##### 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, 2002
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 571-8501, 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.

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

None

(Title of Class)

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

None

(Title of Class)

This form contains 125 pages.





---

TABLE OF CONTENTS



|                                               |                                                                                       |                                                            |  |  |  |  |  | 
|---------------------------------------------- | ------------------------------------------------------------------------------------- | ---------------------------------------------------------- |  |  |  |  |  | 
|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. Accounting Principles                                  
|                                               | 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                                                                    
|SIGNATURES                                    
|Articles of Incorporation                     
|Share Handling Regulations                    
|Regulations of the Board of Directors         
|Regulations of the Board of Corporate Auditors
|Specimen common stock certificates            



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##### Table of Contents



CONTENTS

|                                                              |                                              |  |        |    |      |  | 
|------------------------------------------------------------- | -------------------------------------------- |  | ------ | -- | ---- |  | 
|                                                              |                                              |  |        |    | Page
|                                                              |                                              |  |        |    |     
|Cautionary Statement Regarding Forward-Looking Statements     |                                              |  | 1      |   
|                                                              |                                              |  |        |    |     
|                                                              |                                              |  | PART I |    |      |  | 
|Item 1. Identity of Directors, Senior Management and Advisers |                                              |  | 3      |   
|                                                              |                                              |  |        |    |     
|Item 2. Offer Statistics and Expected Timetable               |                                              |  | 3      |   
|                                                              |                                              |  |        |    |     
|Item 3. Key Information                                       |                                              |  | 3      |   
|                                                              | A. Selected Financial Data                   |  |        | 3  |     
|                                                              | B. Capitalization and Indebtedness           |  |        | 4  |     
|                                                              | C. Reasons for the Offer and Use of Proceeds |  |        | 4  |     
|                                                              | D. Risk Factors                              |  |        | 4  |     
|                                                              |                                              |  |        |    |     
|Item 4. Information on the Company                            |                                              |  | 9      |   
|                                                              | A. History and Development of the Company    |  |        | 9  |     
|                                                              | B. Business Overview                         |  |        | 13 |     
|                                                              | C. Organizational Structure                  |  |        | 24 |     
|                                                              | D. Property, Plants and Equipment            |  |        | 25 |     
|                                                              |                                              |  |        |    |     
|Item 5. Operating and Financial Review and Prospects          |                                              |  | 27     |   
|                                                              | A. Operating Results                         |  |        | 27 |     
|                                                              | B. Liquidity and Capital Resources           |  |        | 35 |     
|                                                              | C. Research and Development                  |  |        | 37 |     
|                                                              | D. Trend Information                         |  |        | 38 |     
|                                                              | E. Accounting Principles                     |  |        | 40 |     
|                                                              |                                              |  |        |    |     
|Item 6. Directors, Senior Management and Employees            |                                              |  | 44     |   
|                                                              | A. Directors and Senior Management           |  |        | 44 |     
|                                                              | B. Compensation                              |  |        | 50 |     
|                                                              | C. Board Practices                           |  |        | 50 |     
|                                                              | D. Employees                                 |  |        | 52 |     
|                                                              | E. Share Ownership                           |  |        | 53 |     
|                                                              |                                              |  |        |    |     
|Item 7. Major Shareholders and Related Party Transactions     |                                              |  | 55     |   
|                                                              | A. Major Shareholders                        |  |        | 55 |     
|                                                              | B. Related Party Transactions                |  |        | 56 |     
|                                                              | C. Interests of Experts and Counsel          |  |        | 56 |     





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|                                                                                      |                                                            |          |     |    |      |  | 
|------------------------------------------------------------------------------------- | ---------------------------------------------------------- | -------- | --- | -- | ---- |  | 
|                                                                                      |                                                            |          |     |    | Page
|                                                                                      |                                                            |          |     |    |     
|Item 8.   Financial Information                                                       |                                                            |          | 56  |   
|                                                                                      | A. Consolidated Statements and Other Financial Information |          |     | 56 |     
|                                                                                      | B. Significant Changes                                     |          |     | 58 |     
|                                                                                      |                                                            |          |     |    |     
|Item 9.   The Offer and Listing                                                       |                                                            |          | 58  |   
|                                                                                      | A. Offer and Listing Details                               |          |     | 58 |     
|                                                                                      | B. Plan of Distribution                                    |          |     | 59 |     
|                                                                                      | C. Markets                                                 |          |     | 59 |     
|                                                                                      | D. Selling Shareholders                                    |          |     | 59 |     
|                                                                                      | E. Dilution                                                |          |     | 60 |     
|                                                                                      | F. Expenses of the Issue                                   |          |     | 60 |     
|                                                                                      |                                                            |          |     |    |     
|Item 10. Additional Information                                                       |                                                            |          | 60  |   
|                                                                                      | A. Share Capital                                           |          |     | 60 |     
|                                                                                      | B. Memorandum and Articles of Association                  |          |     | 60 |     
|                                                                                      | C. Material Contracts                                      |          |     | 69 |     
|                                                                                      | D. Exchange Controls                                       |          |     | 69 |     
|                                                                                      | E. Taxation                                                |          |     | 70 |     
|                                                                                      | F. Dividends and Paying Agents                             |          |     | 73 |     
|                                                                                      | G. Statement by Experts                                    |          |     | 73 |     
|                                                                                      | H. Documents on Display                                    |          |     | 73 |     
|                                                                                      | I. Subsidiary Information                                  |          |     | 74 |     
|                                                                                      |                                                            |          |     |    |     
|Item 11. Quantitative and Qualitative Disclosures about Market Risk                   |                                                            |          | 74  |   
|                                                                                      |                                                            |          |     |    |     
|Item 12. Description of Securities Other than Equity Securities                       |                                                            |          | 76  |   
|                                                                                     
|                                                                                      |                                                            | PART II  |     |    |      | 
|                                                                                      |                                                            |          |     |    |     
|Item 13. Defaults, Dividend Arrearages and Delinquencies                              |                                                            |          | 77  |   
|                                                                                      |                                                            |          |     |    |     
|Item 14. Material Modifications to the Rights of Security Holders and Use of
Proceeds |                                                            |          | 77  |   
|                                                                                      |                                                            |          |     |    |     
|Item 15. [ Reserved ]                                                                 |                                                            |          | 77  |   
|                                                                                      |                                                            |          |     |    |     
|Item 16. [ Reserved ]                                                                 |                                                            |          | 77  |   
|                                                                                      |                                                            |          |     |    |     
|                                                                                      |                                                            | PART III |     |    |      | 
|                                                                                      |                                                            |          |     |    |     
|                                                                                      |                                                            |          |     |    |     
|Item 17. Financial Statements                                                         |                                                            |          | 78  |   
|                                                                                      |                                                            |          |     |    |     
|Item 18. Financial Statements                                                         |                                                            |          | 124 |   
|                                                                                      |                                                            |          |     |    |     
|Item 19. Exhibits                                                                     |                                                            |          | 124 |   





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- 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
|                                                                      |  |                  
|                                                                      |  | March 29, 2002    |               | March 28, 2002 
|Title of Class                                                        |  | (Japan Time)      |               | (New York Time)
|                                                                      |  |                   |               |                
|Common Stock                                                          |  |                   | 2,138,514,603 |                 |  |  |            | 
|American Depositary Shares, each
representing 1 share of common stock |  |                   |               |                 |  |  | 95,275,587 | 

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, 2002 or for the
year ended March 31, 2002 (fiscal 2002) 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 8, 2002 was 118.66 yen =
U.S.$1.

Cautionary Statement Regarding Forward-Looking Statements

This annual report includes forwardlooking statements (within the meaning of
Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S.
Securities Exchange Act of 1934) about Matsushita and its group companies (the
Matsushita Group). To the extent that statements in this annual report do not
relate to historical or current facts, they constitute forward-looking
statements. These forward-looking statements are based on the current
assumptions and beliefs of the Matsushita Group in light of the information
currently available to it, and involve known and unknown risks, uncertainties,
and other factors. Such risks, uncertainties and other factors may cause the
Matsushita Groups actual results, performance, achievements or financial
position to be materially different from any future results, performance,
achievements or financial position expressed or implied by these
forward-looking statements. Matsushita undertakes no obligation to publicly
update any forward-looking statements after the date of this annual report
(July 2002). Investors are advised to consult any further disclosures by
Matsushita in its subsequent filings with the U.S. Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934 and its other
filings.





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- 2 -

The risks, uncertainties and other factors referred to above 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 realize expected benefits of various restructuring
activities in its business and organization, including the share exchanges with
five subsidiaries currently in progress; the ability of the Matsushita Group to
achieve its business objectives through joint ventures and other collaborative
agreements with other companies; the ability of the Matsushita Group to
maintain competitive strength in many product and geographical areas; 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 countries; and
fluctuations in market prices of securities and other assets in which the
Matsushita Group has holdings, as well as future changes or revisions to
accounting policies, or accounting rules.





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##### Table of Contents



- 3 -




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,                                    
|                                    |  |                                                                
|                                    |  | 2002                                                            |           | 2001 |  | 2000 |           | 1999 |  | 1998
|                                    |  |                                                                 |           |      |  |      |           |      |  |     
|Income Statement Data:              |  |                                                                 |           |      |  |      |           |      |  |      |           |   |  |  |           |   |  |  |           |  
|Net sales                           |  |                                                                 | 6,877     |      |  |      | 7,682     |      |  |      | 7,299     |   |  |  | 7,640     |   |  |  | 7,891     |  
|Income (loss) before income taxes   |  |                                                                 | (548      | )    |  |      | 101       |      |  |      | 219       |   |  |  | 202       |   |  |  | 356       |  
|Net income (loss)                   |  |                                                                 | (431      | )    |  |      | 42        |      |  |      | 100       |   |  |  | 24        |   |  |  | 99        |  
|Per common share:                   |  |                                                                 |           |      |  |      |           |      |  |      |           |   |  |  |           |   |  |  |           |  
|Net income (loss):                  |  |                                                                 |           |      |  |      |           |      |  |      |           |   |  |  |           |   |  |  |           |  
|Basic                               |  |                                                                 | (207.65   | )    |  |      | 19.96     |      |  |      | 48.35     |   |  |  | 11.60     |   |  |  | 47.04     |  
|Diluted                             |  |                                                                 | (207.65   | )    |  |      | 19.56     |      |  |      | 46.36     |   |  |  | 11.58     |   |  |  | 44.01     |  
|Dividends                           |  |                                                                 | 12.50     |      |  |      | 12.50     |      |  |      | 14.00     |   |  |  | 12.50     |   |  |  | 13.00     |  
|                                    |  |                                                                 | ($0.100   | )    |  |      | ($0.116   | )    |  |      | ($0.125   | ) |  |  | ($0.097   | ) |  |  | ($0.107   | )
|Balance Sheet Data:                 |  |                                                                 |           |      |  |      |           |      |  |      |           |   |  |  |           |   |  |  |           |  
|Total assets                        |  |                                                                 | 7,627     |      |  |      | 8,156     |      |  |      | 7,955     |   |  |  | 8,055     |   |  |  | 8,661     |  
|Long-term debt                      |  |                                                                 | 692       |      |  |      | 542       |      |  |      | 644       |   |  |  | 709       |   |  |  | 690       |  
|Stockholders equity                |  |                                                                 | 3,243     |      |  |      | 3,773     |      |  |      | 3,684     |   |  |  | 3,642     |   |  |  | 3,854     |  
|Common stock                        |  |                                                                 | 259       |      |  |      | 211       |      |  |      | 210       |   |  |  | 209       |   |  |  | 209       |  
|Number of shares                    |  |                                                                 |           |      |  |      |           |      |  |      |           |   |  |  |           |   |  |  |           |  
|issued at year-end
(thousands)      |  |                                                                 | 2,138,515 |      |  |      | 2,079,573 |      |  |      | 2,062,671 |   |  |  | 2,062,345 |   |  |  | 2,112,318 |  
|Yen exchange rates per
U.S. dollar: |  |                                                                 |           |      |  |      |           |      |  |      |           |   |  |  |           |   |  |  |           |  
|Year-end                            |  |                                                                 | 132.70    |      |  |      | 125.54    |      |  |      | 102.73    |   |  |  | 118.43    |   |  |  | 133.29    |  
|Average                             |  |                                                                 | 125.05    |      |  |      | 110.60    |      |  |      | 111.35    |   |  |  | 128.19    |   |  |  | 122.78    |  
|High                                |  |                                                                 | 115.89    |      |  |      | 104.19    |      |  |      | 101.53    |   |  |  | 108.83    |   |  |  | 111.42    |  
|Low                                 |  |                                                                 | 134.77    |      |  |      | 125.54    |      |  |      | 124.45    |   |  |  | 147.14    |   |  |  | 133.99    |  

|                       |  |      |        |      |  |      |        |      |  |      |        |      |  |  |        |  |  |  |        |  |  |  |        | 
|---------------------- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  |  | ------ |  |  |  | ------ |  |  |  | ------ | 
|Yen exchange
rates for |  | Jan. |        | Feb. |  | Mar. |        | Apr. |  | May  |        | Jun.
|each month during the  |  | 2002 |        | 2002 |  | 2002 |        | 2002 |  | 2002 |        | 2002
|previous six months:   |  |      |        |      |  |      |        |      |  |      |        |     
|High                   |  |      | 130.93 |      |  |      | 132.26 |      |  |      | 127.07 |      |  |  | 128.13 |  |  |  | 123.08 |  |  |  | 119.38 | 
|Low                    |  |      | 134.64 |      |  |      | 134.77 |      |  |      | 133.46 |      |  |  | 133.40 |  |  |  | 128.66 |  |  |  | 125.64 | 





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##### Table of Contents



- 4 -



|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 6,877 billion yen for the
fiscal year ended March 31, 2002 (fiscal 2002). Over the past eight
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 2002 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 businesses, including, but not limited to, the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        





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- 5 -



| |  | Weakness in the Japanese and global economies has significantly reduced
demand for the products of Matsushita, which trend may continue in the
future                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Japanese economy has experienced a prolonged recession since the early
1990s, which has become increasingly serious. In addition, the global
economy has taken a downturn, concurrently with setbacks in the global
information technology industry. These recessionary conditions have
resulted in sluggish consumer spending and weakened corporate capital
expenditures in many industries. For example, the markets for mobile
communications equipment and components and devices for the information
technology industry, on which Matsushita is substantially dependent for its
growth, have been particularly hard hit. Due to these conditions and
restructuring expenses under the Value Creation 21 plan, Matsushita incurred
a significant net loss for the year ended March 31, 2002. Matsushita
currently does not foresee a rapid turnaround in the Japanese or global
economy in the near term. These conditions may continue in the short- to
mid-term, thereby further negatively affecting Matsushitas businesses.                                                                                                                                                                                                                                                                                                           
|
| |  | Matsushitas mid-term
business plan may not produce the expected results                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | Largely as a result of the recessionary conditions in the Japanese and
global economies described above, Matsushita incurred substantial losses in
fiscal 2002. Furthermore, the business environment in which Matsushita
operates has evolved so dramatically in recent years that Matsushitas
traditional business model, namely having each product division and
subsidiary operate autonomously in each product area, does not necessarily
provide as many advantages as it once did. In response to these problems,
starting in April 2001, Matsushita has been implementing its mid-term
business plan called Value Creation 21. The plan consists of two key
elements: structural reforms with an emphasis on the pursuit of higher
management efficiency for customer satisfaction, and the pursuit of a new
growth strategy. Matsushita, however, may not be successful in achieving
all of the goals set out in the plan or in realizing the benefits that it
expects from implementing the plan because of external and internal factors
as further mentioned below.                                                                                                                                                                                                                                                                     
|
| |  | The restructuring of Matsushitas businesses may not bring the improved
efficiency, cost reduction and growth that Matsushita aims
for                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | Under the plan, Matsushita has been restructuring its traditional,
decentralized product division set-up by establishing several centers that
provide manufacturing services commonly used by different product divisions;
restructuring its organizations for semiconductors and display devices;
integrating some of its manufacturing units in Japan and overseas; reforming
its consumer sales and distribution structure in Japan; and implementing
employment restructuring initiatives. As an additional business
restructuring measure, Matsushita is implementing share exchanges with five
of its majority-owned subsidiaries to transform them into wholly-owned
subsidiaries of Matsushita, effective on October 1, 2002, followed by a
major Groupwide reorganization (see Section A of Item 4  Information on the
Company). By integrating their management, Matsushita seeks to create a
corporate structure in which it will be able to conduct its consolidated
Groupwide businesses speedily and efficiently, and to achieve synergies excepted from such restructuring.
Matsushita may not, however, be able to improve efficiency and reduce costs
and realize growth through these measures, due to unexpected additional
reorganization expenses, improper allocation of operational resources or
other unpredictable factors.





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| |  | Matsushita may not succeed in executing its growth strategies outside of
Japan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Value Creation 21 plan includes expanding Matsushitas businesses in
markets outside of Japan. In many of these markets, Matsushita may face
risks such as political instability, economic uncertainty, cultural and
religious differences and labor relations, as well as foreign exchange
risks. Matsushita may also face barriers in commercial and business customs
in foreign countries, including difficulties in timely collection of
accounts receivable or in building and expanding relationships with
potential customers, subcontractors or parts suppliers. Matsushita may also
experience various political, legal on other restrictions, including
restrictions on foreign investment or the repatriation of profits on
invested capital, nationalization of local industry, changes in export or
import restrictions or foreign exchange controls, and changes in the tax
system or rate of taxation in countries where Matsushita operates business.
With respect to the products exported overseas, tariffs, other barriers or
shipping costs may make Matsushitas products less competitive. Finally,
expanding its overseas business may require significant investments long
before Matsushita realizes returns on such investments, and increased
investments may result in expenses growing at a faster rate than revenues.
|
| |  | Matsushita is subject to intense competition in areas in which it operates,
and this may adversely affect its ability to maintain its gross
margins                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | Matsushita produces a broad range of products and therefore faces many
different types of competitors, from large international companies to
relatively small, rapidly growing, and highly specialized organizations.
Matsushita may choose not to fund or invest in one or more of its businesses
to the same degree as its competitors in those businesses do, or it may not
be able to do so in a timely manner or at all. These competitors may have
greater financial, technical, and marketing resources available to them than
Matsushita has in the respective businesses in which they compete.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | Rapid declines in product prices may adversely affect Matsushitas financial
results                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | While some of the factors that drive competition vary by product area, price
is a factor relevant in substantially all of Matsushitas businesses. For
the year ending March 31, 2003, Matsushita expects prices in many product
areas in which it deals to decline significantly or more rapidly than in
recent fiscal years. Matsushita believes that this trend will affect its
businesses especially those of its AVC Networks category, which contributed
approximately 59% of Matsushitas net sales for the year ended March 31,
2002, and in the area of Matsushitas Components and Devices category, which
contributed approximately 20% of its net sales during the same period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Matsushita may not be able to keep pace with technological changes and
develop new products and services in a timely manner to remain
competitive                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | Matsushita may fail to introduce new products and services in response to
technological changes in a timely manner. Some of Matsushitas core
businesses, such as consumer digital electronics and key components and
devices, are concentrated in industries where technological innovation is
the central competitive factor. Matsushita continuously faces the challenge
of developing and introducing viable and innovative new products.
Matsushita must predict with reasonable accuracy both future demand and new
technologies that will be available to meet such demand. If Matsushita
fails to do so, it will not be able to compete in new markets and this could
adversely affect Matsushitas financial results and growth prospects.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    





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| |  | Matsushita may not be able to develop product formats which would prevail as
de factostandards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Matsushita has been forming alliances and partnerships with other major
manufacturers to strengthen the development of product formats, such as
next-generation home and mobile networking products and software systems.
Despite these efforts by Matsushita, its competitors may be the ones who
develop the de factostandards for future products.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | The alliances with, and strategic investments in, third parties undertaken
by Matsushita may not produce positive results                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | Matsushita develops its business through forming alliances or joint ventures
with, and making strategic investments in, other companies, including
investments in venture companies. Matsushitas key alliances are described
in Item 4. Matsushitas reliance on the strategy of partnering with third
parties is increasing. They are crucial to Matsushitas goal of introducing
new products and services, including those using digital network
technologies. Matsushita does not, however, control these partners, who may
make decisions regarding their business undertakings with Matsushita which
may be contrary to Matsushitas interests.                                                                                                                                                                                                                    
|
| |  | Matsushita may be subject to product liability claims that could result in
significant direct or indirect costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | There is a risk that defects may occur in Matsushitas products and
services. Many of Matsushitas products and services are for so-called
mission-critical uses  where the consequences of defects would be severe
 exposing Matsushita in some cases to greater risks than those posed by
ordinary retail products. The occurrence of defects could make Matsushita
liable for damages caused by the defects, including consequential damages.
Negative publicity concerning these problems could also make it harder for
Matsushita to market its products and services.                                                                                                                                                                                                                                                                                           
|
| |  | Currency exchange rate fluctuations could adversely affect Matsushitas
financial results                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | Matsushita is exposed to risks of foreign currency exchange rate
fluctuations. Matsushitas consolidated financial statements, which are
presented in Japanese yen, are affected by foreign exchange rate changes.
These changes affect Matsushitas international business transactions and
costs and prices of Matsushitas products and services in overseas countries
in relation to the yen. They can also affect the yen value of Matsushitas
investments in overseas assets and liabilities. Although Matsushita is
taking measures to reduce or hedge against foreign currency exchange risks,
foreign exchange rate fluctuations may hurt its businesses, financial
conditions or results of operations. Most typically, if the yen
strengthens, Matsushitas domestically manufactured products become less
attractive to foreign purchasers in terms of price.





