----- | --- |  |  | ------ | - |  |  | ------ | 
|                                              |      |  |           |        |         |  |         |        |          |  | Deduct     
|                                              |      |  |           |        |         |  |         |        |          |  |            
|                                              |      |  | Balance   |        |         |  |         |        |          |  |             |        |             |  |         |       | Add
|                                              |      |  | at        |        | Add-    |  | Bad     |        |          |  |             |        | (deduct)-   |  | Balance
|                                              |      |  | beginning |        | charged |  | debts   |        |          |  |             |        | cumulative  |  | at end 
|                                              |      |  | of        |        | to      |  | written |        |          |  |             |        | translation |  | of     
|                                              |      |  | period    |        | income  |  | off     |        | Reversal |  | adjustments |        | period     
|                                              |      |  |           |        |         |  |         |        |          |  |             |        |            
|Allowance
for doubtfultrade receivables:     
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                              | 2001 |  |           | 42,098 |         |  |         | 13,289 |          |  |             | 12,460 |             |  |         | 1,929 |     |  |  | 1,532  |   |  |  | 42,530 | 
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                              | 2000 |  |           | 63,649 |         |  |         | 10,252 |          |  |             | 28,670 |             |  |         | 1,473 |     |  |  | (1,660 | ) |  |  | 42,098 | 
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                              | 1999 |  |           | 62,742 |         |  |         | 13,505 |          |  |             | 8,781  |             |  |         | 2,454 |     |  |  | (1,363 | ) |  |  | 63,649 | 
|                                             
|Allowance
for doubtfulnoncurrent receivables:
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                              | 2001 |  |           | 144    |         |  |         | 3,160  |          |  |             | 3,206  |             |  |         |      |     |  |  |       |   |  |  | 98     | 
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                              | 2000 |  |           | 304    |         |  |         | 1,728  |          |  |             | 1,888  |             |  |         |      |     |  |  |       |   |  |  | 144    | 
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                              | 1999 |  |           | 523    |         |  |         |       |          |  |             | 219    |             |  |         |      |     |  |  |       |   |  |  | 304    | 





---



##### Table of Contents



- 102 -




Item 18.    Financial Statements

Not applicable






Item 19.    Exhibits

Documents filed as exhibits to this annual report are as follows;



|(1) |  | ARTICLES OF INCORPORATION, as amended (English translation) 
|--- |  | ------------------------------------------------------------
|   
|(2) |  | SHARE HANDLING REGULATIONS, as amended (English translation)





---



##### Table of Contents



- 103 -

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Company certifies that it meets all of the requirements for filing on
Form 20-F and has duly caused this annual report to be signed on its behalf by
the undersigned, thereunto duly authorized.

|                    |                                          |                                                                                                                           
|------------------- | ---------------------------------------- | --------------------------------------------------------------------------------------------------------------------------
|                   
|                   
|                    | MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
|                    |                                         
|                    | (Registrant)                            
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|                   
|Date: July 24, 2001 | By                                       | /s/ Shigeru Nakatani                                                                                                      
|                    |                                          |                                                                                                                           
|                    |                                          | Shigeru Nakatani
President of
Panasonic Finance (America), Inc.
1 Rockefeller Plaza, Suite 1001,
New York, N.Y. 10020-2002