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| |  | Matsushita may not be able to successfully recruit and retain skilled
employees, particularly scientific and technical personnel                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Matsushita may fail to recruit skilled employees, particularly scientific
and technical personnel, which are limited in number. Matsushitas future
success depends largely on its ability to attract and retain certain key
personnel, including scientific, technical and management personnel.
Matsushita anticipates that it will need to hire additional skilled
personnel in all areas of its business. Industry demand for skilled
employees, however, exceeds the number of personnel available and the
competition for attracting and retaining these employees, especially
scientific and technical employees, is intense. Because of this intense
competition for these skilled employees, Matsushita may be unable to retain
its existing personnel or attract additional qualified employees
in the future. If Matsushita is unable to retain skilled employees and
attract additional qualified employees to keep up with its future business
needs, this may adversely affect its business and results of operations.                                                                                                                   
|
| |  | Matsushita is dependent on the ability of third parties to deliver parts,
components and services in adequate quality and quantity in a timely
manner                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | Matsushitas manufacturing operations depend on obtaining deliveries of raw
materials, components, equipment and other supplies in adequate quality and
quantity in a timely manner. Since the products Matsushita purchases are
often complex, it may be difficult for Matsushita to substitute one supplier
for another or one component for another in a timely manner or at all. Some
components are only available from a limited number of suppliers. Although
Matsushita believes that it selects only reliable suppliers, shortages could
occur in critical materials due to interruption of supply or increased
industry demand and may adversely affect Matsushitas operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | Matsushita may fail to protect its proprietary intellectual property or face
a claim of intellectual property infringement by a third party, and may lose
its intellectual property rights on key technologies or be liable for
significant damages                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | Matsushitas success depends on its ability to obtain patents, licenses and
other intellectual property rights covering its products and product design
and manufacturing processes. The proceedings for obtaining intellectual
property protection can be long and expensive. Patents may not be granted
on currently pending or future applications or may not be of sufficient
scope or strength to provide Matsushita with enough protection or commercial
advantage. In addition, effective copyright and trade secret protection may
be unavailable or limited in some countries, and Matsushitas trade secrets
may be vulnerable to disclosure or misappropriation by employees,
contractors or others. Competitors or other third parties may also develop
technologies that are protected by patents and other intellectual property
rights, which make such technologies unavailable or available only on terms
unfavorable to Matsushita. Litigation may also be necessary to enforce
Matsushitas intellectual property rights or to defend against intellectual
property infringement claims brought against Matsushita by third parties.
|
| |  | Matsushita is exposed to the risk that its customers, including those to
whom it has provided vendor financing, may encounter financial
difficulties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | Matsushita may incur losses if some of its customers encounter financial
difficulties. Matsushita provides vendor financing to its customers. As
more businesses utilize vendor financing, Matsushita may also provide
increased vendor financing in the future. In addition, many of Matsushitas
customers purchase products and services from it on payment terms that do
not provide for immediate payment. If customers to whom Matsushita has
extended or guaranteed vendor financing, or from whom it has substantial
accounts receivable, encounter financial difficulties and are unable to make
payments on time, Matsushitas business, financial condition and operating
results could be adversely affected.                                                                                                                                                                                                                                                                                                                                                                                                                              





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| |  | Governmental regulations may limit Matsushitas activities or increase its
operating costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Matsushita is subject to governmental regulations in Japan and other
countries in which it conducts its business, including environmental laws
and regulations, governmental approvals required for conducting business and
investments, laws and regulations governing the radio telecommunications
businesses and electric product safety, national security-related laws and
regulations and export/import laws and regulations, as well as commercial,
antitrust, patent, product liability, consumer and business taxation laws
and regulations. To the extent that Matsushita cannot comply with these
laws and regulations, Matsushitas activities would be limited. In
addition, these laws and regulations could increase Matsushitas operating
costs.
|
| |  | Interest rate fluctuations could adversely affect Matsushitas financial
results                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | Matsushita is exposed to the risk of interest rate fluctuations, which,
despite the measures taken by Matsushita to hedge a portion of its exposure
to interest rate fluctuations, may affect its overall operational costs and
the value of its financial assets and liabilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | The decrease in the value of Japanese stocks may adversely affect
Matsushitas financial results                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | Matsushita holds Japanese stocks as part of its investment securities. The
value of most of these stocks, however, dropped substantially over the past
year due to the decline of the Japanese economy. For example, Matsushita
recorded a loss of 93 billion yen in its results of operations for the year
ended March 31, 2002 related to other than temporary declines in its
investment securities.                                                                                                                                                                                                                                                                                                                                                          




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 571-8501, 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 and electronic 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. During the 1950s,
Matsushita expanded its operations by establishing mass production and mass
sales structures to meet increasing domestic demand, while also creating
subsidiaries, making acquisitions and forming alliances. During the 1960s,
Matsushita expanded its overseas businesses, and its products started
getting world-wide recognition.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





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| |  | During the global recession caused by the first oil crisis in 1973,
Matsushita strengthened its structure and overseas business relations. The
advent and popularity of the video cassette recorder (VCR) from the late
1970s enabled Matsushita to receive worldwide recognition as a global
consumer electronics manufacturer. In the 1980s, Matsushita further worked
to evolve from a consumer products manufacturer to a comprehensive
electronics products manufacturer, expanding its business in the areas of
information and communications technology and industrial equipment and
components. Since the 1990s, Matsushita has been emphasizing technological
development and the use of advanced technology in every phase of life. In
particular, Matsushita has been expanding its development activities in such
areas as next-generation audiovisual (AV) equipment, multimedia products,
and advanced electronic components and devices, many of which incorporate
digital technology.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | 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 or 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 network systems, mobile communications, data storage devices,
environmental systems and key components and 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 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,
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 June 1998, the repurchase of 50 million shares of the Companys
common stock, spending approximately 99 billion yen during fiscal 1999. At
the same time, as an incentive to Board members and employees toward the
enhancement of corporate value, the Company introduced stock option plans
for Board members and select senior executives, and established a
stock-price-linked remuneration plan, under which modest cash payments have
been offered to employees manager-level or above 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       





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| |  | In April 2000, the Company made its majority-owned subsidiaries, Matsushita
Refrigeration Company and Wakayama Precision Company, into 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | In June 2000, Kunio Nakamura, new President of the Company, 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | During fiscal 2002, the Company implemented a series of structural reforms
under the Value Creation 21 plan, such as the restructuring of its domestic
consumer sales and distribution structure, management initiatives through
the use of information technology, such as supply chain management (SCM),
the selective integration of businesses and manufacturing locations,
manufacturing reforms, such as the introduction of the cell-style
production, the reform of the Company-wide R&D structure to concentrate on
development in strategic product or core technology areas, and employment
restructuring initiatives including the regional-based employee renumeration
system and special early retirement programs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | 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 disbursed between Matsushita and MEC for each
of these strategic businesses have been integrated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | As an additional structural reform aimed at achieving new growth under the
Value Creation 21 plan, on January 10, 2002, Matsushita and five of its
majority-owned subsidiaries (Matsushita Communication Industrial Co., Ltd.,
Kyushu Matsushita Electric Co., Ltd., Matsushita Seiko, Ltd., Matsushita
Kotobuki Electronics Industries, Ltd. and Matsushita Graphic Communication
Systems, Inc.) announced preliminary agreements to implement share exchanges
to transform these subsidiaries into wholly-owned subsidiaries of
Matsushita, effective October 1, 2002. The definitive agreements concluded
between Matsushita and each of these subsidiaries have been approved by
respective companies shareholders meetings on June 27, 2002. Following
the completion of the share exchanges, Matsushita intends to implement,
early in January 2003, the major reorganization of four of the five
subsidiaries and Matsushitas related internal divisional companies and
sales divisions into seven new operating entities. These seven operating
entities are tentatively named: Panasonic AVC Networks Company, Panasonic
Communications & Imaging Co., Ltd., Panasonic Mobile Communications &
Networks Co., Ltd., Panasonic Automotive Systems Company, Panasonic System
Solutions Company, Matsushita Ecology Systems Co., Ltd. and Panasonic
Factory Solutions Co., Ltd. Through this reorganization, Matsushita seeks
to reestablish its business domains as strategic units, thereby achieving
higher management efficiency and accelerated growth on a consolidated
Groupwide basis. The reorganization will be implemented with focus on the
elimination of duplication of business lines and of counterproductive
competition within the consolidated Group, the unification and concentration
of research and development resources, and the establishment of a totally
integrated operational structure from development and manufacturing to sales
in each domain for full customer satisfaction.



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| |  | In April 2002, Matsushita and Toshiba Corporation established a joint
venture company for the development, manufacture and sale of liquid crystal
display (LCD) panels and next-generation display devices. Of the joint
venture companys initial capital of 10 billion yen, 60% was invested by
Toshiba and 40% by Matsushita. The joint venture is expected to become one
of the worlds leading LCD panel manufacturers, combining Matsushitas
fast-response LCD image processing technology, Toshibas technology of
low-temperature polysilicon LCD panel manufacturing, and both companies
experiences and technologies in the fields of consumer products, personal
computers (PCs) and communication devices. The joint venture will start
production of low-temperature polysilicon LCD panels in July 2002, to add to
the existing LCD panel operations transferred from Matsushita and Toshiba.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

CAPITAL INVESTMENT



| |  | 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 investment in production automation and
energy-saving facilities, increasing emphasis has been placed on the
expansion of facilities in such business areas as key components and
devices, digital AV equipment and mobile communications equipment.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Total capital investment (excluding intangibles) amounted to 338 billion
yen, 504 billion yen and 309 billion yen for fiscal 2000, 2001 and 2002,
respectively. The decrease for fiscal 2002 mainly reflects a severe
business environment, as well as the fact that a series of major investment
has peaked out in such key components and devices areas as semiconductors.                                                                                                                                                                                                           
|
| |  | For the current fiscal year ending March 31, 2003 (fiscal 2003),
Matsushita expects its capital investment to decrease to approximately 240
billion yen as the Company places emphasis on higher asset efficiency,
better utilizing existing facilities. Of the projected total amount, nearly
160 billion yen will be invested in facilities in Japan and the remaining 80
billion yen overseas. This investment will be funded primarily through
internal sources.                                                                                                                 



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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,
|                       |                                          |          |       |                            
|                       |                                          |          |       | 2002                        |       | 2001 |    | 2000
|                       |                                          |          |       |                             |       |      |    |     
|AVC Networks           |                                          |          |       |                             |       |      |    |      |     |   |       |       |       |  |    |    |     |   |       |       |       |  |    |   
|                       | Video and audio equipment                |          |       | 1,797                       |       |      |    | 26   | %   |   |       | 1,756 |       |  |    | 23 | %   |   |       | 1,706 |       |  |    | 23 | %  
|                       | Information and
communications equipment |          |       | 2,255                       |       |      |    | 33   |     |   |       | 2,524 |       |  |    | 33 |     |   |       | 2,375 |       |  |    | 33 |    
|                       |                                          |          |       |                             |       |      |    |      |     |   |       |       |       |  |    |    |     |   |       |       |       |  |    |   
|                       |                                          | Subtotal |       |                             | 4,052 |      |    |      | 59  |   |       |       | 4,280 |  |    |    | 56  |   |       |       | 4,081 |  |    |    | 56  |  
|                      
|Home Appliances        |                                          |          | 1,178 |                             |       |      | 17 |      |     |   | 1,316 |       |       |  | 17 |    |     |   | 1,306 |       |       |  | 18 |   
|Industrial Equipment   |                                          |          | 289   |                             |       |      | 4  |      |     |   | 468   |       |       |  | 6  |    |     |   | 382   |       |       |  | 5  |   
|Components and Devices |                                          |          | 1,358 |                             |       |      | 20 |      |     |   | 1,618 |       |       |  | 21 |    |     |   | 1,530 |       |       |  | 21 |   
|                       |                                          |          |       |                             |       |      |    |      |     |   |       |       |       |  |    |    |     |   |       |       |       |  |    |   
|                       |                                          | Total    |       |                             | 6,877 |      |    |      | 100 | % |       |       | 7,682 |  |    |    | 100 | % |       |       | 7,299 |  |    |    | 100 | %
|                       |                                          |          |       |                             |       |      |    |      |     |   |       |       |       |  |    |    |     |   |       |       |       |  |    |   



| | Note: | Effective fiscal 2002, the Company reclassified its former
Consumer, Industrial and Components categories into four new categories: AVC
Networks, Home Appliances, Industrial Equipment, and Components and Devices.
Prior years figures have been restated to reflect this change.
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
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| |  | For TVs, Matsushita produces a broad range of models to meet demand in the
domestic and international markets. For the mainstay cathode-ray-tube (CRT)
TVs, Matsushita has shifted production of conventional CRT models from Japan
to Southeast Asian and other overseas factories. Domestic production is now
concentrated on flat-surface CRT models. Also, in recent years, Matsushita
has gradually expanded production of high-picture-quality, high definition
models, as well as flat-screen TVs such as LCD TVs and plasma display panel
(PDP) TVs. In October 2001, Matsushita introduced a new range of LCD TVs
with built-in DVD players. Volume production of PDP TVs began in the summer
of 2001 through a newly established manufacturing joint venture in Osaka
with Toray Industries, Inc. Matsushita is also particularly active in the
growing market for digital TVs. In the two years ended March 31, 2002,
Matsushita captured a top share of domestic broadcast satellite digital TV
and set-top-box (STB) production, including production on what is known as
an original equipment manufacture basis, or OEM basis. Matsushita believes
that this success was mainly attributable to its long commitment to research
and development in digital TVs.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | To prepare for the launch in Japan of digital TV-based e-Net services in
2002, Matsushita, in cooperation with Toshiba, Hitachi and other Japanese
companies, including broadcasting networks and content providers,
established eP Corporation to develop a common platform as the basis for
interactive TV, which is also linked with the Internet, to substantially
enhance the convenience of TV. The eP-platform will cover not only multiple
digital TV programming and data providing services but also stay-at-home
shopping and banking, e-mail and Internet browsing and other interactive
services via TV with an STB incorporating a hard disk drive (HDD). In June
2002, Matsushita started sales of STBs for digital TVs, which can
accommodate broadcast satellite and communications satellite digital TV
services and other interactive information services through the eP-platform,
and which contain an HDD for storing large-capacity digital data.
Furthermore, in view of the planned start in 2003 of digital terrestrial TV
broadcasting in Japan and in preparation for the coming broadband
communication age, Matsushita is developing more advanced Internet-protocol
TVs.                                                                       
|
| |  | In the VCR and video camera area, Matsushita has been accelerating
digitization, introducing digital VHS VCR decks and expanding its range of
digital camcorders and digital still cameras, some of which incorporate the
secure digital memory card mentioned below for memory storage and enhanced
networking convenience. Of these, new models of digital still cameras,
which benefit from the world-renowned optical technology of Leica Camera AG,
achieved an immediate market success upon its introduction in the second
half of fiscal 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | As for DVDs, Matsushita offers a wide range of products from standard DVD
players to portable models equipped with LCDs. In June 2000, Matsushita
launched DVD recorders, and has since strengthened this product line by
introducing the industrys most competitively-priced model in June 2001 and
the industrys first DVD recorder with a built-in HDD in December 2001.
Matsushita also formed an alliance with Nintendo Co., Ltd. and introduced a
new DVD player which is compatible with the Nintendo GameCube.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | In the area of audio equipment, Matsushita produces a variety of products,
including such digital products as compact disc (CD) players, CD radio
cassette recorders and Mini Disc players, as well as radio receivers, tape
recorders, portable headphone players, stereo hi-fi equipment and electronic
musical instruments. Matsushita expanded its range of new audio equipment
in recent years, with the launch of DVD-Audio players, and a series of
products using the secure digital memory card, such as an ultra-compact
portable headphone player. The secure digital memory card is a postage
stamp-sized data storage device now supported by more than 400 corporate
members of the Secure Digital Association worldwide.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       



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- 15 -



| |  | Information and Communications Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Information equipment includes products such as personal computers (PCs), PC
displays, HDDs, CD-ROM drives, DVD-ROM and DVD-RAM drives, DVD-ROM and
CD-R/RW combination drives, and other optical disk drives, copying machines
and printers. CD-ROM and DVD-ROM drives are devices which permit users to
read only the data contained on CDs or DVDs, while CD-R/RW and DVD-RAM
drives permit users to read and write data onto them. Communications
equipment includes products such as telephones, cellular phones, other
mobile communications equipment, digital private branch exchanges and
facsimile equipment. Products in this sector also include other systems
equipment, such as cable TV systems, car AV equipment, broadcast- and
business-use AV equipment and systems, large-screen visual equipment and
communications network-related equipment. This has been Matsushitas
fastest growth category during the last decade, led by mobile communications
equipment and PC-related equipment.
|
| |  | Matsushita is a worldwide leader in such business lines as optical disk
drives, facsimile equipment, broadcast-use digital VCR equipment and airline
in-flight AV systems. It also maintains a leading position in the Japanese
cellular phone industry. 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 area of PC peripherals and the recent
setback in global demand for information technology-related products such as
PCs and cellular phones.                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | With respect to PCs, Matsushita continued to upgrade its notebook models
over the last several fiscal years. Matsushita launched an A5-sized
notebook PC which can interface with charge coupled device cameras and
cellular phones 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 in the year ended March 31,
2000 by the introduction of ultra slim models with added features such as
wireless communication. In the year ended March 31, 2001, adding to its
slim notebook series, Matsushita introduced an AV-oriented notebook PC that
links easily to digital AV equipment to better meet the needs of the digital
networking age. In the year ended March 31, 2002, Matsushita introduced
what is currently the worlds lightest (960 grams) B5-sized notebook PC in
Japan.                                                                                          
|
| |  | In the area of PC peripherals, Matsushita strengthened its disk drive
lineups. In HDDs, Matsushita continued to introduce upgraded models to meet
the need for greater data storage capacity and faster processing speed. In
the area of optical disk drives, Matsushita expanded its range of slim
models for notebook PCs in the year ended March 31, 2000, and in the year
ended March 31, 2001, introduced several new multiple disk drive models that
gained popularity, including the industrys slimmest and fastest DVD-ROM and
CD-R/RW combination drive. In October 2001, Matsushita developed the
worlds first 50-gigabyte blue laser rewritable dual-layer optical disc
technology. These blue laser discs have more than 10 times the capacity of
conventional rewritable optical disks.                                                                                                                                                                                                         
|
| |  | In the area of 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 recent years. In the
year ended March 31, 2000, Matsushita launched NTT DoCoMos popular i-mode
cellular handsets equipped with e-mail and Internet browsing capabilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 



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- 16 -



| |  | Furthermore, in the year ended March 31, 2001, Matsushita began shipments of
base transceiver stations for next-generation, wideband code division
multiple access (W-CDMA) cellular phone services that NTT DoCoMo, Inc.
commenced in the year ended March 31, 2002, followed by shipments of W-CDMA
handsets, which permit the transmission of moving images and large volumes
of data. W-CDMA is the worlds first third-generation wireless voice, image
and data transmission services using an advanced technology which allows
service providers to offer faster and higher quality services to their
users. In August 2001, Matsushita, Matsushita Communication Industrial Co.,
Ltd. and NEC Corporation signed an agreement to form a development alliance
to strengthen the global expansion of their technologies and products in
third-generation mobile handsets, in particular W-CDMA products for the
mobile multimedia market. In spite of this new trend, Matsushitas sales of
cellular phones were down for fiscal 2002, mainly as a result of sharp
declines in demand for cellular phones especially in Japan and Europe, with
additional negative effects of glitches found in certain models of the
Company. To counter this unfavorable business environment, Matsushita
launched new Internet-compatible slim folding cellular phones for NTT
DoCoMo, with high picture quality, in January 2001 and in June 2002. These
models are well-accepted and reestablishing Matsushitas reputation in the
Japanese cellular phone market.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | In the area of facsimile equipment, Matsushita marketed in April 2000 a new
multifunctional model, featuring facsimile, copier, printer, scanner and
telephone functions, and in February 2002 a color facsimile machine,
compatible with the secure digital memory card, to meet the
ever-sophisticated customer needs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | In the area of car AV equipment, Matsushita has continued to develop
advanced car navigation systems for the domestic market, as well as further
promoting global expansion in car audio equipment.
Building on its success of the worlds first car navigation system
incorporating DVD, Matsushita extended its car navigation networking
capabilities by launching NTT DoCoMos i-mode capable models in the year
ended March 31, 2000. Matsushita continues to launch upgraded car
navigation systems, with recent introductions of a model that can receive
mobile information services and a further advanced model with a built-in
HDD capable of processing large volumes of data in an instant. In the
related area of electronic toll collection (ETC) services, which were
officially inaugurated in March 2001 as an integral part of Japans
intelligent transport systems project, the Company began supplying not
only the infrastructure equipment but also new in-vehicle terminals for
the ETC system.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | In the area of broadcast-use AV equipment and systems, Matsushita launched
in April 2000 a series of digital video electronic news gathering systems
called DVCPRO HD, building on the success of its light, compact digital
DVCPRO series and, in the year ended March 31, 2001, the Company supplied
major broadcast satellite digital TV networks in Japan with conditional
access systems and an electronic program guide, both key systems for
broadcast satellite digital broadcasting. Matsushita is also solidifying
its leading position in the global in-flight AV systems market by delivering
AV systems with LCD monitors and personal multimedia systems that allow
passengers to enjoy in-flight shopping from their seats.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   



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- 17 -



| |  | Home Appliances                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Matsushitas principal products in this category include home appliances,
such as 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; and household equipment,
mainly comprising kitchen fixture systems, electric, gas and kerosene
hot-water supply systems, and bath and sanitary equipment. This category
also includes healthcare equipment, electric lamps, bicycles, and optical
cameras and flash units.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Matsushita has a leading position in the Japanese home appliance market. In
recent years, Matsushita responded to diversified customer needs by
introducing products with high value-added innovative features, such as a
centrifugal-force washing machine for home use, featuring reduced drying
time made possible through the worlds first dual air- and water-cooling
technology, a compact rechargeable-battery-powered cordless vacuum cleaner
employing a centrifugal-force dust collection system and a vacuum cleaner
with separate modes for high-power and low-air exhaust operations.
Matsushita introduced a series of space-saving refrigerators that do not
sacrifice inner capacity, followed by a refrigerator to employ separate
cooling functions for the refrigerator compartment, vegetable drawer and
freezer for higher energy efficiency. In the year ended March 31, 2002,
furthermore, the Company launched Japans industry-leading refrigerator that
uses hydrocarbon refrigerant, which eliminates the use of ozone-layer
depletive refrigerants. In the same year, Matsushita introduced two innovative models of air
conditioners to meet the growing consumer interests in energy conservation
and healthy lifestyles. One of them features an energy-saving technology
achieving reduction of the power consumption by half compared with the
Companys model from ten years ago, and another one featuring the worlds
first system that incorporates a negative ion generator with an electronic
dust collector.
|
| |  | In addition to developing and introducing high-value-added products designed
to stimulate the saturated appliance market in Japan, Matsushita has also
been strengthening its business base by taking the lead in the newer, growth
product areas, such as dishwashers, frame-free induction heating cooking
equipment and compact garbage processing units.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | Furthermore, Matsushita is working on the development of new businesses to
create enriched living environments in the twenty-first century, offering
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. For
example, in the year ended March 31, 2002, Matsushita developed a new
web-based tele-homecare system which allows patients to measure their vital
signs and doctors to access remotely the patients information. The
Ministry of Health, Labour and Welfare of Japan officially recognized the
system to be introduced for medical use.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | In May 2001, Matsushita entered into an agreement on a broad business
alliance with Hitachi Ltd. in fields such as IC card-based solutions
business and home networking appliances. As part of this alliance, the
companies are co-developing home network systems linking home appliances
with public infrastructures, which is intended to save energy and improve
living standards. The companies are also joining hands on research and
development of new environmental technologies for home appliances.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       



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| |  | Industrial Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Matsushitas industrial equipment encompasses factory automation (FA)
equipment, welding machines, power distribution equipment, ventilating and
air conditioning equipment, vending machines and medical equipment. In
addition, Matsushita is reinforcing its engineering services business,
mainly for private enterprises and government agencies in Japan and
overseas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | In the area of FA equipment, Matsushita is an industry leader in
electronic-parts mounting machines, and also produces industrial robots and
electronic measuring instruments. Building on this strength to meet
increasingly sophisticated customer requirements, Matsushita has launched
innovative products in recent years, with a focus on smaller, lighter
high-precision machines. Examples include a Stud Bump Bonding
semiconductor mounting machine and a new high-speed multifunctional chip
mounter, as well as a laser processing machine for ultra-fine production of
high-integration circuit boards. Matsushita has also added modular
components mounters to solidify its mainstay range of parts-mounting
machines in the year ended March 31, 2002. Concurrently, Matsushita
introduced the worlds smallest and lightest fully digital carbon
dioxide/metal active gas automatic welding machine. Matsushita also holds a
competitive position in the market for DVD disc mastering and replication
equipment. Matsushita is currently augmenting its efforts to become a total
FA solutions provider offering not only equipment but also comprehensive
engineering services and related support.
|
| |  | In the area of commercial-use ventilating and air-conditioning systems,
Matsushita has been expanding delivery of its specialty in-tunnel dust
collection and ventilation systems to Japans major expressways. Matsushita
sources the manufacture of packaged air conditioners to Daikin Industries,
Ltd. as part of an alliance entered into in November 1999 between the two
companies. The alliance covers a broad range, also 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 environmentally-conscious products.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Components and Devices                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Major products included in this category are semiconductors, general
electronic components, display devices, electric motors, compressors and
batteries, some of which are incorporated into Matsushitas finished
products and some of which are for sale to other manufacturers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | 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 priority on the development
of competitive components and devices technology and business. During and since the year ended March 31, 2001, business in this category
has been adversely affected by setbacks in the demand from the cellular
phone and other information technology-related industries. Given this
adverse business environment, Matsushita implemented various structural
reforms, including the centralization of manufacturing locations and the
establishment of a new liquid crystal display (LCD) joint venture. In
addition, to secure growth and profitability in this business category,
Matsushita concentrates on the development of proprietary black-box
technologies and the business expansion centered on the 120 strategic
products that have the potential to achieve top global positions in their
respective markets.                                                                                                                                                        



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- 19 -



| |  | Matsushitas semiconductors are primarily made up of integrated circuits,
such as metal oxide semiconductor large-scale integration (LSI) circuits and
bipolar integrated circuits, discrete devices and charge coupled devices.
Matsushita has been strengthening development of multifunctional system LSI
circuits, which form the basis of digital network-related equipment.
Successful results in recent years included system LSI chip sets for DVD-ROM
drives, MPEG-2 encoder chips, 32-bit microcontrollers with embedded dynamic
RAM, system LSI chip sets for digital TV tuners and the worlds first
single-chip MPEG-4 multi-codec system LSI circuits. Matsushita has also
been a leader in optical pickup semiconductors for DVD equipment, charge
coupled devices for video camcorders, and gallium-arsenide power modules for
cellular phones. In April 2002, Matsushita commenced production of new
0.13-micron system LSIs and compound semiconductors at new facilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Matsushita manufactures general components, encompassing electronic circuit
components, printed circuit boards, transformers, power supply components,
coils, capacitors, resistors, tuners, speakers, ceramic components, and
various sensors. Matsushita has recently been focusing on smaller, more
advanced components for equipment downsizing and performance improvement.
As part of this effort, Matsushita has expanded its production of compact
multi-layer printed circuit boards of its own design and high frequency
components for use in compact mobile communications equipment. In the year
ended March 31, 2002, Matsushita augmented its range of specialty polymer
aluminum electrolytic capacitors. Matsushita also developed cutting-edge
ultracompact, high-capacitance products in the field of multiplayer ceramic
chip capacitors and film capacitors. In areas related to digital
networkable consumer products, Matsushita developed a surface-mounted
circuit module for Bluetooth, a short-range wireless networking protocol.                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | In the area of display devices, Matsushita has recently added
high-technology semi-stretched tension flat-surface CRTs and has further
expanded this product series to include a model with a brightness level 20%
higher than conventional models. Matsushita has been concentrating
production of flat-surface CRTs in Japan, while shifting production of
traditional CRTs overseas. In the year ended March 31, 2001, Matsushita
developed the worlds thinnest 32- and 36-inch flat-surface high-definition
direct-view CRTs for broadcast satellite digital high definition TVs.
Matsushita also has been focusing on developing high-picture-quality LCD
devices with faster picture response and wider viewing angles. In April
2002, Matsushita established Toshiba Matsushita Display Technology Co.,
Ltd., a new joint venture with Toshiba. The new joint venture has succeeded
to LCD operations of the two parent companies, and will further commence
manufacture of cutting-edge products, including low-temperature polysilicon
LCD panels. Regarding plasma display panels (PDPs), the market for which is
expected to grow significantly in the mid-term, Matsushita boosted its
product lineup with the marketing of competitively-priced 50-inch and
37-inch units to add to its existing 42-inch model in 2001. Matsushita
strengthened its manufacturing structure through a number of initiatives,
including the commencement of production at a new PDP plant in China in
December 2001.
|
| |  | In the area of electric motors, Matsushita recently augmented its FA
equipment motor lineup with smaller, high-speed servomotors with greater
energy efficiency than conventional models. During the year ended March 31,
2002, the Company enhanced the lineup of vibration motors for cellular
phones and polygon mirror scanner motors for laser beam printers, while
launching linear servomotors for industrial applications. In compressors,
Matsushita is a world leader, primarily for air conditioners and
refrigerators.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               



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- 20 -



| |  | Matsushita is one of the worlds largest battery manufacturers, producing
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, Matsushita has increased production of compact,
high-performance batteries, such as long-life alkaline batteries and
lithium-ion batteries, in recent years, as these batteries are increasingly
used in compact electronic equipment. Matsushita is also 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 the new cars of the leading Japanese auto manufacturers. In the year
ended March 31, 2000, Matsushita launched a ultraslim (0.4 mm) manganese
dioxide-lithium battery, known as the paper coin, for use in what are
known as IC cards such as bank or credit cards. To strengthen its
competitive position in the compact rechargeable batteries, Matsushita
launched prismatic lithium-ion rechargeable batteries in the year ended
March 31, 2001, and expanded its Osaka plant in the year ended March 31,
2002 to prepare for an extensive production increase in the future.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

MARKETING CHANNELS



| |  | The table below shows a breakdown of Matsushitas net sales by geographical
area for the periods indicated:
| |  | -----------------------------------------------------------------------------------------------------------

|                        |       |  |                             |       |      |  |      |     |   |  |       |       |  |  |    |     |   |  |       |       |  |  |    |     |  
|----------------------- | ----- |  | --------------------------- | ----- | ---- |  | ---- | --- | - |  | ----- | ----- |  |  | -- | --- | - |  | ----- | ----- |  |  | -- | --- | -
|                        |       |  | Yen (billions) (%)         
|                        |       |  |                            
|                        |       |  | Fiscal year ended March 31,
|                        |       |  |                            
|                        |       |  | 2002                        |       | 2001 |  | 2000
|                        |       |  |                             |       |      |  |     
|Japan                   |       |  | 3,348                       |       |      |  | 49   | %   |   |  | 4,034 |       |  |  | 53 | %   |   |  | 3,698 |       |  |  | 51 | %  
|North and South America |       |  | 1,359                       |       |      |  | 20   |     |   |  | 1,380 |       |  |  | 18 |     |   |  | 1,384 |       |  |  | 19 |    
|Europe                  |       |  | 775                         |       |      |  | 11   |     |   |  | 849   |       |  |  | 11 |     |   |  | 906   |       |  |  | 12 |    
|Asia and Others         |       |  | 1,395                       |       |      |  | 20   |     |   |  | 1,419 |       |  |  | 18 |     |   |  | 1,311 |       |  |  | 18 |    
|                        |       |  |                             |       |      |  |      |     |   |  |       |       |  |  |    |     |   |  |       |       |  |  |    |    
|                        | Total |  |                             | 6,877 |      |  |      | 100 | % |  |       | 7,682 |  |  |    | 100 | % |  |       | 7,299 |  |  |    | 100 | %
|                        |       |  |                             |       |      |  |      |     |   |  |       |       |  |  |    |     |   |  |       |       |  |  |    |    



| |  | Sales and Distribution in Japan                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Domestic sales are handled or coordinated by several sales divisions
organized according to the types of customers (consumers, corporate,
government, manufacturing industry, and other respective industries) in
order to meet the specific and ever-diversifying needs of consumers and
various industries.                                                                                                                   
|
| |  | For the consumer market, Matsushita maintains the industrys most extensive
sales networks, supplying many electronics and appliance retailers
throughout Japan, and expanding sales to volume retailers.                                                                                                                                                                                                                       
|
| |  | Matsushita sells its products to non-consumers, such as manufacturers,
business corporations, construction companies and governments, through its
sales divisions, sales offices and subsidiaries or through outside agencies.
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.



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- 21 -



| |  | In April 2001, Matsushita began implementing major reorganizations of its
domestic consumer sales and distribution structure. As a first step,
Matsushita restructured its corporate consumer products sales divisions, the
sales functions of its product divisions and the advertisement division,
into two new brand-name-linked marketing divisions: the Corporate Marketing
Division for Panasonic Brand, which is primarily responsible for the
products of the AVC Networks category, and the Corporate Marketing Division
for National Brand, which is primarily responsible for the products of the
Home Appliances category. In respect of distribution through local consumer
electronics and appliance retailers, in October 2001, Matsushita
consolidated its 22 regional consumer sales companies throughout Japan into
a single company. Matsushitas sales for volume retailers will also be
strengthened by expanding supply chain management. In addition, on October
1, 2001, Matsushitas credit sales subsidiary and leasing subsidiary were
merged into one company, Matsushita Leasing & Credit Co., Ltd. By
implementing these reforms and revitalizing its domestic consumer sales and
distribution operations, Matsushita intends to create an efficient structure
that ensures speedy responses to customer needs and realizes a significant
reduction in distribution costs and an increased market share.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Overseas Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Matsushita operates 228 companies in 45 countries outside of Japan,
including five regional headquarters, 49 manufacturing/sales companies, 93
manufacturing companies, 49 sales companies, 13 research organizations and
four 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. These efforts are expected to broaden the scope of
Matsushitas overseas sales channels to add to the existing consumer
products sales networks that Matsushita has in many countries and regions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | Overseas sales represented approximately 51% of the Companys total
consolidated sales in fiscal 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | 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. Specifically, Matsushita
has been focusing on the strategy for China by strengthening the production
capacity of its Chinese facilities for such products as DVD players,
microwave ovens, compressors and components, and by building a new Chinese
facility for plasma display panels. The Company entered into a basic
agreement with TCL Holdings Co., Ltd., a Chinese electronics leader, in
April 2002, to develop collaborative relationship with each other in this
growth market.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      



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| |  | 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.
Matsushitas business is not materially dependent on 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 is centralizing in greater scale of its
purchasing at its headquarters and at the internal divisional companies and
subsidiaries levels. It is also reducing the number of its suppliers and
standardizing parts and materials for common use throughout Matsushita.                                                                                                                                                                                                                                                                                                                

PATENT LICENSE AGREEMENTS



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



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| |  | Matsushita is a licensee under various license agreements which cover a wide
range of products, including AV 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 of its technical exchange and license agreements
beneficial to its operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

COMPETITION



| |  | The markets in which the Company sells its products are highly competitive.
Matsushitas principal competitors, across the full range of its products,
consist of several large Japanese and international 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, and
shortening production and distribution lead time through the introduction of
supply chain management in cooperation with several overseas and domestic
mass-scale retailers and cell-style production, as well as 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 enacted the Law for
Recycling of Specified Kinds of Consumer Electric Goods (the Recycling Law).
The Recycling Law requires that consumers, retailers and manufacturers
share the responsibility of recycling used TVs, refrigerators, air
conditioners and washing machines.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|   |  | To cope with requirements under 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. Matsushita, as the industry leader in the domestic home
appliance market, has been consistently working on environmental protection
measures that meet or exceed standards set forth in 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 Groupwide 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 as of March 31, 2002 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 Devices Company                                                   
| |     |  | Lighting Company                                                          
| |     |  | Factory Automation Company                                                



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

|                                                   |  |                 |       |  
|-------------------------------------------------- |  | --------------- | ----- | -
|Name of company                                    |  | Percentageowned
|                                                   |  |                
|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.*              |  |                 | 51.5  |  
|Matsushita Seiko Co., Ltd.*                        |  |                 | 57.6  |  
|Matsushita Graphic Communication Systems, Inc. *   |  |                 | 67.8  |  
|Matsushita Kotobuki Electronics Industries, Ltd. * |  |                 | 57.6  |  
|Victor Company of Japan, Ltd.                      |  |                 | 52.4  |  

|                                                                                                                                                                           |  |  |  | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|(* The asterisked companies are scheduled to become wholly-owned
subsidiaries of Matsushita Electric Industrial Co., Ltd. via share
exchanges, effective October 1, 2002.)

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

|                                                                 |  |               |  |                  |       |   |  | 
|---------------------------------------------------------------- |  | ------------- |  | ---------------- | ----- | - |  | 
|                                                                 |  | Country of    |  |                  |       |  
|Name of company                                                  |  | incorporation |  | Percentage 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        |  |                  | 68.2  |  
|Matsushita Industrial Corporation Sdn. Bhd                       |  | Malaysia      |  |                  | 99.3  |  
|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, 2002 comprise the accounts of 304 consolidated companies plus
46 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 of its factories well maintained and suitable for current
production requirements.





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| |  |                                                                                                          
| |  | ---------------------------------------------------------------------------------------------------------
| |  | The following table sets forth information as of March 31, 2002 with respect
to manufacturing facilities:

|                      |       |              |               |                                 |  |                                                                                                                                                                                                         | 
|--------------------- | ----- | ------------ | ------------- | ------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|                      |       |              | Floor Space   |                                 | 
|                      |       |              | (thousands of |                                 | 
|Location              |       | square feet) |               | Principal Products Manufactured
|                      |       |              |               |                                
|Osaka                 |       |              | 9,228         |                                 |  | VCRs, PDP TVs, DVD products, audio equipment, washing
machines, other home appliances, information equipment,
industrial equipment, components, batteries, kitchen
fixtures.                           
|                     
|Kanagawa              |       |              | 4,264         |                                 |  | 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               |       |              | 1,869         |                                 |  | TVs, TV picture tubes, information equipment.                                                                                                                                                          
|                     
|Nara                  |       |              | 1,992         |                                 |  | Home appliances, gas and kerosene equipment, compact discs
and DVD discs.                                                                                                                              
|                     
|Okayama               |       |              | 1,905         |                                 |  | VCRs, components, magnetic tapes and discs.                                                                                                                                                            
|                     
|Kyoto                 |       |              | 1,627         |                                 |  | Semiconductors, components.                                                                                                                                                                            
|                     
|Ibaraki               |       |              | 1,118         |                                 |  | Magnetic tapes.                                                                                                                                                                                        
|                     
|Shikoku               |       |              | 3,694         |                                 |  | VCRs, information equipment, home appliances.                                                                                                                                                          
|                     
|Kyushu                |       |              | 3,216         |                                 |  | Information and communications equipment, components,
industrial equipment.                                                                                                                            
|                     
|North America         |       |              | 7,715         |                                 |  | TVs, home appliances, VCRs, DVD discs, car audio equipment,
communications equipment, components, batteries.                                                                                           
|                     
|Europe                |       |              | 4,184         |                                 |  | VCRs, TVs, audio equipment, car audio equipment, home
appliances, components, information and communications
equipment.                                                                                
|                     
|Asia(excluding
China) |       |              | 17,673        |                                 |  | TVs, VCRs, audio equipment, air conditioners, refrigerators,
other home appliances, components, semiconductors,
information and communications equipment, industrial
equipment, compressors, batteries.
|                     
|China                 |       |              | 5,185         |                                 |  | TVs, audio equipment, air conditioners, washing machines,
other home appliances, car audio equipment, communications
equipment, industrial equipment, compressors, components,
batteries.              
|                     
|Other                 |       |              | 17,009        |                                 |  | Home appliances, industrial equipment, components,
semiconductors, video and audio equipment, batteries,
information and communications equipment.                                                     
|                      |       |              |               |                                 |  |                                                                                                                                                                                                         | 
|                      | Total |              |               | 84,243                          |  |                                                                                                                                                                                                         | 
|                      |       |              |               |                                 |  |                                                                                                                                                                                                         | 



| |  |                                                                                                                                                                               
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.





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| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 7.7 million square feet, research and
development facilities with an aggregate floor space of approximately 6.9
million square feet, employee housing and welfare facilities with an
aggregate floor space of approximately 11.3 million square feet, and
administrative offices with an aggregate floor space of approximately 19.0
million square feet.
|
| |  | As of March 31, 2002, Matsushita leased approximately 17.0 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 2002,
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 2003, the Company will make a capital investment of approximately
240 billion yen, for the purpose of production of new products and
enhancement of production capacity and efficiency with a focus on such areas
as AV and information and communications equipment (approximately 85 billion
yen), and electronic components and devices including semiconductors and
PDPs (approximately 124 billion yen).                                                                                                                        
|
| |  | The investments stated above will be funded mainly through internal sources.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    




Item 5.     Operating and Financial Review and Prospects

|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|A. |  | Operating Results                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   |  | Since the early to mid-1990s, the Japanese economy has been experiencing
slow growth and stagnation. The continued general decline of Japanese real
estate prices and a series of bank and corporate failures and the related
instability in the Japanese financial system have increased economic
uncertainty. In the year ended March 31, 2000, the Japanese economy began
to recover moderately, owing to government economic stimulus packages and a
surge in demand for information technology (IT)-related goods and services
which resulted in a 1.9% increase in real gross domestic product. The
recovery continued into the year ended March 31, 2001, especially in the
first half, led by IT-related corporate capital investment. In the second
half of that year, however, economic growth in Japan slowed once again due
to sluggish consumer spending and weak growth in exports, along with a sharp
slowdown in demand for IT and related products. On an annual basis, Japans
gross domestic product grew 1.7% in real terms during the year ended March
31, 2001. For the year ended March 31, 2002, Japans real gross domestic
product declined 1.3%, due mainly to the continuing recession in the global
IT industry, sluggish capital spending and reduced exports. Slow consumer
spending also contributed to the decline.





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| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | For the first part of the three years ended March 31, 2002, overseas
economic conditions were generally favorable, particularly in the United
States. From around the middle of the year ended March 31, 2001, however,
economic growth in the United States began to slow down. This slowdown
coincided with setbacks in the global IT industry, which had previously
enjoyed rapid growth in demand centered on personal computers 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.                                                                                                                                                                                                                                                                                                                              
|
| |  | During the period, sluggish consumer spending and capital investment have
triggered deflation in Japan. The consumer price index in Japan declined
0.5% in the year ended March 31, 2000 and declined 0.5% again in the year
ended March 31, 2001. In the year ended March 31, 2002, the consumer price
index continued to fall, recording a decline of 1.0%. This deflationary
trend has been reflected in the declining prices of goods and services in
Japan, which have been putting pressure on the earnings of Japanese
businesses.                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | Foreign currency exchange rates were volatile during the three-year period,
with the Japanese yen generally weakening against such major currencies as
the U.S. dollar and the Euro (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 from Japan.
The Company does not have any material unhedged monetary assets,
liabilities, or commitments denominated in currencies other than the
operations functional currency.                                           
|
| |  | In the face of the previously mentioned severe economic environment,
Matsushita commenced, in April 2001, implementing its mid-term business
plan, Value Creation 21, which covers the three-year period ending March 31,
2004. This plan is intended to respond to the changing business
environment, especially societys transition to a so-called ubiquitous
networking society in the twenty-first century, to which Matsushita believes
it must adapt in order to continue to satisfy customer needs and contribute
to society. From the viewpoint of its financial results, Matsushita hopes,
through the implementation of the plan, to achieve growth in sales and
earnings by developing, manufacturing and selling products that respond to
the needs of customers in the new era of the ubiquitous networking society,
and by improving efficiency through restructuring programs which it hopes
will also help to realize a sizable reduction in its fixed costs.
|
| |  | 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 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 311.2% over the previous year. Increased
profitability in Components and Devices 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 adjustments in net deferred tax assets in the previous
fiscal year, which were not incurred in fiscal 2000.                                                                                                                                                          





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| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 certain subsidiaries 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.                                                                                                                                                 
|
| |  | In fiscal 2002, net sales declined 10.5% to 6,877 billion yen. Sales in the
video and audio equipment sector of the AVC Networks category rose, compared
with fiscal 2001, attributable to steady growth in digital AV equipment.
Sales in almost all other sectors, however, dropped from the previous year.
Specifically, the information and communications equipment sector and the
Components and Devices category were negatively affected by a worldwide
downturn in IT-related industries, while reduced capital investment globally
caused a steep fall in sales in the Industrial Equipment category. In
addition to these sales declines, the Company incurred various restructuring
expenses under the Value Creation 21 plan as mentioned below. Reflecting
these adverse factors, along with corporate tax effects and a decrease in
minority interests due to negative earnings of certain subsidiaries, the
Company incurred a net loss of 431 billion yen.
|
| |  | Under the Value Creation 21 plan (see Section A of Item 4 for a description
of the plan), Matsushita implemented in fiscal 2002 employment restructuring
programs, including special early retirement programs for employees of the
parent company and several subsidiaries in Japan, in order to meet
employees ever-diversifying attitudes toward work. The number of employees
who participated in the special early retirement programs totaled
approximately 13,000 persons. Expenses related to these employment
restructuring programs, including one-time payment packages to the early
retirees, amounted to approximately 164 billion yen in fiscal 2002.                                                                                                                                                                                                                                                                                                       
|
| |  | Concurrently, the Company recognized an impairment loss during fiscal 2002
related to the write-down of the machinery and equipment to manufacture
display devices and other components. Matsushita also carried out business
restructuring initiatives, including the closure or integration of several
manufacturing locations in Japan and overseas to maintain competitiveness
and increase capital efficiency. Expenses related to the impairment loss
and business restructuring totaled 86 billion yen in fiscal 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | For expected cost savings in fiscal 2003 as a result of the above
employment and business restructuring, see Section D of this Item 5 -
Trend Information.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Details of operating and financial results during the last three fiscal
years are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              





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- 30 -

Year ended March 31, 2002 compared with 2001

|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) |  | Sales                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    |  | Consolidated net sales for fiscal 2002 were down 10.5% to 6,877 billion yen
from 7,682 billion yen in the previous year. The decline was mainly a
result of negative effects of the recession in the global IT industry and
weak economic conditions in Japan and overseas. The recession in Japan
deepened with sluggish consumer spending and retracted capital investment,
while overseas, the slowdown in U.S. economic growth, combined with the
September 11 terrorist attacks, led to a weakening of Asian and European
economies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    |  | Domestic sales fell 17.0% to 3,348 billion yen. This decrease was mainly a
result of slow sales of products in the AVC Networks category, particularly
information and communications equipment. In components and devices, as
well, setbacks in the information and communications-related industries
resulted in depressed sales of general components, semiconductors and
electric motors. Overseas sales were 3,528 billion yen, down 3.3% when
translated into yen and down 10.5% on a local currency basis. Sharp sales
declines of components and devices were a major factor in the overseas sales
decline.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|(2) |  | Other Revenues (Revenue excluding Net Sales)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    |  | Other revenues include interest income, dividends received and other income.
Of these, interest income decreased 23.2% to 34 billion yen, and dividends
received also decreased 25.1% to 9 billion yen. Other income remained
mostly flat, decreasing only 0.6% to 54 billion yen.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(3) |  | Costs and Expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    |  | As net sales declined, cost of sales decreased 6.3% to 5,134 billion yen and
selling, general and administrative expenses also decreased 2.9% to 1,954
billion yen. Meanwhile, interest expense decreased 5.3% to 41 billion yen,
owing to a reduction in the Companys borrowings. However, other deductions
increased 153.9% to 391 billion yen, including 164 billion yen related to
employment restructuring programs, such as additional retirement allowances
for special early retirement programs, 86 billion yen related to business
restructuring expenses, such as impairment losses, and other expenses
associated with the closure or integration of several manufacturing
locations, and a write-down of 93 billion yen on investment securities,
compared with restructuring charges for fiscal 2001, which included one-time
expenses of 100 billion yen associated with the implementation of the
regional-based employee remuneration system and early retirement programs in
several domestic subsidiaries. The aggregate restructuring accrual of 6,660
million yen at the end of fiscal 2002 mainly consists of rental cancellation
penalty fees under contractual obligations and compensation fees for
subcontractors in several subsidiaries. It is expected that the
restructuring accrual balance will be paid during fiscal 2003.
|   
|(4) |  | Income (Loss) before Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    |  | As a result of the above factors, income before income taxes turned to a
loss of 548 billion yen, compared with a pretax profit of 101 billion yen in
fiscal 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          





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|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(5) |  | Provision for Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    |  | Provision for income taxes generated a benefit of 57 billion yen, compared
with an expense of 50 billion yen in the previous year. Its ratio to income
(loss) before income taxes turned to 10.4%, from 49.5% a year ago. This is
mainly due to an increase of valuation allowance for deferred tax assets.                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(6) |  | Minority Interests                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    |  | Minority interests decreased to negative 60 billion yen for fiscal 2002,
compared with 22 billion yen in fiscal 2001, reflecting depressed or
negative earning results of several subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(7) |  | Equity in Earnings of Associated Companies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    |  | Equity in earnings of associated companies decreased to 59 million yen, from
the previous years 13 billion yen, due mainly to decreased earnings of
associated companies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(8) |  | Net Income (Loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    |  | As a result of all the factors stated in the preceding paragraphs, the
Company recorded a net loss of 431 billion yen for fiscal 2002, compared
with a net income of 42 billion yen in the previous fiscal year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(9) |  | Results of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    |  | Beginning in the year ended March 31, 2002, Matsushita discloses results of
operations according to the reclassified product segments; AVC Networks,
Home Appliances, Industrial Equipment, and Components and Devices.
Accordingly, information for previous years has been restated to correspond
to the new classifications.                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    |  | Results of operations by business segment were as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    |  | AVC Networks sales declined 5.3% to 4,052 billion yen, from 4,280 billion
yen in the previous year. Within this category, despite sluggish sales of
VCRs, overall sales of video and audio equipment grew 2.3% from the previous
year to 1,797 billion yen, due mainly to increased overseas sales of TVs and
rapid worldwide sales expansion of DVD equipment and discs. Sales of
information and communications equipment declined 10.7% to 2,255 billion
yen. Although strong sales were recorded for car AV equipment and
broadcast- and business-use AV equipment, drastically reduced sales in
mobile communications equipment, specifically cellular phones, and hard disk
drives, resulted in an overall sales decrease within this category.
|   
|    |  | With respect to this segment, Matsushitas segment profit decreased from 104
billion yen for the year ended March 31, 2001 to a loss of 52 billion yen
for the year ended March 31, 2002. The sharp decrease in profit was mainly
due to lower sales in mobile communications equipment, including cellular
phones, and the severe market price competition in video and audio
equipment.                                                                                                                                                                                                                                                                                                                                                            
|   
|    |  | Sales of Home Appliances decreased 10.4% to 1,179 billion yen. Although
microwave ovens and vacuum cleaners recorded strong sales overseas, weak
domestic demand for refrigerators and washing machines, partly due to
unusually high sales at the end of the previous fiscal year prior to the
enactment of a new recycling law in Japan, worked to lower overall sales in
this category.                                                                                                                                                                                                                                                                                                                                                           





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| |  |                                                                                                                                                                                                                                                                                                 
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | With respect to this segment, Matsushitas segment profit fell 30.4% from 55
billion yen for the year ended March 31, 2001 to 38 billion yen for the year
ended March 31, 2002. The cost reduction efforts could not offset the
adverse effect of overall sales decrease.                       
|
| |  | Sales of Industrial Equipment were 296 billion yen, down 37.7% from the
previous year. As orders from IT-related industries remained slow, domestic
and overseas sales of factory automation (FA) equipment were negatively
impacted, leading to a sharp sales decrease in this category.       
|
| |  | Due to the significant declines of sales, Matsushitas segment profit for
Industrial Equipment decreased from 18 billion yen for the year ended March
31, 2001 to a loss of 44 billion yen for the year ended March 31, 2002.                                                                   
|
| |  | Sales of Components and Devices decreased 20.4% to 1,973 billion yen. This
was mainly due to sharp declines in sales of general components,
semiconductors, liquid crystal display (LCD) devices and batteries all
mainly for cellular phone- and IT-related industries.                        
|
| |  | With respect to this segment, Matsushitas segment profit decreased from 89
billion yen for the year ended March 31, 2001 to a loss of 96 billion yen
for the year ended March 31, 2002, principally owing to significantly
reduced sales and further price reductions to meet customer demands.

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 Equipment, including FA
equipment, as well as Components and Devices, such as general electronic
components and semiconductors. A moderate recovery in AVC Networks,
achieved mainly by growth in digital 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 and Devices category leading the way.
|   
|(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.                                                                                                                                                      





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|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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, due mainly 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(7) |  | Equity in Earnings 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        





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|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(9) |  | Results of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    |  | Results of operations by business segment, as restated on the basis of the
business segment classifications effective from the year ended March 31,
2002, were as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|    |  | Sales of the AVC Networks segment increased 4.9% from 4,082 billion yen for
the year ended March 31, 2000 to 4,280 billion yen for the year ended March
31, 2001. Within this segment, sales of video and audio equipment
increased, due mainly to solid sales of color TVs and DVD players worldwide,
and digital TVs and compact disc music albums in Japan, which more than
offset decreased sales of VCRs and audio equipment. Sales of information
and communications equipment also increased, largely due to an expansion in
mobile communications equipment, such as cellular phones, along with steady
increases in sales of personal computers, CD-R/RW drives and car AV
equipment. However, overseas sales of information and communications
equipment were down slightly, as they were hampered by a global downturn in
the IT industry during the second half of the fiscal year.
|   
|    |  | With respect to this segment, Matsushitas segment profit increased 3.0%
from 101 billion yen for the year ended March 31, 2000 to 104 billion yen
for the year ended March 31, 2001. The sales increase and cost reduction
efforts offset the adverse effects of severe market price competition and
the appreciation of the yen.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    |  | Sales of the Home Appliances segment increased 0.8% from 1,306 billion yen
for the year ended March 31, 2000 to 1,316 billion yen for the year ended
March 31, 2001. This was principally attributable to the market success of
new products, mainly in Japan, such as centrifugal force washer/dryer and a
cordless rechargeable vacuum cleaner offering extended continuous operation,
and temporary high sales at the fiscal year-end prior to the April 2001
enactment of a home appliance recycling law in Japan.                                                                                                                                                                                                                                                                                                                                                                         
|   
|    |  | With respect to this segment, Matsushitas segment profit increased 28.7%
from 42 billion yen for the year ended March 31, 2000 to 55 billion yen for
the year ended March 31, 2001, primarily due to its cost reduction efforts
despite the adverse effects of declines in market prices of products.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|    |  | Sales of the Industrial Equipment segment increased 21.3% from 391 billion
yen for the year ended March 31, 2000 to 475 billion yen for the year ended
March 31, 2001. This was mainly attributable to robust sales of FA
equipment, such as electronic parts-mounting machines, mainly for the
information and communications equipment industry.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    |  | With respect to this segment, Matsushitas segment profit decreased 11.8%
from 20 billion yen for the year ended March 31, 2000 to 18 billion yen for
the year ended March 31, 2001, mainly owing to the devaluation of FA
equipment inventory despite sales increase.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|    |  | Sales of the Components and Devices segment increased 5.1% from 2,358
billion yen for the year ended March 31, 2000 to 2,478 billion yen for the
year ended March 31, 2001. This was attributable to solid sales in both
domestic and overseas markets, in such lines as general electronic
components, semiconductors, LCD devices and electric motors, mainly for
mobile communications equipment and digital AV products.                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    |  | With respect to this segment, Matsushitas segment profit increased 34.1%
from 66 billion yen for the year ended March 31, 2000 to 89 billion yen for
the year ended March 31, 2001, principally owing to sales increases and
efforts to reduce costs, despite the negative impact of price declines.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          





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|   |  |                                                                                                                                                                                                                          
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|B. |  | Liquidity and Capital Resources                                                                                                                                                                                          
|  
|   |  | Matsushitas Liquidity Profile                                                                                                                                                                                           
|  
|   |  | The two tables below show Matsushitas cash payment obligations and
guarantees and other commercial commitments, broken down by the amount of
payments due for each of the periods specified below, as of March 31, 2002:

|                         |                                    |                                    |  |                        |           |        |  |           |         |           |  |               |         |  |  |         |         |  |  |         |         | 
|------------------------ | ---------------------------------- | ---------------------------------- |  | ---------------------- | --------- | ------ |  | --------- | ------- | --------- |  | ------------- | ------- |  |  | ------- | ------- |  |  | ------- | ------- | 
|                         |                                    |                                    |  | Yen (millions)        
|                         |                                    |                                    |  |                       
|                         |                                    |                                    |  | Payments Due by Period
|                         |                                    |                                    |  |                       
|                         |                                    |                                    |  |                        |           |        |  | Less than |         |           |  |               |         |  |  |         |         |  |  |        
|                         |                                    |                                    |  | Total                  |           | 1 year |  | 1-3 years |         | 4-5 years |  | After 5 years
|                         |                                    |                                    |  |                        |           |        |  |           |         |           |  |              
|Contractual Obligations: |                                    |                                    |  |                        |           |        |  |           |         |           |  |               |         |  |  |         |         |  |  |        
|                         | Long-Term Debt                     |                                    |  | 953,235                |           |        |  | 263,807   |         |           |  | 379,154       |         |  |  | 200,258 |         |  |  | 110,016
|                         | Capital Lease Obligations          |                                    |  | 4,128                  |           |        |  | 1,664     |         |           |  | 1,962         |         |  |  | 482     |         |  |  | 20     
|                         | Operating Leases                   |                                    |  | 98,158                 |           |        |  | 14,483    |         |           |  | 40,792        |         |  |  | 42,883  |         |  |  |       
|                         | Unconditional Purchase Obligations |                                    |  | 6,496                  |           |        |  | 6,496     |         |           |  |              |         |  |  |        |         |  |  |       
|                        
|                         |                                    | Total Contractual Cash
Obligations |  |                        | 1,062,017 |        |  |           | 286,450 |           |  |               | 421,908 |  |  |         | 243,623 |  |  |         | 110,036
|                        

|                              |                   |                              |  |                       |        |  | 
|----------------------------- | ----------------- | ---------------------------- |  | --------------------- | ------ |  | 
|                              |                   |                              |  | Yen (millions)        |       
|                              |                   |                              |  |                       |       
|                              |                   |                              |  | TotalAmountsCommitted |       
|                              |                   |                              |  |                       |       
|Other Commercial Commitments: |                   |                              |  |                       |       
|                              | Letters of Credit |                              |  | 20,153               
|                              | Guarantees        |                              |  | 59,521                |       
|                              |                  
|                              |                   | Total Commercial Commitments |  |                       | 79,674 | 
|                              |                  

| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Letters of credit generally have contractual lives of less than one year.
Loan guarantees are principally provided on behalf of associated companies,
customers and retailers and generally have long-term contractual lives
coinciding with the maturities of the guaranteed obligations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | In October 2001, Matsushita sold machinery and equipment, which are used to
manufacture semiconductors for 44 billion yen. The assets were sold to a
special-purpose entity, which in turn leased them back to Matsushita over a
period of four years. Sumitomo Mitsui Banking Corporation provided to the
special-purpose entity a loan with the same term as that of the resulting
leases. The loan paid for approximately 88% of the cost of the machinery
and equipment. SMBC Leasing Company, Limited, an affiliate of Sumitomo
Mitsui Banking Corporation, owns, through the special-purpose entity, an
equity interest in the machinery and equipment, representing approximately
12% of the cost. The leases are classified as operating leases for U.S.
GAAP purposes. Matsushita entered into another similar sale and lease-back
arrangement in the amount of 64 billion yen in March 2002.





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| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | On January 10, 2002, Matsushita publicly announced that it would repurchase
its own shares in Japan pursuant to Japanese law. Matsushita also announced
its intention to hold such repurchased shares as treasury stock to increase
capital efficiency, and to use some or all of the repurchased shares for the
share exchanges to transform five of its subsidiaries into wholly-owned
subsidiaries, (see Section A of Item 4  Information on the Company).
Matsushita set the maximum aggregate purchase amount at 100 billion yen and
the maximum aggregate number of shares to be purchased at 60 million shares.
The period of purchase began on January 11, 2002 and ended on April 19,
2002. During that period, Matsushita acquired 59,586,000 shares.                                                                                                                                                                                                                                                                                                                                     
|
| |  | Also on January 10, 2002, Matsushita publicly announced that it would issue
straight bonds in Japan to raise funds necessary for its future business
development, including such needs as working capital, redemption at maturity
of outstanding convertible bonds and the repurchase of its shares discussed
above. Matsushita had previously set up a shelf registration in Japan for
issuances of straight bonds, including those announced on January 10, 2002,
with the maximum aggregate principal amount of 500 billion yen within two
years from December 29, 2001. On February 14, 2002, Matsushita issued
straight bonds in the aggregate principal amount of 300 billion yen.                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | Matsushitas 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, 2002 stood at 42.5%,
although the total of short-term borrowings and long-term debt increased to
1,200 billion yen as of March 31, 2002, from 1,090 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 1,421 billion yen as of March 31, 2002, increasing slightly from
the previous years 1,376 billion yen due mainly to decreased inventories
and capital investment during fiscal 2002.
|
| |  | With this cash balance, combined with generally 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, 2002, the outstanding balance of short-term borrowings
totaled 508 billion yen, and long-term debt was at 692 billion yen. Of the
short-term borrowings, 98 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | 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.                                                                                                                                                                                                                                                                                                                                                 





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|   |  | Regarding the use of financial instruments for hedging purposes, see Item 11.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Fiscal 2002 Financial Position and Liquidity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   |  | The Companys consolidated total assets at the end of fiscal 2002 decreased
to 7,627 billion yen, compared with 8,156 billion yen at the end of fiscal
2001. This decline was chiefly a result of a reduction in accounts
receivable, caused by lower sales, and a reduction in inventories, along
with companywide efforts to reduce capital investment in plant and
equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   |  | Stockholders equity at the end of fiscal 2002 also dropped, to 3,243
billion yen, from 3,773 billion yen in the previous year. This was largely
attributable to a decrease in retained earnings caused by the net loss, as
well as declines in accumulated other comprehensive income (loss), including
minimum pension liability adjustments, despite the positive effect of the
yens year-end exchange rate on cumulative translation adjustments. The
Companys repurchase of its own shares of common stock in an effort to
improve capital efficiency also resulted in reduced stockholders equity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   |  | The Companys capital investment (excluding intangibles) during fiscal 2002
totaled 309 billion yen, a decrease from the previous years figure of 504
billion yen. This was mainly in response to a severe business environment,
in which the Company cut back capital investment, particularly for
components and devices, such as semiconductors. Depreciation (excluding
intangibles) during the year also fell, to 323 billion yen, compared with
345 billion yen in the previous year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   |  | Net cash provided by operating activities in fiscal 2002 amounted to 77
billion yen, compared with 392 billion yen in the previous fiscal year.
This reduction was primarily attributable to a net loss and a decrease in
trade payables that were greater than the decreases in trade receivables and
inventories. Net cash used in investing activities amounted to 70 billion
yen, compared with 583 billion yen in fiscal 2001, principally owing to an
investment decrease in time deposits and a reduction of capital
expenditures. Net cash provided by financing activities was 29 billion yen,
compared with net cash used in financing activities of 113 billion yen a
year ago, due mainly to a decrease in repayments of long-term debt despite
an increase in repurchase of common stock. All these activities, compounded
by the effect of exchange rate changes, resulted in a net increase of 51
billion yen in cash and cash equivalents during fiscal 2002. Cash and cash
equivalents at the end of fiscal 2002 totaled 900 billion yen, compared with
849 billion yen a year ago. These are primarily held in yen (79%) and U.S.
dollars (4%).
|  
|   |  | Commitments for Capital Expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|   |  | As of March 31, 2002, commitments outstanding for the purchase of property,
plant and equipment amounted to 6 billion yen.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|C. |  | Research and Development                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   |  | Matsushita considers research and development 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, Matsushita is committed to research
and development activities that create next-generation businesses from a
mid- to long-term viewpoint, while at the same time supporting current or
ongoing products and businesses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 





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| |  | The main focus of Matsushitas research and development activities has been
increasingly directed to digital networks and the environment and energy.
During the year ended March 31, 2001, in order to speedily address these
themes, Matsushita categorized its research and development activities into
four main technological areas: multimedia software, devices and environment-
and energy-related technologies, semiconductors, and production engineering
and quality control. At the same time, Matsushita increased communication
and collaboration between corporate research and development centers and
divisional technology centers and departments across various product areas.
This strategic approach 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. Matsushita also worked on the expansion
of its global research and development networks, establishing a number of
research and development centers in North America, Europe and Asia.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Notwithstanding such progress, as part of its Value Creation 21 plan,
Matsushita further reviewed all corporate-wide research and development
organizations spanning various divisions in a decentralized manner. As a
result of this thorough review, and to enable concentration of research and
development resources into strategic areas, Matsushita established a
Strategic Products Development Platform structure in December 2001. Under
this new structure, Matsushita has identified nearly 20 strategic product
categories which require even more specialized technologies and to which
virtually all corporate-level and divisional-level R&D efforts are
concentrated. These strategic product categories include: digital TVs; home
AVC servers; AVC mobile; mobile communications; car electronics; home
gateways; color printing; home networking; fuel cell cogeneration systems;
life line systems; mobile devices; circuit devices; secondary batteries;
display devices; lighting devices; and strategic semiconductors. Matsushita
plans to establish a development center or development task force for each
category, concentrating all relevant development resources. Concurrently,
to develop the technologies that support these strategic products,
Matsushita established corporate-level core technology development groups,
which are responsible for the following areas: multimedia software
technology; semiconductor technology; devices, environment and production
engineering technologies; and cutting-edge technologies.
|
| |  | Total expenditures for research and development amounted to 526 billion yen,
544 billion yen and 566 billion yen for the three fiscal years ended March
31, 2000, 2001 and 2002, respectively, representing 7.2%, 7.1% and 8.2% of
Matsushitas total net sales for each of those periods.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            






|D. |  | Trend Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The slow growth and stagnation of the Japanese economy in recent years and
the erosion in the strength of the global economy in recent months, and
setbacks in the global IT and related industries that have been continuing
for over a year, have had a major negative impact on Matsushitas results of
operations.                                                                                                                                                                    
|  
|   |  | During the year ended March 31, 2002, the Japanese economy continued to
deteriorate due to stagnant consumer demand and slow capital investment.
Growing uncertainty has been mounting about the outlook for the Japanese
economy. The U.S. economy has shown modest signs of recovery after a
downturn following the terrorist attacks of September 11, 2001, but its
outlook remains uncertain at this point. In the meantime, the Asian and
European economies have generally weakened.





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| |  | The severe conditions of the Japanese and global economies have caused
decreases in Matsushitas sales in a number of product areas, with
significant negative impact on its results of operations in the year ended
March 31, 2002. Within its major product categories, Matsushita has been
experiencing negative effects on the sales of cellular phones and PC-related
products, as well as components and devices and FA equipment. With respect
to cellular phones, the slowdown in growth in demand that began in the
second half of the year ended March 31, 2001 continued into the year ended
March 31, 2002. This contributed to the buildup of industry-wide excess
inventory of cellular phones and reduced shipments of Matsushitas handsets.
Similarly, the inventories of personal computers and related products also
increased, reflecting the downturn in the market for those products.
Meanwhile, Matsushita has suffered substantially reduced orders for
components and devices and FA equipment from the global IT industry, as well
as declining prices. Matsushita has also been suffering the negative
effects of slow consumer spending on its consumer products in Japan, as well
as weak overseas demand reflecting the economic slowdowns in the United
States and other regions.                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Matsushita expects that the sluggish conditions in the domestic market and
fierce price competition in Japan and overseas will persist during the
current fiscal year, ending March 31, 2003. In this severe business
environment, Matsushita will strive to achieve a sales increase by
introducing a range of new products, including its V-Products which are
competitive products that Matsushita believes have the potential to achieve
top share in high-volume markets and contribute to the Companys overall
performance. Together with benefits from the restructuring measures
implemented during the year ended March 31, 2002, including reduced fixed
costs due to the employment restructuring initiatives and the closure or
integration of manufacturing locations in and outside Japan, Matsushita aims
to realize a recovery in earnings. For fiscal 2003, Matsushita currently
expects a reduction in costs of about 119 billion yen as a result of the
employment restructuring initiatives, and a savings of approximately 52
billion yen related to the closure or integration of manufacturing
locations. However, whether or not Matsushita will succeed in achieving an
earnings recovery during the current fiscal year will depend on numerous
factors, many of which are beyond Matsushitas control. As a mid-term
growth strategy, Matsushita will implement a comprehensive Groupwide
business and organizational restructuring upon transforming five of its
subsidiaries into wholly-owned subsidiaries in the second half of the
current fiscal year ending March 31, 2003. Matsushita currently expects
that any positive effects of such Group restructuring will arise in or after
the next fiscal year.
|
| |  | In June 2002, the Company and certain of its domestic subsidiaries obtained
approval from the Ministry of Health, Labour and Welfare (the Ministry) for
an exemption from the future benefit obligation with respect to the
substitutional portion of each Employees Pension Fund (EPF) that the Company
and certain of its domestic subsidiaries operate on behalf of the government
in accordance with Japanese Welfare Pension Insurance Law, following the
enactment in April 2001 of a new law concerning the defined benefit pension
plans in Japan. The Company and certain of its domestic subsidiaries will
apply for the return of the past benefit obligation of the substitutional
portion of each EPF. Settlement of the past benefit obligation of the
substitutional portion and the return of the pension assets to the
government will be carried out by December 15, 2003. Matsushita currently
expects that any positive effects of an exemption from the future benefit
obligation and the settlement of the past benefit obligation with respect to
the substitutional portion of each EPF will principally arise in the next
fiscal year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 





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|E. |  | Accounting Principles                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Critical Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   |  | The Company has identified the following critical accounting policies which
are important to its financial condition and results of operations, and
require managements judgments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |  | Long-lived Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   |  | The useful lives of property, plant and equipment are summarized in Note
1(o) to the consolidated financial statements included in this annual report
and reflect the estimated period that the Company expects to derive economic
benefit from their use. In estimating the useful lives and determining
whether subsequent revisions to the useful lives are necessary, the Company
considers the likelihood of technological obsolescence, changes in demand
for the products related to such equipment, and other factors which may
affect their utility. The effect of any future changes to the estimated
useful lives of the equipment and machinery could be significant to the
Companys results of operations.                                                                                                                                                                                                                                                                         
|  
|   |  | Long-lived assets and certain identifiable intangibles are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amounts of assets 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 asset exceeds the fair value of the assets.
Assets to be disposed of are reported at the lower of the carrying amount or
fair value less costs to sell. Factors which may contribute to the need for
future impairment charges include changes in the use of the assets resulting
from the Companys restructuring initiatives, technological changes or any
significant declines in the demand for the related products.
|  
|   |  | Valuation of Available-for-sale Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   |  | The Company holds available-for-sale securities included in short-term
investments and investments and advances. Available-for-sale securities are
carried at fair value with unrealized holding gains and 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. Management regularly reviews each investment security for
impairment based on criteria that include the extent to which cost exceeds
market value, the duration of that market decline and the financial health
of and specific prospects for the issuer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      





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| |  | Valuation of Inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Inventories are stated at the lower of cost, determined on a first-in,
first-out basis, or net realizable value. Net realizable value is the
estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make a
sale. The Company routinely reviews its inventories for their saleability
and for indications of obsolescence to determine if inventories should be
written-down to net realizable value. Judgments and estimates must be made
and used in connection with establishing such allowances in any accounting
period. In estimating the net realizable value of its inventories, the
Company considers the age of the inventory and the likelihood of spoilage or
changes in market demand for its inventories.                                                                                                                                
|
| |  | Warranties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | The Company makes estimates of potential warranty claims related to its
revenues. The Company provides for such costs based upon historical
experience and its estimate of the level of future claims. Management makes
judgments and estimates in connection with establishing the warranty reserve
in any accounting period. Differences may result in the amount and timing
of its revenue for any period if the Company makes different judgments or
utilizes different estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Valuation of Accounts Receivable and Noncurrent Receivables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | The Company reviews its accounts receivable on a periodic basis and provides
an allowance for doubtful receivables based on historical loss experience
and current economic conditions. In evaluating the collectibility of
individual receivable balances, the Company considers the age of the
balance, the customers historical payment history, their current
credit-worthiness and adequacy of collateral.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | The Company records noncurrent receivables 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 the
Company 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. Managements judgment is required
in making estimates of the future cash flows of an impaired loan. Such
estimates are based on current economic conditions and the current and
expected financial condition of the debtor.





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| |  | Accounting for Derivatives                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Company has limited involvement with derivative financial instruments
and does not use them for trading purposes. The Company uses derivative
instruments principally to manage foreign currency risks resulting from
transactions denominated in currencies other than the Japanese yen. As
discussed in Note 1(n) to the consolidated financial statements included in
this annual report, the Company recognizes all derivatives as either assets
or liabilities on the balance sheet at their fair value. Changes in the
fair value of those derivatives are reported in earnings or other
comprehensive income depending on their use and whether they qualify for
hedge accounting. The accounting for gains and losses associated with
changes in the fair value of the derivative depends on its hedge designation
and whether the hedge is highly effective in achieving offsetting changes in
the fair values or cash flows of the hedged item. The Company evaluates and
determines on a continuous basis if the derivative remains highly effective
in offsetting changes in the fair value or cash flows of the hedged item.
If the derivative ceases to be highly effective in offsetting changes in the
fair value or cash flows of the hedged item, the Company discontinues hedge
accounting prospectively. Because the derivatives the Company uses are not
complex, significant judgment is not required to determine their fair
values. Fair values are determined principally by receiving quotations from
banks or brokers.
|
| |  | Loss Contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Loss contingencies may from time to time arise from situations such as
product liability claims, disputes over intellectual property rights, and
other legal actions. Loss contingencies are recorded as liabilities when it
is probable that a liability has been incurred and the amount of the loss is
reasonably estimable. Disclosure is required when there is a reasonable
possibility that the ultimate loss will exceed the recorded provision.
Contingent liabilities are often resolved over long time periods. In
recording liabilities for probable losses, management is required to make
estimates and judgments regarding the amount or range of the probable loss.
Management continually assesses the adequacy of estimated loss contingencies
and, if necessary, adjusts the amounts recorded as better information
becomes known.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                





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| |  | New Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Company will adopt Emerging Issues Task Force Issue (EITF) 01-9
Accounting for Consideration Given by a Vender to a Customer or Reseller of
the Vendors Products in the fiscal year beginning April 1, 2002. The
Company does not expect that the adoption of EITF 01-9 will materially
affect the results of operations or financial position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | In June 2001, FASB issued SFAS No. 141, Business Combinations, and SFAS
No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that
all business combinations be accounted for by the purchase method and
changes the criteria for recognition of intangible assets acquired in
business combinations. The provisions of SFAS No. 141 apply to all business
combinations initiated after June 30, 2001, as well as all purchase method
business combinations completed after June 30, 2001. SFAS No. 142 will
require that goodwill and intangible assets that have indefinite useful
lives no longer be amortized but should be tested at least annually for
impairment. Intangible assets that have estimable useful lives will
continue to be amortized over their useful lives. SFAS No. 142 also
provides specific guidance for testing for impairment of goodwill and
intangibles with indefinite useful lives. The provisions of SFAS No. 142
will be effective from the fiscal year beginning April 1, 2002, however,
goodwill and intangible assets acquired after June 30, 2001, will be subject
immediately to the nonamortization and amortization provisions of SFAS No.
142. The adoption of SFAS No. 141 did not have a material effect on the
Companys results of operations or financial position. The Company does not
expect that the adoption of SFAS No. 142 will materially affect the results
of operations or financial position.
|
| |  | In June 2001, FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations, which addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. This Statement applies to legal
obligations associated with the retirement of long-lived assets that result
from the acquisition, construction, development and (or) normal operation of
a long-lived asset, except for certain obligations of lessees. SFAS No. 143
requires that the fair value of a liability for an asset retirement
obligation be recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. The associated asset
retirement costs are capitalized as part of the carrying amount of the
long-lived asset and subsequently allocated to expense over the assets
useful life. The Company will adopt the provisions of SFAS No. 143 on April
1, 2003. The Company does not expect that the adoption will materially
affect the results of operations or financial position.                                                                                                                                                                                                                                                                                                                                                                
|
| |  | In August 2001, FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, applicable for the fiscal year beginning
April 1, 2002. SFAS No. 144 amends the existing guidance on accounting for
the impairment of long-lived assets to be held or used, establishes one
accounting model to be used for long-lived assets to be disposed of by sale
and broadens the presentation of discontinued operations to include more
disposal transactions. The Company does not expect that the adoption of
SFAS No. 144 will materially affect the results of operations or financial
position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   





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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. The Corporate Auditors are required to attend
meetings of the Board of Directors and express opinions, if necessary, at
such meetings, but they 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    





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| |  | The following table shows information about Matsushitas Directors and
Corporate Auditors after the ordinary general meeting of shareholders held
on June 27, 2002, including their dates of birth, positions,
responsibilities and their brief personal records.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                |  |  |                                                       
|--------------- |  |  | ------------------------------------------------------
|Name            |  |  | Positions, responsibilities and brief personal records
|                |  |  |                                                       
|(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.                                                  
|                    |  |                                                                 
|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.                  
|                    |  |                                                                 
|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;                                                                
|                    |  | -1997                                                            | Managing 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.                                                                       





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|                |  |  |                                                       
|--------------- |  |  | ------------------------------------------------------
|Name            |  |  | Positions, responsibilities and brief personal records
|                |  |  |                                                       
|(Date of birth) |  | 
|                |  | 

|                |  |                                                                                                                                                                                                                                                                                                      |                                                                                                    
|--------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------
|Kazuo Toda      |  | Senior Managing Director  since June 1999                                                                                                                                                                                                                                                          
|(Feb. 13, 1941) |  | In charge of Corporate Marketing Division for Panasonic Brand,
Corporate Marketing Division for National Brand, Corporate
Consumer Products Distribution Division, Corporate Commodity
Sales, Housing Equipment Sales, Electrical Supplies Sales,
Advertising, Logistics, and Corporate CS Division.
|                |  | -1994                                                                                                                                                                                                                                                                                                | Director of the Company, and in charge of Home Appliance Business;                                 
|                |  | -1996                                                                                                                                                                                                                                                                                                | Managing Director of the Company;                                                                  
|                |  | -1997                                                                                                                                                                                                                                                                                                | President of Home Appliance & Housing Electronics Company;                                         
|                |  | -2000                                                                                                                                                                                                                                                                                                | President of AVC Company;                                                                          
|                |  | -2001                                                                                                                                                                                                                                                                                                | Director of Corporate Marketing Division for Panasonic Brand.                                      
|                |  |                                                                                                                                                                                                                                                                                                     
|Osamu Tanaka    |  | Senior Managing Director  since June 1999                                                                                                                                                                                                                                                          
|(Nov. 1, 1940)  |  | Tokyo Representative, and in charge of Public and Private
Institutions, Recycling Business Promotion and Panasonic
Center.                                                                                                                                                                          
|                |  | -1995                                                                                                                                                                                                                                                                                                | Director of the Company, and Director of Corporate
Consumer Sales Division;                        
|                |  | -1997                                                                                                                                                                                                                                                                                                | Managing Director of the Company;                                                                  
|                |  | -1999                                                                                                                                                                                                                                                                                                | In charge of Corporate Consumer Sales;                                                             
|                |  | -2001                                                                                                                                                                                                                                                                                                | In charge of Corporate Consumer Products Distribution
Division and Public and Private Institutions.
|                |  |                                                                                                                                                                                                                                                                                                     
|Sukeichi Miki   |  | Senior Managing Director  since June 2001                                                                                                                                                                                                                                                          
|(Feb. 5, 1940)  |  | In charge of Technology, 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 and Overseas Research Laboratories;  
|                |  | -2000                                                                                                                                                                                                                                                                                                | In charge of Intellectual Property.                                                                
|                |  |                                                                                                                                                                                                                                                                                                     
|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;                  
|                |  | -2000                                                                                                                                                                                                                                                                                                | In charge of Overseas Operations.                                                                  





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|                |  |  |                                                        |  |  |  | 
|--------------- |  |  | ------------------------------------------------------ |  |  |  | 
|Name            |  |  | Positions, responsibilities and brief personal records |  |  |  | 
|                |  |  |                                                        |  |  |  | 
|(Date of birth) |  |  |                                                        |  |  | 
|                |  | 

|                 |                                                                                                                                                                                                                          |                                                                                                                               |  |  |  | 
|---------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|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, and President
of Factory Automation Company.
|                 | -1992                                                                                                                                                                                                                    | Director of Matsushita Battery Industrial Co., Ltd.;                                                                         
|                 | -1998                                                                                                                                                                                                                    | Director of the Company, and Director of Corporate
Industrial Marketing & Sales Division.                                    
|                 |                                                                                                                                                                                                                          |                                                                                                                              
|Susumu Koike     | Managing Director  since June 2000                                                                                                                                                                                     
|(Nov. 15, 1945)  | In charge of Device Technology, Environmental Technology,
Production Engineering and Recycling Process Systems Business,
and President of Semiconductor Company.                                                        
|                 | -1993                                                                                                                                                                                                                    | Director of Matsushita Electronics Corporation;                                                                              
|                 | -1998                                                                                                                                                                                                                    | Director of the Company, and in charge of Semiconductor Technology;                                                          
|                 | -2001                                                                                                                                                                                                                    | President of Semiconductor Company.                                                                                          
|                 |                                                                                                                                                                                                                          |                                                                                                                              
|Fumio Ohtsubo    | Managing Director  since June 2000                                                                                                                                                                                     
|(Sep. 5, 1945)   | President of AVC Company, and Business Group Executive of AVC
Network Business Group, and in charge of Storage Device
Business.                                                                                         
|                 | -1998                                                                                                                                                                                                                    | Director of the Company, and Vice President of AVC Company;                                                                  
|                 | -2001                                                                                                                                                                                                                    | Business Group Executive of AVC Network Business Group.                                                                      
|                 |                                                                                                                                                                                                                          |                                                                                                                              
|Haruo Ueno       | Managing Director  since June 2001                                                                                                                                                                                     
|(Nov. 9, 1940)   | Director of Corporate Legal Affairs Division.                                                                                                                                                                           
|                 | -1965                                                                                                                                                                                                                    | Joined the National Police Agency;                                                                                           
|                 | -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 Devices Company, and in charge of Quality
and Environment.                                                                                                                                         
|                 | -1998                                                                                                                                                                                                                    | Director of the Company, and in charge of Corporate
Quality Administration Division and Purchasing Administration
Department;
|                 | -1999                                                                                                                                                                                                                    | President of Matsushita Electronics Corporation;                                                                             
|                 | -2001                                                                                                                                                                                                                    | President of Display Devices Company.                                                                                        
|                 |                                                                                                                                                                                                                          |                                                                                                                              
|Yoshiaki Kushiki | Managing Director  since June 2001                                                                                                                                                                                     
|(Jan. 17, 1946)  | In charge of Multimedia Technology and Software Technology.                                                                                                                                                             
|                 | -1997                                                                                                                                                                                                                    | Director of Multimedia Development Center;                                                                                   
|                 | -1999                                                                                                                                                                                                                    | Director of the Company, and in charge of Multimedia
Technology.                                                             





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|                  |                                                                                                                                                                                                                     |                                                                                                   
|----------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------
|Name              |                                                                                                                                                                                                                     | Positions, responsibilities and brief personal records                                            
|                  |                                                                                                                                                                                                                     |                                                                                                   
|(Date of birth)   |                                                                                                                                                                                                                     |                                                                                                   
|                  |                                                                                                                                                                                                                     |                                                                                                   
|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;                                            
|                  | -1995                                                                                                                                                                                                               | Joined the Company as Corporate Advisor;                                                          
|                  | -1998                                                                                                                                                                                                               | Director of Tokyo Branch, and in charge of Public and
Private Institutions.                       
|                  |                                                                                                                                                                                                                     |                                                                                                   
|Toshio Sugiura    | Director  since June 1997                                                                                                                                                                                         
|(Sep. 20, 1941)   | Director of Corporate Management Division for China and
Northeast Asia.                                                                                                                                            
|                  | -1995                                                                                                                                                                                                               | President of Matsushita Electric Co., (Malaysia) Bhd.;                                            
|                  | -1997                                                                                                                                                                                                               | President of Air-conditioner Company;                                                             
|                  | -2000                                                                                                                                                                                                               | Director of Corporate Management Division for China.                                              
|                  |                                                                                                                                                                                                                     |                                                                                                   
|Tetsuya Kawakami  | Director  since June 2000                                                                                                                                                                                         
|(Dec. 7, 1941)    | In charge of Finance and Accounting.                                                                                                                                                                               
|                  | -1996                                                                                                                                                                                                               | General Manager of Corporate Accounting Department.                                               
|                  |                                                                                                                                                                                                                     |                                                                                                   
|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;
|                  | -2000                                                                                                                                                                                                               | Director of Corporate Management Division for the
Americas.                                       
|                  |                                                                                                                                                                                                                     |                                                                                                   
|Yoshitaka Hayashi | Director  since June 2000                                                                                                                                                                                         
|(Jun. 7, 1946)    | In charge of Appliance Business, President of Home Appliance &
Housing Electronics Company and Air-conditioner Company, and in
charge of Packaged Air-conditioner Company and Healthcare &
Medical Business Center.
|                  | -1999                                                                                                                                                                                                               | Vice President of Home Appliance & Housing Electronics Company;                                   
|                  | -2000                                                                                                                                                                                                               | President of Home Appliance & Housing Electronics Company;                                        
|                  | -2001                                                                                                                                                                                                               | Director of Corporate Marketing Division for National Brand.                                      





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|                                   |                                                                                                               |                                                                  
|---------------------------------- | ------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------
|Name                               |                                                                                                               | Positions, responsibilities and brief personal records           
|                                   |                                                                                                               |                                                                  
|(Date of birth)                    |                                                                                                               |                                                                  
|                                   |                                                                                                               |                                                                  
|Toshihiro Sakamoto                 | Director  since June 2000                                                                                   
|(Oct. 27, 1946)                    | Senior Vice President of AVC Company, and Business Group
Executive of Visual Network Products Business Group.
|                                   | -1998                                                                                                         | President of Matsushita Electric (Taiwan) Co., Ltd.;             
|                                   | -2000                                                                                                         | Vice President of AVC Company.                                   
|                                   |                                                                                                               |                                                                  
|Masaki Akiyama                     | Director  since June 2001                                                                                   
|(Jun. 29, 1943)                    | Director of Corporate System Sales Division and Corporate
Systems Solutions Division.                        
|                                   | -1994                                                                                                         | Director of Matsushita Communication Industrial Co., Ltd.
(MCI); 
|                                   | -1998                                                                                                         | Senior Managing Director of MCI;                                 
|                                   | -2000                                                                                                         | Director of Corporate Systems Solutions Division.                
|                                   |                                                                                                               |                                                                  
|Yoichiro Maekawa                   | Director  since June 2001                                                                                   
|(Jan. 6, 1944)                     | Director of Corporate e-Net Business Division.                                                               
|                                   | -1997                                                                                                         | General Manager of Corporate Planning Office;                    
|                                   | -2000                                                                                                         | Director of Corporate e-Net Business Division.                   
|                                   |                                                                                                               |                                                                  
|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;                    
|                                   | -2000                                                                                                         | Director of Corporate Management Division for Europe.            
|                                   |                                                                                                               |                                                                  
|Masaharu Matsushita(Sep. 17, 1912) | Honorary Chairman of the Board of Directors and ExecutiveAdvisor  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, in charge of Technology.          
|                                   |                                                                                                               |                                                                  
|Toshiomi Uragami                   | Corporate Auditor  since June 2000                                                                          
|(Nov. 4, 1935)                     | (Executive Advisor of Sumitomo Life Insurance Co.)                                                           
|                                   | -1997                                                                                                         | Chairman of the Board of Sumitomo Life Insurance Co.;            
|                                   | -2001                                                                                                         | Executive Advisor of Sumitomo Life Insurance Co.                 





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|                |                                                            |                                                         
|--------------- | ---------------------------------------------------------- | --------------------------------------------------------
|Name            |                                                            | Positions, responsibilities and brief personal records  
|                |                                                            |                                                         
|(Date of birth) |                                                            |                                                         
|                |                                                            |                                                         
|Kiyosuke Imai   | Corporate Auditor  since June 2000                       
|(Nov. 14, 1934) | (Chairman of the Board of Matsushita Electric Works, Ltd.)
|                | -1994                                                      | President 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 2002 to all Directors and Corporate Auditors (38 persons) for
services in all capacities was 1,166 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 2002
amounted to 294 million yen.                                                                                                                                                                              
|  
|   |  | For details of the Companys stock option plans for Board members and select
senior executives, see Section E of this Item 6.                                                                                                                                                                                                                                                                                                                                                                                 
|  
|C. |  | Board Practices                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   |  | For information on the Companys Directors and Statutory Auditors, see
Section A of this Item 6.                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |  | Pursuant to the home country practices exception granted by the New York
Stock Exchange, Matsushita is permitted to follow corporate governance
practices complying with relevant Japanese laws and Japanese stock exchange
rules, which are different from those followed by U.S. domestic companies
under the New York Stock Exchanges listing standards. The New York Stock
Exchange rules and Matsushitas current practices relating to corporate
governance have the following significant differences:



| |  |  | Audit Committee.The New York Stock Exchange requires that a
listed company have an audit committee consisting of at least three
independent directors, and that the audit committee be charged with the
responsibility of selecting, monitoring and communicating with the
outside auditor of the company to ensure the outside auditors
independence. Pursuant to the home country practices exception,
Matsushita does not have an audit committee with functions called for
by the New York Stock Exchange rules. Under the Commercial Code of
Japan, Matsushita has the Board of Corporate Auditors which is under a
statutory duty to monitor, review and report on the administration of
the affairs of the Company, as discussed in Section A of this Item 6.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





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| |  |  | Shareholder Approval Policy.The New York Stock Exchange requires
that shareholder approval be obtained prior to issuance of stock
options to officers or directors except, among others, where no single
officer or director may acquire more than 1% of the number of common
stock outstanding at the time the stock option plan is adopted, and
where the stock option plan, together with all plans of the issuer
other than those for which shareholder approval is not required, does
not authorize the issuance of more than 5% of the issuers common stock
outstanding at the time the stock option plan is adopted. Pursuant to
the home country practices exception, Matsushita follows relevant
Japanese laws which, as discussed in Section B of Item 10, generally
require it to obtain shareholder approval if stock options are to be
issued with specially favorable conditions.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The New York Stock Exchange also requires that, with certain exceptions
specified in its rules, shareholder approval be obtained prior to
issuance of common stock or securities convertible into or exercisable
for common stock (1) to a director, an officer, a substantial security
holder or a party related to any of them if the number of shares of
common stock which are to be issued or are issuable upon conversion
exceeds 1% of the number of common stock or voting power outstanding
before the issuance, (2) in any transaction or series of transactions, if
the voting power of the common stock is equal to or exceeds 20% of the
voting power outstanding before the issuance or if the number of shares
of the common stock is equal to or exceeds 20% of the number of shares
outstanding before the issuance, and (3) that will result in a change of
control of the issuer. Pursuant to the home country practices exception,
Matsushita only follows relevant Japanese laws which, as discussed in
Section B of Item 10, generally require it to obtain shareholder approval
with respect to the issuance of common stock or securities convertible
into or exercisable for common stock if common stock is to be issued at a
specially favorable price or convertible bonds or debentures to acquire
shares are to be issued with specially favorable conditions or stock
acquisition rights to acquire shares are to be issued with specially
favorable conditions.
| |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | On June 6, 2002, the Corporate Accountability and Listing Standards
Committee of the New York Stock Exchange issued a report recommending that
the Exchange adopt significant changes to its corporate governance listing
standards. The report also contains several recommended changes to the
Securities and Exchange Commissions disclosure and corporate governance
requirements. The New York Stock Exchange has stated that it plans to
submit the proposals for approval to its Board of Directors in August 2002
and then would submit them to the Securities and Exchange Commission for
approval. Under the current proposals, non-U.S. issuers such as Matsushita
would continue to be permitted to follow home country practices with respect
to corporate governance requirements. If and when the proposed rules are
finally adopted after the Securities and Exchange Commissions approval,
there would be additional significant differences other than those discussed
above between the New York Stock Exchange rules and Matsushitas current
practices relating to corporate governance.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The rights of ADR holders, including their rights relating to corporate
governance practices, are governed by the Amended and Restated Deposit
Agreement (incorporated by reference to the Registration Statement on Form
F-6 (File No. 333-12694) filed on October 4, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  





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|D. |  | Employees                                                                                                                   
|-- |  | ----------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The following table lists the number of consolidated full-time employees of
the Company as of March 31, 2002, 2001 and 2000:

| |            |          |  |      |         |      |  |      |         |  |  |  |         |  | 
| | ---------- | -------- |  | ---- | ------- | ---- |  | ---- | ------- |  |  |  | ------- |  | 
| |            |          |  | 2002 |         | 2001 |  | 2000
| |            |          |  |      |         |      |  |     
| | Employees: |          |  |      |         |      |  |      |         |  |  |  |        
| |            | Domestic |  |      | 124,212 |      |  |      | 143,162 |  |  |  | 146,675 | 
| |            | Overseas |  |      | 142,984 |      |  |      | 149,628 |  |  |  | 143,773 | 
| |            |          |  |      |         |      |  |      |         |  |  |  |        
| |            | Total    |  |      | 267,196 |      |  |      | 292,790 |  |  |  | 290,448 | 
| |            |          |  |      |         |      |  |      |         |  |  |  |        



| |  | 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, Matsushita 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, Matsushita has been
introducing in Japan new comprehensive employment and personnel systems to
satisfy the diversified needs of employees.
|
| |  | Such systems include an individual performance-oriented annual salary
system, a regional-based employee remuneration system and an alternative
payment system under which employees can receive retirement and fringe
benefits up front as an addition to their monthly salary.                                                                                                                                                    
|
| |  | For a quarter century, Matsushita has not experienced any major labor
strikes or disputes. Matsushita considers its labor relations to be
excellent.                                                                                                                                                                                                                                                                               
|
| |  | The number of voluntary retirees of special early retirement programs
implemented for the employees of Matsushita in Japan in the year ended March
31, 2002 was approximately 13,000. They all retired by March 31, 2002.                                                                                                                                                                                                          





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|E.  |  | Share Ownership                                                                                                                                                                                                                            
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) |  | The following table lists the number of shares owned by the Directors and
Corporate Auditors of the Company as of June 27, 2002. The total is
17,354,622 shares constituting 0.81% of all outstanding shares of the
Companys common stock.

|                    |  |                                                                   |  |                             |            | 
|------------------- |  | ----------------------------------------------------------------- |  | --------------------------- | ---------- | 
|                    |  |                                                                   |  | Number of Matsushita Shares
|Name                |  | Position                                                          |  | Owned as of June 27, 2002  
|                    |  |                                                                   |  |                            
|Yoichi Morishita    |  | Chairman of the Board of Directors                                |  |                             | 75,305     | 
|Masayuki Matsushita |  | Vice Chairman of the Board of Directors                           |  |                             | 7,884,721  | 
|Kunio Nakamura      |  | President and Director                                            |  |                             | 26,000     | 
|Atsushi Murayama    |  | Executive Vice President and Director                             |  |                             | 24,164     | 
|Takashi Kawada      |  | Executive Vice President and Director                             |  |                             | 5,815      | 
|Kazuo Toda          |  | Senior Managing Director                                          |  |                             | 20,235     | 
|Osamu Tanaka        |  | Senior Managing Director                                          |  |                             | 18,750     | 
|Sukeichi Miki       |  | Senior Managing Director                                          |  |                             | 14,000     | 
|Yukio Shohtoku      |  | Managing Director                                                 |  |                             | 22,277     | 
|Takami Sano         |  | Managing Director                                                 |  |                             | 18,033     | 
|Susumu Koike        |  | Managing Director                                                 |  |                             | 12,562     | 
|Fumio Ohtsubo       |  | Managing Director                                                 |  |                             | 15,000     | 
|Haruo Ueno          |  | Managing Director                                                 |  |                             | 21,000     | 
|Hidetsugu Otsuru    |  | Managing Director                                                 |  |                             | 14,000     | 
|Yoshiaki Kushiki    |  | Managing Director                                                 |  |                             | 9,000      | 
|Josei Ito           |  | Director                                                          |  |                             | 3,000      | 
|Toshio Morikawa     |  | Director                                                          |  |                             | 5,000      | 
|Hiroaki Enomoto     |  | Director                                                          |  |                             | 18,000     | 
|Toshio Sugiura      |  | Director                                                          |  |                             | 8,030      | 
|Tetsuya Kawakami    |  | Director                                                          |  |                             | 7,167      | 
|Hideaki Iwatani     |  | Director                                                          |  |                             | 7,000      | 
|Yoshitaka Hayashi   |  | Director                                                          |  |                             | 10,798     | 
|Toshihiro Sakamoto  |  | Director                                                          |  |                             | 6,278      | 
|Masaki Akiyama      |  | Director                                                          |  |                             | 7,000      | 
|Yoichiro Maekawa    |  | Director                                                          |  |                             | 18,274     | 
|Tomikazu Ise        |  | Director                                                          |  |                             | 10,712     | 
|Masaharu Matsushita |  | Honorary Chairman of the Board of Directors and Executive Advisor |  |                             | 9,034,980  | 
|Motoi Matsuda       |  | Senior Corporate Auditor                                          |  |                             | 16,840     | 
|Yoshitomi Nagaoka   |  | Senior Corporate Auditor                                          |  |                             | 14,681     | 
|Toshiomi Uragami    |  | Corporate Auditor                                                 |  |                             | 3,000      | 
|Kiyosuke Imai       |  | Corporate Auditor                                                 |  |                             | 3,000      | 
|                    |  |                                                                   |  |                             |            | 
|Total               |  |                                                                   |  |                             | 17,354,622 | 
|                    |  |                                                                   |  |                             |            | 





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- 54 -



| |  | 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
shares of common stock 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 shares of common stock 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
share, exercisable from July 1, 2001 to June 30, 2005, ranging from 2,000 to
10,000 shares of common stock each. For this purpose, the Company in early
August 1999 purchased on the TSE a total of 116,000 shares of common stock
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 of common stock
each, at a price of 2,815 yen per 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 shares of common stock 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 then 30 Directors on the Board and nine select senior executives were
granted stock options ranging from 2,000 to 10,000 shares of common stock
each, at a price of 2,163 yen per 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 shares of common stock with an
aggregate purchase price of approximately 250 million yen.                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | In June 2002, the Company obtained approval of the ordinary general meeting
of shareholders regarding the issue of stock acquisition rights as stock
options (the Stock Acquisition Rights) for Board members and select senior
executives, pursuant to Articles 280-20 and 280-21 of the Japanese
Commercial Code, as amended. Upon the shareholders approval, the Board of
Directors has adopted resolutions to issue at no charge an aggregate of 116
Stock Acquisition Rights, each representing a stock option to purchase 1,000
shares of common stock of the Company, to the current 27 Directors on the
Board and eight select senior executives. The Stock Acquisition Rights are
exercisable during the period from July 1, 2004 through June 30, 2008. The
amount to be paid by qualified persons upon exercise of each Stock
Acquisition Right is set at 1,734 yen per share of common stock.                                                                                                                                          





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|(2) |  | The Companys full-time employees are eligible to participate in the
Matsushita Electric Employee Shareholding Association, whereby
participating employees contribute a portion of their salaries to the
Association and the Association purchases shares of the Companys common
stock on their behalf. The Company provides a 10% subsidy on top of any
funds employees contribute to the Association. As of March 31, 2002, the
Association owned 29,337 thousand shares of the Companys common stock
constituting 1.37% of all outstanding shares of the Companys common
stock.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




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 largest shareholders of record and their
share holdings as of the end of the last fiscal year are as follows:

|                                                     |  |                  |        |                     |  |  |      |  
|---------------------------------------------------- |  | ---------------- | ------ | ------------------- |  |  | ---- | -
|                                                     |  | Share ownership  |        |                     |  | 
|                                                     |  | (in thousands of |        | Percentage of total
|Name                                                 |  | shares)          |        | issued shares      
|                                                     |  |                  |        |                    
|Sumitomo Mitsui Banking Corporation                  |  |                  | 97,648 |                     |  |  | 4.56 | %
|Japan Trustee Services Bank, Ltd. (trust account)    |  |                  | 96,773 |                     |  |  | 4.52 |  
|Moxley & Co.                                         |  |                  | 95,319 |                     |  |  | 4.45 |  
|Sumitomo Life Insurance Co.                          |  |                  | 76,764 |                     |  |  | 3.58 |  
|The Mitsubishi Trust and Banking Co. (trust account) |  |                  | 67,632 |                     |  |  | 3.16 |  
|Nippon Life Insurance Co.                            |  |                  | 65,751 |                     |  |  | 3.07 |  
|Matsushita Investment & Development Co., Ltd.        |  |                  | 55,229 |                     |  |  | 2.58 |  
|UFJ Trust Bank Ltd. (trust account A)                |  |                  | 42,230 |                     |  |  | 1.97 |  
|The Asahi Bank, Ltd.                                 |  |                  | 41,704 |                     |  |  | 1.95 |  
|Mitsui Sumitomo Insurance Co., Ltd.                  |  |                  | 34,445 |                     |  |  | 1.61 |  



| |  | 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 voting rights of all the shareholders. The Companys
shareholders are not entitled to cumulative voting in the election of
Directors. A corporate shareholder, more than one-quarter of whose total
voting rights 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. Shareholders may also
exercise their voting rights by electronic means when the Board of Directors
decides to permit such method of exercising voting rights.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





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|    |  | 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, splitting of
the corporation into two or more corporations requiring shareholders
resolutions, any offering of new shares at a specially favorable price (or
any offering of stock acquisition rights to subscribe for or acquire shares
of capital stock (stock acquisition rights) or bonds with stock
acquisition rights at a specially favorable exercise conditions) to any
persons other than shareholders, 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, 2002, approximately 8.58% of the Companys common stock
was owned by 176 United States shareholders including the ADR Depositarys
nominee, Moxley & Co., considered as one shareholder of record, owning
approximately 4.45 % of the total common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(3) |  | Matsushita is not, directly or indirectly, owned or controlled by other
corporations, by the Japanese government or any foreign government or by
any natural or legal person or persons severally or jointly.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(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                                           
|-- |  | ---------------------------------------------------------------------
|  
|   |  | Matsushita is not a party to any material related party transactions.






|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.





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- 57 -



|(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, a former subsidiary
now merged into the Company), 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    |  | 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 Matsushita. 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
traditionally has distributed regular dividends to its shareholders on a
periodic basis. However, due to factors including the severe economic
conditions outlined in Section A of item 5, as well as unsatisfactory
business results for fiscal 2002, the Board of Directors resolved to
decrease the annual cash dividend.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    |  | At the ordinary general meeting of shareholders held on June 27, 2002, a
year-end cash dividend of Matsushita Electric Industrial Co., Ltd. was
approved at the rate of 3.75 yen per share of common stock. 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 10.00 yen.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          





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- 58 -



| |  | 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.




Item 9. The Offer and Listing






|A. |  | Offer and Listing Details                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The primary market for the Companys common stock (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 Euronext Amsterdam
Stock Exchange and the Euronext Paris Stock Exchange in the form of original
Common Stock of the Company, and on the Frankfurt Stock Exchange and
Duesseldorf Stock Exchange in the form of co-ownership shares in a Global
Bearer Certificate. 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.
|  
|   |  | 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, JP Morgan Chase Bank of New York, the successor entity to 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
|                           |  |                      |       |                             |  |      |       |    
|1998                       |  |                      | 2,520 |                             |  |      | 1,750 |     |  |  | 21.10 |  |  |  | 13.51 | 
|1999                       |  |                      | 2,375 |                             |  |      | 1,640 |     |  |  | 19.50 |  |  |  | 12.80 | 
|2000                       |  |                      | 3,320 |                             |  |      | 2,050 |     |  |  | 30.30 |  |  |  | 17.35 | 
|2001                       |  |                      | 3,190 |                             |  |      | 1,932 |     |  |  | 29.90 |  |  |  | 16.00 | 
|2002                       |  |                      | 2,360 |                             |  |      | 1,398 |     |  |  | 19.43 |  |  |  | 11.14 | 





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|                           |  |                      |       |                             |     |      |       |       |     |  |       |       |  |  |       |       | 
|-------------------------- |  | -------------------- | ----- | --------------------------- | --- | ---- | ----- | ----- | --- |  | ----- | ----- |  |  | ----- | ----- | 
|                           |  |                      |       |                            
|                           |  | 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  
|                           |  |                      |       |                             |     |      |       |      
|2001                       |  |                      |       |                             |     |      |       |       |     |  |       |       |  |  |       |      
|1st quarter                |  |                      | 3,070 |                             |     |      | 2,410 |       |     |  | 29.28 |       |  |  | 22.65 |      
|2nd quarter                |  |                      | 2,995 |                             |     |      | 2,660 |       |     |  | 28.18 |       |  |  | 25.05 |      
|3rd quarter                |  |                      | 3,190 |                             |     |      | 2,430 |       |     |  | 29.90 |       |  |  | 22.13 |      
|4th quarter                |  |                      | 2,800 |                             |     |      | 1,932 |       |     |  | 25.25 |       |  |  | 16.00 |      
|2002                       |  |                      |       |                             |     |      |       |       |     |  |       |       |  |  |       |      
|1st quarter                |  |                      | 2,360 |                             |     |      | 1,901 |       |     |  | 19.43 |       |  |  | 15.35 |      
|2nd quarter                |  |                      |       | 1,960                       |     |      |       | 1,402 |     |  |       | 15.92 |  |  |       | 11.50 | 
|3rd quarter                |  |                      | 1,697 |                             |     |      | 1,398 |       |     |  | 13.89 |       |  |  | 11.60 |      
|4th quarter                |  |                      | 1,826 |                             |     |      | 1,482 |       |     |  | 14.50 |       |  |  | 11.14 |      
|2003                       |  |                      |       |                             |     |      |       |       |     |  |       |       |  |  |       |      
|1st quarter                |  |                      | 1,787 |                             |     |      | 1,528 |       |     |  | 14.64 |       |  |  | 12.13 |      
|                          
|Most recent 6 months       |  |                      | High  |                             | Low |      | High  |       | Low
|                           |  |                      |       |                             |     |      |       |      
|January, 2002              |  |                      | 1,815 |                             |     |      | 1,623 |       |     |  | 13.70 |       |  |  | 12.35 |      
|February, 2002             |  |                      | 1,725 |                             |     |      | 1,482 |       |     |  | 12.83 |       |  |  | 11.14 |      
|March, 2002                |  |                      | 1,826 |                             |     |      | 1,573 |       |     |  | 14.50 |       |  |  | 12.21 |      
|April, 2002                |  |                      | 1,749 |                             |     |      | 1,576 |       |     |  | 13.66 |       |  |  | 12.13 |      
|May, 2002                  |  |                      | 1,787 |                             |     |      | 1,628 |       |     |  | 14.64 |       |  |  | 12.76 |      
|June, 2002                 |  |                      | 1,783 |                             |     |      | 1,528 |       |     |  | 14.47 |       |  |  | 12.51 |      



|* |  | 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      





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- 60 -






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






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




Item 10.  Additional Information






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






|B. |  | Memorandum and Articles of Association                                                                                                                                                                                                                                                                                           
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Organization                                                                                                                                                                                                                                                                                                                     
|  
|   |  | 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 (shogyo 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 lines of business:                                                                                                                                                                                             



| | 1. | manufacture and sale of electric machinery and equipment,
communication and electronic equipment, as well as lighting equipment;
| | -- | --------------------------------------------------------------------------------------------------------------------------------
|
| | 2. | manufacture and sale of gas, kerosene and kitchen equipment, as
well as machinery and equipment for building and housing;       
|
| | 3. | manufacture and sale of machinery and equipment for office and
transportation, as well as for sales activities;                 
|
| | 4. | manufacture and sale of medical, health and hygienic equipment,
apparatus and material;                                         
|
| | 5. | manufacture and sale of optical and precision machinery and
equipment;                                                          
|
| | 6. | manufacture and sale of batteries, battery-operated products,
carbon and manganese and other chemical and metal products;       
|
| | 7. | manufacture and sale of air conditioning and anti-pollution
equipment, as well as industrial machinery and equipment;           





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| | 8.  |  | manufacture and sale of other machinery and equipment;                                                                                                                                                                                                 
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 9.  |  | engineering and installation of machinery and equipment related to
any of the preceding items as well as engineering and performance of
and contracting for other construction work;                                                                   
|
| | 10. |  | production and sale of software;                                                                                                                                                                                                                       
|
| | 11. |  | sale of iron and steel, nonferrous metals, minerals, oil, gas,
ceramics, paper, pulp, rubber, leather, fibre and their products;                                                                                                                       
|
| | 12. |  | sale of foods, beverages, liquor and other alcoholics,
agricultural, livestock, dairy and marine produces, animal feed and
their raw materials;                                                                                                        
|
| | 13. |  | manufacture and sale of drugs, quasi-drugs, cosmetics, fertilizer,
poisonous and deleterious substance and other chemical products;                                                                                                                    
|
| | 14. |  | sale of woods and other construction materials and general
merchandise;                                                                                                                                                                                
|
| | 15. |  | motion picture and musical entertainment business and promotion of
sporting events;                                                                                                                                                                    
|
| | 16. |  | export and import of products, materials and software mentioned in
each of the preceding items (other than item 9);                                                                                                                                    
|
| | 17. |  | providing repair and maintenance services for the products, goods
and software mentioned in each of the preceding items for itself and on
behalf of others;                                                                                            
|
| | 18. |  | provision of information and communication services, and
broadcasting business;                                                                                                                                                                        
|
| | 19. |  | provision of various services utilizing the Internet including
Internet access and e-commerce;                                                                                                                                                         
|
| | 20. |  | business related to publishing, printing, freight forwarding,
security, maintenance of buildings, nursing care, dispatch of workers,
general leasing, financing, non-life insurance agency and buying,
selling, maintaining and leasing of real estate;
|
| | 21. |  | investment in various businesses;                                                                                                                                                                                                                      
|
| | 22. |  | accepting commission for investigations, research, development and
consulting related to any of the preceding items; and                                                                                                                               
|
| | 23. |  | all other business or businesses incidental or related to any of
the preceding items.                                                                                                                                                                  





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| |  | 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 on such resolution. The
total amount of remuneration to Directors and that to Corporate Auditors are
subject to the approval of the general meeting of shareholders. 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 Directors or
Corporate Auditors power to vote in connection with their compensation, the
borrowing power exercisable by a Representative Director (or a Director who
is given power by a Representative Director to exercise such power), 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 company to acquire or dispose of material assets;
to borrow a substantial amount of money; to employ or discharge from
employment important employees, such as 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 in an amount not less than
10 billion yen or its equivalent.
|
| |  | Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | General                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | 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, which became effective on October 1, 2001 (the 2001
Amendments) and April 1, 2002 (the 2002 Amendments).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | In order to assert shareholders rights against the Company, a shareholder
must have its name and address registered on the Companys register of
shareholders, in accordance with the Companys Share Handling Regulations.
The registered beneficial holder of deposited shares underlying the ADSs is
the Depositary for the ADSs. Accordingly, holders of ADSs will not be able
directly to assert shareholders rights to the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 





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| |  | As of March 31, 2002, 2,138,514,603 shares of Common Stock without having
any par value were issued and outstanding.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The 2001 Amendments eliminated the concept of par value of shares of
capital stock. Thus, all shares of capital stock of the Company have no par
value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | 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 Board of
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 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 as of 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 or of the amount of such interim dividends until the aggregate
amount of capital surplus and legal reserve equals to 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 capital surplus;                                                                                                                                                                                                                               
| | (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; and                      
| | (vi)  |  | if certain assets of the Company are stated at market value on
such balance sheet pursuant to the provisions of the Commercial Code,
the excess, if any, of the aggregate amount of their market value
over the aggregate acquisition cost thereof.





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| |  | In the case of interim dividends, the net assets are calculated by reference
to the non-consolidated balance sheet as at the last closing of the
Companys accounts, but adjusted to reflect; (x) any subsequent payment by
way of appropriation of retained earnings and transfer to legal reserve in
respect thereof; (y) any subsequent transfer of retained earnings to stated
capital; and (z) if the Company has been authorized, pursuant to a
resolution of an ordinary general meeting of shareholders, to purchase
shares of its Common Stock (see Section B of this Item 10  Memorandum and
Articles of Association  Common Stock  Acquisition by the Company of its
Common Stock), the total amount of the purchase price of such shares so
authorized by such resolution that may be paid by the Company, 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 (vi) above.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | 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 three years after the
date on which they first became payable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | For information as to Japanese taxes on shareholder dividends, see Section E
of this Item 10  Taxation  Japanese Taxation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | Stock splits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | The Company may at any time split shares in issue into a greater number of
shares by resolution of the Board of Directors, and may amend its Articles
of Incorporation to increase the number of the authorized shares to be
issued in proportion to the relevant stock split in principle pursuant to a
resolution of the Board of Directors rather than a special resolution of a
general meeting of shareholders which is otherwise required for amending the
Articles of Incorporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | In the event of a stock split, generally, shareholders will not be required
to exchange share certificates for new share certificates, but certificates
representing the additional shares resulting from the stock split will be
issued to shareholders. When a stock split is to be made, the Company must
give public notice of the stock split, specifying the record date therefor,
at least two weeks prior to such record date. In addition, promptly after
the stock split takes effect, the Company must give notice to each
shareholder specifying the number of shares to which such shareholder is
entitled by virtue of the stock split.                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | General meeting of shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | The ordinary general meeting of shareholders 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 notice of convocation thereof at
least two weeks prior to the date set for the meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Notice of convocation of a shareholders meeting setting forth the place,
time and purpose thereof, must be mailed to each shareholder having voting
rights (or, in the case of a non-resident shareholder, to his or her
standing proxy or mailing address in Japan) at least two weeks prior to the
date set for the meeting. Under the Commercial Code, such notice may be
given to shareholders by electronic means, subject to the consent by the
relevant shareholders. The record date for an ordinary general meeting of
shareholders is March 31 of each year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                





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| |  | Any shareholder or group of shareholders holding at least three percent of
the total number of voting rights for a period of six months or more may
require the convocation of a general meeting of shareholders for a
particular purpose. Unless such shareholders meeting is convened promptly
or a convocation notice of a meeting which is to be held not later than six
weeks from the day of such demand is dispatched, the requiring shareholder
may, upon obtaining a court approval, convene such shareholders meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Any shareholder or group of shareholders holding at least 300 voting rights
or one percent of the total number of voting rights for a period of six
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 six weeks prior to the date set for such meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | Voting rights                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | So long as the Company maintains the unit share system (see Section B of
this Item 10  Memorandum and Articles of Association
 Common Stock  New
Unit share system) a holder of shares constituting one or more whole units
is entitled to one voting right per unit of shares subject to the
limitations on voting rights set forth in the following paragraph. If the
Company eliminates from its Articles of Incorporation the provisions
relating to the unit of shares, holders of Common Stock will have one voting
right for each share they hold. Except as otherwise provided by law or by
the Articles of Incorporation, a resolution can be adopted at a general
meeting of shareholders by a majority of the number of voting rights of all
the shareholders 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 voting rights of all the shareholders. The
Companys shareholders are not entitled to cumulative voting in the election
of Directors. The Company or a corporate shareholder more than one-quarter
of whose total voting rights 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. Shareholders may also exercise their voting rights by electronic
means when the Board of Directors decides to permit such method of
exercising voting rights.
|
| |  | 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 with a certain exception under which shareholders
resolution is not required, 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 with a certain exception under which shareholders resolution is
not required, share exchange or share transfer for the purpose of
establishing 100 percent parent-subsidiary relationships with a certain
exception under which shareholders resolution is not required, splitting of
the corporation into two or more corporations with a certain exception under
which shareholders resolution is not required, or any offering of new shares
at a specially favorable price (or any offering of stock acquisition
rights to subscribe for or acquire shares of capital stock (stock
acquisition rights) or bonds with stock acquisition rights at a specially
favorable exercise conditions) to any persons other than shareholders, the
quorum shall be a majority of the total voting rights of all the
shareholders and the approval by at least two-thirds of the voting rights of
all the shareholders represented at the meeting is required (the special
shareholders resolutions).                                                                                                                                                                                                                                                                                                          





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| |  | Issue of additional shares and pre-emptive 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 two weeks prior public notice must be
given. Each of the shareholders to whom such rights are given must also be
given notice of the expiry thereof at least two weeks prior to the date on
which such rights expire.
|
| |  | 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.                      
|
| |  | Under the 2002 Amendments, subject to certain requirements, the Company may
issue stock acquisition rights by a resolution of the Board of Directors.
Holders of stock acquisition rights may exercise their rights to acquire a
certain number of shares within the exercise period as prescribed in the
terms of their stock acquisition rights. Upon exercise of stock acquisition
rights, the Company will be obliged to issue the relevant number of new
shares or alternatively to transfer the necessary number of existing shares
held by it.                                                                                                                                                                                                                                                                                                                 
|
| |  | 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 numbers of shares of
common stock held.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | Record date                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | March 31 is the record date for the Companys year-end dividends. So long
as the Company maintains in its Articles of Incorporation a provision for
the unit of shares, the shareholders and beneficial shareholders who are
registered as the holders of one unit of shares 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 two 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     





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| |  | Acquisition by the Company of its Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Company may acquire its own shares through a stock exchange on which
such shares are listed (pursuant to an ordinary resolution of an ordinary
general meeting of shareholders), by way of tender offer (pursuant to an
ordinary resolution of an ordinary general meeting of shareholders), or by
purchase from a specific party other than a subsidiary of the Company
(pursuant to a special resolution of an ordinary general meeting of
shareholders) or from a subsidiary of the Company (pursuant to a resolution
of the Board of Directors). When such acquisition is made by the Company
from a specific party other than a subsidiary of the Company, any other
shareholder may make a demand to a Representative Director, more than five
calendar days prior to the relevant shareholders meeting, that the Company
also purchase the shares held by such shareholder. Any such acquisition of
shares must satisfy certain requirements, including that the total amount of
the purchase price may not exceed the amount of the retained earnings
available for dividend payments after taking into account any reduction, if
any, of the stated capital, capital surplus or legal reserve (if such
reduction of the stated capital, capital surplus or legal reserve has been
authorized pursuant to a resolution of the relevant ordinary general meeting
of shareholders), minus the amount to be paid by way of appropriation of
retained earnings for the relevant fiscal year and the amount to be
transferred to stated capital. However, if it is anticipated that the net
assets on the balance sheet as at the end of the immediately following
fiscal year will be less than the aggregate amount of the stated capital,
capital surplus and other items as described in (i) through (vi) of
Dividendsabove, the Company may not acquire such shares.
|
| |  | Shares acquired by the Company may be held by it for any period or may be
cancelled by resolution of the Board of Directors. The Company may also
transfer to any person the shares held by it, subject to a resolution of the
Board of Directors, and subject also to other requirements similar to those
applicable to the issuance of new shares, as described inIssue of
additional shares and pre-emptive rightsabove. The Company may also
utilize its treasury stock for the purpose of transfer to any person upon
exercise of stock acquisition rights or for the purpose of acquiring another
company by way of merger, share exchange or corporate split through exchange
of treasury stock for shares or assets of the acquired company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | The Company repurchased 59,586,000 shares in the market between January 11
and April 19, 2002. As of April 30, 2002, the Company holds 60,455,097
shares of its own shares. The ordinary general meeting of shareholders held
on June 27, 2002 approved the Company to repurchase its own shares up to
180,000,000 shares during the period between late June 2002 and late June
2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | New Unit share system                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | The 2001 Amendments introduced a new unit share system called
tangen-kabushiki.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Pursuant to these amendments and the Articles of Incorporation of the
Company, 1,000 shares constitute one unit. Although the number of shares
constituting a new unit is included in the Articles of Incorporation, any
amendment to the Articles of Incorporation reducing (but not increasing) 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, which is otherwise
required for amending the Articles of Incorporation. The number of shares
constituting one new unit, however, cannot exceed 1,000 or one two-hundredth
(1/200) of all issued shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                





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| |  | 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Unless the Companys Board of Directors adopts 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 not to issue share certificates for
less than a unit of shares, a share certificate for any number of shares
less than a 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 unit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | A holder of shares constituting less than one unit may require the Company
to purchase such shares at their market value in accordance with the
provisions of the Share Handling Regulations of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | 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 of shares of Common Stock. Although, as discussed
above, under the 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 Common 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 unit. As a result, access to the Japanese markets by
holders of ADRs through the withdrawal mechanism will not be available for
dispositions of shares of Common Stock in lots less than 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 and regulations thereunder requires
any person who has become, beneficially and solely or jointly, a holder of
more than five 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 Director-General of a
competent Local Finance Bureau of the Ministry of Finance within five
business days a report concerning such shareholdings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        





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| |  | A similar report must also be filed in respect of any subsequent change of
one percent or more in any such holding or any change in material matters
set out in reports previously filed, with certain exceptions. For this
purpose, shares issuable to such person upon conversion of convertible
securities or exercise of share subscription warrants or stock acquisition
rights are taken into account in determining both the number of shares held
by such holder and the issuers total issued share capital. Copies of such
report must also be furnished to the issuer of such shares and all Japanese
stock exchanges on which the shares are listed 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 the shares of Common Stock of the Company or exercise
voting rights thereon.                                                                 
|
| |  | There is no provision in the Companys Articles of Incorporation 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 the Company during the two years preceding the
date of this report were entered into in the ordinary course of business.






|D. |  | Exchange Controls                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Japanese Foreign Exchange and Foreign Trade Law, currently in effect
(the Law), does not affect or restrict the rights of a non-resident or
foreign corporation to acquire or hold shares of capital 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 non-resident or foreign corporation, which so
acquires the Common Stock, 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.





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##### Table of Contents



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|E. |  | Taxation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The following is a general summary of the principal U.S. federal income and
Japanese tax consequences of the ownership and disposition of shares of
Common Stock or ADSs by an investor that holds those shares or ADSs, as
capital assets (generally, property held for investment). This summary does
not purport to address all material tax consequences that may be relevant to
holders of shares of Common Stock or ADSs, and does not take into account
the specific circumstances of any particular investors, some of which (such
as tax-exempt entities, banks, insurance companies, broker-dealers,
investors liable for alternative minimum tax, investors that own or are
treated as owning 10% or more of our voting stock, investors that hold
shares of Common Stock or ADSs as part of a straddle, hedge, conversion
transaction or other integrated transaction and investors whose functional
currency is not the U.S. dollar) may be subject to special tax rules. This
summary is based on the tax laws of the United States as in effect on the
date hereof, as well as on the current income tax convention between the
United States and Japan (the Treaty), all of which are subject to change
(possibly with retroactive effect), and to differing interpretations. In
addition, this summary is based in part upon the representations of the
Depositary and the assumption that each obligation in the Deposit Agreement
for ADSs and in any related agreement, will be performed in accordance with
its terms.
|  
|   |  | For purposes of this discussion, a U.S. Holder is any beneficial owner of
shares of Common Stock or ADSs that is:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          



| |  |  | an individual citizen or resident of the United States,                                                                                                                                                                     
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | a corporation or other entity taxable as a corporation organized
under the laws of the United States or any State,                                                                                                          
| |  |  | an estate the income of which is subject to U.S. federal income tax
without regard to its source, or                                                                                                                        
| |  |  | a trust that is subject to the primary supervision of a U.S. court
and the control of one or more U.S. persons, or that has a valid
election in effect under applicable Treasury regulations to be treated
as a U.S. person.



| |  | An Eligible U.S. Holder is a U.S. Holder that:
| |  | ------------------------------------------------



| |  |  | is a resident of the United States for purposes of the Treaty,                                                                                                                                                                                                                                      
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | does not maintain a permanent establishment or fixed base in Japan
to which shares of Common Stock or ADSs are attributable and through
which the U.S. Holder carries on or has carried on business (or, in the
case of an individual, performs or has performed independent personal
services), and
| |  |  | is not otherwise ineligible for benefits under the Treaty with
respect to income and gain derived in connection with the shares of
Common Stock or ADSs.                                                                                                                                            





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##### Table of Contents



- 71 -



| |  | This summary does not address any aspects of U.S. federal tax law other than
income taxation, and does not discuss any aspects of Japanese tax law other
than income taxation, inheritance and gift taxation and securities transfer
taxation. Investors are urged to consult their tax advisor regarding the
U.S. federal, state and local and Japanese and other tax consequences of
owning and disposing of shares of Common Stock or ADSs. In particular,
where relevant, investors are urged to confirm their status as Eligible U.S.
Holders with their tax advisors and to discuss with their tax advisors any
possible consequences of their failure to qualify as Eligible U.S. Holders.
In general, taking into account the earlier assumptions, for purposes of the
Treaty and for U.S. federal income and Japanese tax purposes, owners of ADRs
evidencing ADSs will be treated as the owners of the shares of Common Stock
represented by those ADSs, and exchanges of shares of Common Stock for ADSs,
and exchanges of ADSs for shares of Common Stock, will not be subject to
U.S. federal income or Japanese tax.                                                                                                                                                                                                                                                                        
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Japanese taxation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | The following is a summary of certain Japanese income tax consequences of
the ownership and disposition of shares of Common Stock or ADRs by a
portfolio investor who is a non-resident of Japan or a non-Japanese
corporation having no permanent establishment in Japan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Generally, a non-resident of Japan or a non-Japanese corporation is subject
to Japanese withholding tax on dividends paid by a Japanese corporation.
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 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Under the Treaty, 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. An Eligible U.S. Holder 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 such payment of dividends. A standing proxy
in Japan for a non-resident holder of Common Stock may provide this
application service. With respect to ADRs, the Depositary or its agent will
apply for this reduced rate on behalf of Eligible U.S. Holders by submitting
two Application Forms (one before payment of dividends, the other within
eight months after the Companys fiscal year-end) to the Japanese tax
authorities. To claim this reduced rate, an Eligible U.S. 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. An Eligible U.S. Holder who
does not submit an application in advance will be entitled to claim the
refund of withholding taxes withheld in excess of the rate under the Treaty
from the relevant Japanese tax authority.





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##### Table of Contents



- 72 -



| |  | 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 having no permanent establishment in Japan, are in
general not subject to Japanese income or corporation tax.                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Japanese inheritance or gift tax at progressive rates may be payable by a
non-resident 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 Matsushitas Common Stock or ADSs should consult their
tax advisers regarding the effect of these taxes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | U.S. federal income taxation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | The following is a summary of certain United States federal income tax
consequences of the ownership of shares of Common Stock or ADSs 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 Treaty
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 Treaty 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 or 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 ADSs, 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 ADSs. 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 ADSs 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.                                                                                                               





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- 73 -



| |  | Transfers of retained earnings and sales of shares of Common Stock to the
Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | A transfer of retained earnings or legal reserve to stated capital is
generally treated as a dividend payment for Japanese tax purposes subject to
withholding tax. A sale of shares of Common Stock or ADSs 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.
|
| |  | Passive foreign investment company considerations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | The Company believes that shares of Common Stock and ADSs 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 ADSs), gain realized on the sale or
other disposition of shares of Common Stock or ADSs 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 ADSs 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 the 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
| |  |  | -----------------------------------------------------------------------------------------



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- 74 -



| |  |  | 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        




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, 2002 and 2001:

|                                      |  |                |         |            |  |      |         |            |  |  |         |  |  |  |         | 
|------------------------------------- |  | -------------- | ------- | ---------- |  | ---- | ------- | ---------- |  |  | ------- |  |  |  | ------- | 
|                                      |  | Yen (millions)
|                                      |  |                |        
|                                      |  | 2002           |         | 2001      
|                                      |  |                |         |            |  |     
|                                      |  | Cost           |         | Fair value |  | Cost |         | Fair value
|                                      |  |                |         |            |  |      |         |            |  |  |         | 
|Due within one year                   |  |                | 11,846  |            |  |      | 11,849  |            |  |  | 11,401  |  |  |  | 11,421  | 
|Due after one year through five years |  |                | 105,613 |            |  |      | 103,476 |            |  |  | 173,167 |  |  |  | 172,050 | 
|Equity securities                     |  |                | 288,816 |            |  |      | 411,621 |            |  |  | 369,972 |  |  |  | 533,421 | 
|                                      |  |                |         |            |  |      |         |            |  |  |         |  |  |  |         | 
|                                      |  |                | 406,275 |            |  |      | 526,946 |            |  |  | 554,540 |  |  |  | 716,892 | 
|                                      |  |                |         |            |  |      |         |            |  |  |         |  |  |  |         | 





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- 75 -

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.

The following table provides the contract amounts and fair values of foreign
exchange contracts, primarily hedging U.S. dollar revenues, at March 31, 2002
and 2001. 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) 
|                                             |                            |  |                
|                                             |                            |  | 2002            |         | 2001      
|                                             |                            |  |                 |         |           
|                                             |                            |  | Contract amount |         | Fair value |  | Contract amount |        | Fair value
|                                             |                            |  |                 |         |            |  |                 |        |           
|Forward:                                     |                            |  |                 |         |            |  |                 |        |            |  |        |         |  |  |        |       
|                                             | To sell foreign currencies |  |                 | 374,993 |            |  |                 | (3,746 | )          |  |        | 350,087 |  |  |        | (4,997 | )
|                                             | To buy foreign currencies  |  |                 | 173,546 |            |  |                 | 2,470  |            |  |        | 109,523 |  |  |        | 2,283  |  
|Options purchased to sell foreign currencies |                            |  | 37,940          |         |            |  | (219            | )      |            |  | 16,430 |         |  |  | (334   | )     
|Options purchased to buy foreign currencies  |                            |  |                |         |            |  |                |        |            |  | 34,412 |         |  |  | 1,327  |       
|Options written to buy foreign currencies    |                            |  |                |         |            |  |                |        |            |  | 24,956 |         |  |  | (1,483 | )     
|Options written to sell foreign currencies   |                            |  |                |         |            |  |                |        |            |  | 40,080 |         |  |  | 246    |       

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.





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##### Table of Contents



- 76 -

The following tables provide information about the Companys financial
instruments that are sensitive to changes in interest rates at March 31, 2002
and 2001. 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, 2002) |         |      |        |        
|                                           |                                                                   |          |  | Average  |   |       |        |                                                          |         |     
|                                           |                                                                   |          |  | interest |   |       |        |                                                          |         |      |        |         |         |      |       |         |         |       |  |            |         |  |  |        |        |  |  |         |         | There- |  |         |         | 
|                                           |                                                                   |          |  | rate     |   | Total |        | 2003                                                     |         | 2004 |        | 2005    |         | 2006 |       | 2007    |         | after |  | Fair value
|                                           |                                                                   |          |  |          |   |       |        |                                                          |         |      |        |         |         |      |       |         |         |       |  |           
|Long-term debt,
including current
portion: |                                                                   |          |  |          |   |       |        |                                                          |         |      |        |         |         |      |       |         |         |       |  |            |         |  |  |        |        |  |  |         |         |        |  |         |         |  |        |        
|                                           | Japanese yen
convertible bonds                                    |          |  | 1.2      | % |       |        | 143,226                                                  |         |      |        | 16,999  |         |      |       | 97,744  |         |       |  | 11,483     |         |  |  | 17,000 |        |  |  |         |         |        |  |         |         |  |        | 161,532 |        
|                                           | Straight bonds                                                    |          |  | 1.0      | % |       |        | 300,000                                                  |         |      |        |         |         |      |       |         |         |       |  | 100,000    |         |  |  |        |        |  |  | 100,000 |         |        |  | 100,000 |         |  |        | 297,503 |        
|                                           | Straight bonds issued
by a subsidiary                             |          |  | 1.8      | % |       |        | 45,000                                                   |         |      |        |         |         |      |       | 5,000   |         |       |  |            |         |  |  | 10,000 |        |  |  | 20,000  |         |        |  | 10,000  |         |  |        | 45,954  |        
|                                           | U.S. dollar
unsecured bonds                                       |          |  | 5.8      | % |       |        | 133,340                                                  |         |      |        | 133,340 |         |      |       |         |         |       |  |            |         |  |  |        |        |  |  |         |         |        |  |         |         |  |        | 135,219 |        
|                                           | Unsecured yen loans
from banks and
insurance companies
and others |          |  | 0.8      | % |       |        | 339,772                                                  |         |      |        | 121,571 |         |      |       | 98,081  |         |       |  | 66,846     |         |  |  | 40,784 |        |  |  | 12,474  |         |        |  | 16      |         |  |        | 337,176 |        
|                                          
|                                           |                                                                   | Subtotal |  |          |   |       |        |                                                          | 961,338 |      |        |         | 271,910 |      |       |         | 200,825 |       |  |            | 178,329 |  |  |        | 67,784 |  |  |         | 132,474 |        |  |         | 110,016 |  |        |         | 977,384 | 
|Foreign exchange
contracts                 |                                                                   |          |  |          |   |       | (8,103 | )                                                        |         |      | (8,103 | )       |         |      |       |         |         |       |  |            |         |  |  |        |        |  |  |         |         |        |  |         |         |  | (8,103 | )      
|                                          
|                                           |                                                                   | Total    |  |          |   |       |        |                                                          | 953,235 |      |        |         | 263,807 |      |       |         | 200,825 |       |  |            | 178,329 |  |  |        | 67,784 |  |  |         | 132,474 |        |  |         | 110,016 |  |        |         | 969,281 | 
|                                          
|                                          
|                                           |                                                                   |          |  |          |   |       |        | 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 | 
|                                          




Item 12. Description of Securities Other than Equity Securities

Not applicable





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- 77 -




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 ]





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- 78 -




PART III




Item 17.      Financial Statements

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

|                                                            |  |  |  |                                                                                                                                                                               |  |      |     | 
|----------------------------------------------------------- |  |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                            |  |  |  |                                                                                                                                                                               |  | Page
|                                                            |  |  |  |                                                                                                                                                                               |  |     
|                                                            |  |  |  | Independent Auditors Report                                                                                                                                                  |  |      | 79  | 
|                                                            |  | 
|                                                            |  |  |  | Consolidated Balance Sheets as of March 31, 2002 and 2001                                                                                                                     |  |      | 80  | 
|                                                            |  | 
|                                                            |  |  |  | Consolidated Statements of Operations for the years ended
March 31, 2002, 2001 and 2000                                                                                       |  |      | 82  | 
|                                                            |  | 
|                                                            |  |  |  | Consolidated Statements of Stockholders Equity for the years ended
March 31, 2002, 2001 and 2000                                                                             |  |      | 83  | 
|                                                            |  | 
|                                                            |  |  |  | Consolidated Statements of Cash Flows for the years ended
March 31, 2002, 2001 and 2000                                                                                       |  |      | 85  | 
|                                                            |  | 
|                                                            |  |  |  | Notes to Consolidated Financial Statements                                                                                                                                    |  |      | 87  | 
|                                                            |  | 
|Schedule for the years ended March 31, 2002, 2001 and 2000: |  |  |  |                                                                                                                                                                              
|                                                            |  | 
|                                                            |  |  |  | Schedule II                         Valuation
and Qualifying Accounts and Reserves for               
       
        
         the
years ended March 31, 2002, 2001 and 2000 |  |      | 123 | 

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.



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##### Table of Contents



- 79 -





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.

In our report dated April 27, 2001, we expressed an opinion that the 2001 and
2000 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 omission of segment information. Foreign issuers are presently
exempted from such disclosure requirement. As described in Note 18 of the
notes to the consolidated financial statements, Matsushita Electric Industrial
Co., Ltd. and subsidiaries have included the required segment information and
restated their 2001 and 2000 consolidated financial statements to conform with
accounting principles generally accepted in the United States of America.
Accordingly, our present opinion on the 2001 and 2000 consolidated financial
statements, as presented herein, is different from that expressed in our
previous report.

In our opinion, 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, 2002 and 2001, and the
results of their operations and their cash flows for each of the years in the
three-year period ended March 31, 2002, 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 26, 2002, except as to Note 10 and Note 19,
which are as of June 27, 2002



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- 80 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Consolidated Balance Sheets

March 31, 2002 and 2001

|                                               |                                         |                                    |                                   |           |                |           |           |           |           |           | 
|---------------------------------------------- | --------------------------------------- | ---------------------------------- | --------------------------------- | --------- | -------------- | --------- | --------- | --------- | --------- | --------- | 
|                                               |                                         |                                    |                                   |           | Yen (millions)
|                                               |                                         |                                    |                                   |           |               
|Assets                                         |                                         | 2002                               |                                   | 2001     
|                                               |                                         |                                    |                                   |          
|Current assets:                                |                                         |                                    |                                   |           |                |           |           |          
|                                               | Cash and cash equivalents (Note 7)      |                                    |                                   | 899,769   |                |           |           | 848,878   |          
|                                               | Time deposits (Note 7)                  |                                    |                                   | 521,333   |                |           |           | 527,145   |          
|                                               | Short-term investments (Notes 4 and 16) |                                    |                                   | 11,849    |                |           |           | 11,421    |          
|                                               | Trade receivables (Note 7):             |                                    |                                   |           |                |           |           |           |          
|                                               |                                         | Related companies (Note 3)         |                                   |           | 14,276         |           |           |           | 21,945    |          
|                                               |                                         | Notes                              |                                   |           | 70,522         |           |           |           | 106,334   |          
|                                               |                                         | Accounts                           |                                   |           | 1,042,437      |           |           |           | 1,310,329 |          
|                                               |                                         | Allowance for doubtful receivables |                                   |           | (40,298        | )         |           |           | (42,530   | )        
|                                               |                                         |                                    |                                   |           |                |           |           |           |          
|                                               |                                         |                                    | Net trade receivables             |           |                | 1,086,937 |           |           |           | 1,396,078 | 
|                                               |                                         |                                    |                                   |           |                |           |           |          
|                                               |                                         |                                    |                                   |           |                |           |           |          
|                                               | Inventories (Notes 2 and 7)             |                                    |                                   | 834,608   |                |           |           | 1,047,615 |          
|                                               | Other current assets (Note 9)           |                                    |                                   | 487,535   |                |           |           | 486,812   |          
|                                               |                                         |                                    |                                   |           |                |           |           |           |          
|                                               |                                         |                                    |                                   |           |                |           |           |          
|                                               |                                         |                                    | Total current assets              |           |                | 3,842,031 |           |           |           | 4,317,949 | 
|                                               |                                         |                                    |                                   |           |                |           |           |           |          
|                                               |                                         |                                    |                                   |           |                |           |           |          
|Noncurrent receivables (Note 5)                |                                         |                                    | 316,230                           |           |                |           | 246,419   |          
|                                               |                                         |                                    |                                   |           |                |           |           |          
|Investments and advances (Notes 4 and 16):     |                                         |                                    |                                   |           |                |           |           |          
|                                               | Associated companies (Note 3)           |                                    |                                   | 348,463   |                |           |           | 336,221   |          
|                                               | Other investments and advances          |                                    |                                   | 982,938   |                |           |           | 1,175,116 |          
|                                               |                                         |                                    |                                   |           |                |           |           |           |          
|                                               |                                         |                                    |                                   |           |                |           |           |          
|                                               |                                         |                                    | Total investments and advances    |           |                | 1,331,401 |           |           |           | 1,511,337 | 
|                                               |                                         |                                    |                                   |           |                |           |           |           |          
|                                               |                                         |                                    |                                   |           |                |           |           |          
|Property, plant and equipment (Notes 5 and 6): |                                         |                                    |                                   |           |                |           |           |          
|                                               | Land                                    |                                    |                                   | 221,823   |                |           |           | 223,910   |          
|                                               | Buildings                               |                                    |                                   | 1,314,122 |                |           |           | 1,265,932 |          
|                                               | Machinery and equipment                 |                                    |                                   | 3,148,408 |                |           |           | 3,188,884 |          
|                                               | Construction in progress                |                                    |                                   | 66,578    |                |           |           | 152,126   |          
|                                               |                                         |                                    |                                   |           |                |           |           |           |          
|                                               |                                         |                                    | 4,750,931                         |           |                |           | 4,830,852 |          
|                                               | Less accumulated depreciation           |                                    |                                   | 3,310,660 |                |           |           | 3,252,791 |          
|                                               |                                         |                                    |                                   |           |                |           |           |           |          
|                                               |                                         |                                    |                                   |           |                |           |           |          
|                                               |                                         |                                    | Net property, plant and equipment |           |                | 1,440,271 |           |           |           | 1,578,061 | 
|                                               |                                         |                                    |                                   |           |                |           |           |           |          
|                                               |                                         |                                    |                                   |           |                |           |           |          
|Other assets (Note 9)                          |                                         |                                    | 697,226                           |           |                |           | 502,522   |          
|                                               |                                         |                                    |                                   |           |                |           |           |           |          
|                                               |                                         |                                    |                                   |           |                |           |           |          
|                                               |                                         |                                    | 7,627,159                         |           |                |           | 8,156,288 |          
|                                               |                                         |                                    |                                   |           |                |           |           |          

See accompanying Notes to Consolidated Financial Statements.



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w

- 81 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Consolidated Balance Sheets

March 31, 2002 and 2001

|                                                 |                                                                                        |                                                                      |                                            |                                                     |          |                |           |           |          |         |           |  
|------------------------------------------------ | -------------------------------------------------------------------------------------- | -------------------------------------------------------------------- | ------------------------------------------ | --------------------------------------------------- | -------- | -------------- | --------- | --------- | -------- | ------- | --------- | -
|                                                 |                                                                                        |                                                                      |                                            |                                                     |          | Yen (millions)
|                                                 |                                                                                        |                                                                      |                                            |                                                     |          |               
|Liabilities and
Stockholders Equity             |                                                                                        | 2002                                                                 |                                            | 2001                                               
|                                                 |                                                                                        |                                                                      |                                            |                                                    
|Current liabilities:                             |                                                                                        |                                                                      |                                            |                                                     |          |                |           |          
|                                                 | Short-term borrowings, including current portion of long-term debt
(Notes 5, 7 and 16) |                                                                      |                                            | 489,725                                             |          |                |           | 470,965   |         
|                                                 | Commercial paper                                                                       |                                                                      |                                            | 18,339                                              |          |                |           | 77,494    |         
|                                                 | Trade payables:                                                                        |                                                                      |                                            |                                                     |          |                |           |           |         
|                                                 |                                                                                        |                                                                      | Related companies (Note 3)                 |                                                     |          | 18,064         |           |           |          | 18,860  |          
|                                                 |                                                                                        |                                                                      | Notes                                      |                                                     |          | 26,446         |           |           |          | 73,430  |          
|                                                 |                                                                                        |                                                                      | Accounts                                   |                                                     |          | 501,935        |           |           |          | 585,433 |          
|                                                 |                                                                                        |                                                                      |                                            |                                                     |          |                |           |           |         
|                                                 |                                                                                        |                                                                      |                                            | Total trade payables                                |          |                | 546,445   |           |          |         | 677,723   |  
|                                                 |                                                                                        |                                                                      |                                            |                                                     |          |                |           |          
|                                                 |                                                                                        |                                                                      |                                            |                                                     |          |                |           |          
|                                                 | Accrued income taxes (Note 9)                                                          |                                                                      |                                            | 25,184                                              |          |                |           | 55,343    |         
|                                                 | Accrued payroll                                                                        |                                                                      |                                            | 147,897                                             |          |                |           | 158,697   |         
|                                                 | Other accrued expenses                                                                 |                                                                      |                                            | 647,237                                             |          |                |           | 663,541   |         
|                                                 | Deposits and advances from customers                                                   |                                                                      |                                            | 109,263                                             |          |                |           | 114,179   |         
|                                                 | Employees deposits                                                                    |                                                                      |                                            | 136,387                                             |          |                |           | 153,147   |         
|                                                 | Other current liabilities                                                              |                                                                      |                                            | 365,599                                             |          |                |           | 321,698   |         
|                                                 |                                                                                        |                                                                      |                                            |                                                     |          |                |           |           |         
|                                                 |                                                                                        |                                                                      |                                            | Total current liabilities                           |          |                | 2,486,076 |           |          |         | 2,692,787 |  
|                                                 |                                                                                        |                                                                      |                                            |                                                     |          |                |           |           |         
|                                                 |                                                                                        |                                                                      |                                            |                                                     |          |                |           |          
|Noncurrent liabilities:                          |                                                                                        |                                                                      |                                            |                                                     |          |                |           |          
|                                                 | Long-term debt (Notes 5, 7 and 16)                                                     |                                                                      |                                            | 691,892                                             |          |                |           | 541,541   |         
|                                                 | Retirement and severance benefits (Note 8)                                             |                                                                      |                                            | 718,501                                             |          |                |           | 558,396   |         
|                                                 | Other liabilities (Note 9)                                                             |                                                                      |                                            | 21,375                                              |          |                |           | 23,075    |         
|                                                 |                                                                                        |                                                                      |                                            |                                                     |          |                |           |           |         
|                                                 |                                                                                        |                                                                      |                                            | Total noncurrent liabilities                        |          |                | 1,431,768 |           |          |         | 1,123,012 |  
|                                                 |                                                                                        |                                                                      |                                            |                                                     |          |                |           |           |         
|Minority interests                               |                                                                                        |                                                                      | 466,231                                    |                                                     |          |                | 567,809   |          
|                                                 |                                                                                        |                                                                      |                                            |                                                     |          |                |           |          
|Stockholders equity:                            |                                                                                        |                                                                      |                                            |                                                     |          |                |           |          
|                                                 | Common stock (Notes 7 and 10):                                                         |                                                                      |                                            |                                                     |          |                |           |           |         
|                                                 |                                                                                        | Authorized - 4,950,000,000 shares                                    |                                            |                                                     |          |                |           |           |          |        
|                                                 |                                                                                        | Issued         - 2,138,514,603 shares (2,079,572,737 shares in 2001) |                                            |                                                     | 258,737  |                |           |           | 210,994  |        
|                                                 | Capital surplus (Notes 7 and 10)                                                       |                                                                      |                                            | 682,848                                             |          |                |           | 621,267   |         
|                                                 | Legal reserve (Note 10)                                                                |                                                                      |                                            | 82,354                                              |          |                |           | 88,251    |         
|                                                 | Retained earnings (Note 10)                                                            |                                                                      |                                            | 2,461,963                                           |          |                |           | 2,924,071 |         
|                                                 | Accumulated other comprehensive income (loss) (Notes 4, 8, 11 and
15):                 |                                                                      |                                            |                                                     |          |                |           |           |         
|                                                 |                                                                                        | Cumulative translation adjustments                                   |                                            |                                                     | (51,287  | )              |           |           | (150,027 | )      
|                                                 |                                                                                        | Unrealized holding gains of available-for-sale securities            |                                            |                                                     | 50,888   |                |           |           | 78,863   |        
|                                                 |                                                                                        | Unrealized gains of derivative instruments                           |                                            |                                                     | 128      |                |           |           |         |        
|                                                 |                                                                                        | Minimum pension liability adjustments                                |                                            |                                                     | (150,362 | )              |           |           |         |        
|                                                 |                                                                                        |                                                                      |                                            |                                                     |          |                |           |          
|                                                 |                                                                                        |                                                                      |                                            | Total accumulated other comprehensive income (loss) |          |                | (150,633  | )         |          |         | (71,164   | )
|                                                 |                                                                                        |                                                                      |                                            |                                                     |          |                |           |          
|                                                 | Treasury stock, at cost (Note 10):                                                     |                                                                      |                                            |                                                     |          |                |           |           |         
|                                                 |                                                                                        |                                                                      | 54,793,408 shares (295,000 shares in 2001) |                                                     |          | (92,185        | )         |           |          | (739    | )        
|                                                 |                                                                                        |                                                                      |                                            |                                                     |          |                |           |           |         
|                                                 |                                                                                        |                                                                      |                                            | Total stockholders equity                          |          |                | 3,243,084 |           |          |         | 3,772,680 |  
|                                                 |                                                                                        |                                                                      |                                            |                                                     |          |                |           |          
|Commitments and contingent liabilities (Note 17) |                                                                                        |                                                                      |                                            |                                                     |          |                |           |          
|                                                 |                                                                                        |                                                                      |                                            |                                                     |          |                |           |          
|                                                 |                                                                                        |                                                                      | 7,627,159                                  |                                                     |          |                | 8,156,288 |          
|                                                 |                                                                                        |                                                                      |                                            |                                                     |          |                |           |          

See accompanying Notes to Consolidated Financial Statements.



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- 82 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Consolidated Statements of Operations

Years ended March 31, 2002, 2001 and 2000

|                                                       |                                                        |                            |                                                                                        |           |           |                |        |           |           |           |         |           |           |           | 
|------------------------------------------------------ | ------------------------------------------------------ | -------------------------- | -------------------------------------------------------------------------------------- | --------- | --------- | -------------- | ------ | --------- | --------- | --------- | ------- | --------- | --------- | --------- | 
|                                                       |                                                        |                            |                                                                                        |           |           | Yen (millions) |       
|                                                       |                                                        |                            |                                                                                        |           |           |                |       
|                                                       |                                                        |                            |                                                                                        |           | 2002      |                | 2001   |           | 2000     
|                                                       |                                                        |                            |                                                                                        |           |           |                |        |           |           |           |         |           |           |           | 
|Revenues:                                              |                                                        |                            |                                                                                        |           |           |                |        |           |           |           |         |          
|                                                       | Net sales:                                             |                            |                                                                                        |           |           |                |        |           |           |           |         |           |          
|                                                       |                                                        | Related companies (Note 3) |                                                                                        |           | 115,603   |                |        |           | 171,756   |           |         |           | 168,774   |          
|                                                       |                                                        | Other                      |                                                                                        |           | 6,761,085 |                |        |           | 7,509,805 |           |         |           | 7,130,613 |          
|                                                       |                                                        |                            |                                                                                        |           |           |                |        |           |           |           |         |          
|                                                       |                                                        |                            | Total net sales                                                                        |           |           | 6,876,688      |        |           |           | 7,681,561 |         |           |           | 7,299,387 | 
|                                                       |                                                        |                            |                                                                                        |           |           |                |        |           |           |           |         |          
|                                                       | Interest income                                        |                            |                                                                                        | 33,556    |           |                |        | 43,712    |           |           |         | 42,949    |          
|                                                       | Dividends received                                     |                            |                                                                                        | 9,162     |           |                |        | 12,237    |           |           |         | 14,674    |          
|                                                       | Other income (Notes 4, 5, 13 and 15)                   |                            |                                                                                        | 53,774    |           |                |        | 54,082    |           |           |         | 135,746   |          
|                                                       |                                                        |                            |                                                                                        |           |           |                |        |           |           |           |         |          
|                                                       |                                                        |                            | Total revenues                                                                         |           |           | 6,973,180      |        |           |           | 7,791,592 |         |           |           | 7,492,756 | 
|                                                       |                                                        |                            |                                                                                        |           |           |                |        |           |           |           |         |          
|Costs and expenses:                                    |                                                        |                            |                                                                                        |           |           |                |        |           |           |           |         |          
|                                                       | Cost of sales (Notes 3 and 13)                         |                            |                                                                                        | 5,134,077 |           |                |        | 5,481,314 |           |           |         | 5,190,791 |          
|                                                       | Selling, general and administrative expenses (Note 13) |                            |                                                                                        | 1,954,418 |           |                |        | 2,011,843 |           |           |         | 1,949,542 |          
|                                                       | Interest expense                                       |                            |                                                                                        | 41,213    |           |                |        | 43,538    |           |           |         | 46,237    |          
|                                                       | Other deductions (Notes 4, 6, 13 and 15)               |                            |                                                                                        | 391,481   |           |                |        | 154,162   |           |           |         | 87,581    |          
|                                                       |                                                        |                            |                                                                                        |           |           |                |        |           |           |           |         |          
|                                                       |                                                        |                            | Total costs and expenses                                                               |           |           | 7,521,189      |        |           |           | 7,690,857 |         |           |           | 7,274,151 | 
|                                                       |                                                        |                            |                                                                                        |           |           |                |        |           |           |           |         |          
|                                                       |                                                        |                            |                                                                                        |           |           |                |        |           |           |           |         |          
|                                                       |                                                        |                            | Income (loss) before income taxes                                                      |           |           | (548,009       | )      |           |           | 100,735   |         |           |           | 218,605   | 
|                                                       |                                                        |                            |                                                                                        |           |           |                |        |           |           |           |         |          
|Provision for income taxes (Note 9):                   |                                                        |                            |                                                                                        |           |           |                |        |           |           |           |         |          
|                                                       | Current                                                |                            |                                                                                        | 30,035    |           |                |        | 117,855   |           |           |         | 178,445   |          
|                                                       | Deferred                                               |                            |                                                                                        | (87,246   | )         |                |        | (67,994   | )         |           |         | (41,430   | )        
|                                                       |                                                        |                            |                                                                                        |           |           |                |        |           |           |           |         |          
|                                                       |                                                        |                            | (57,211                                                                                | )         |           |                | 49,861 |           |           |           | 137,015 |          
|                                                       |                                                        |                            |                                                                                        |           |           |                |        |           |           |           |         |          
|                                                       |                                                        |                            | Income (loss) before minority
interests and equity in earnings of
associated companies |           |           | (490,798       | )      |           |           | 50,874    |         |           |           | 81,590    | 
|                                                       |                                                        |                            |                                                                                        |           |           |                |        |           |           |           |         |          
|Minority interests                                     |                                                        |                            | (59,732                                                                                | )         |           |                | 22,125 |           |           |           | (941    | )        
|                                                       |                                                        |                            |                                                                                        |           |           |                |        |           |           |           |         |          
|Equity in earnings of associated companies (Note 3)    |                                                        |                            | 59                                                                                     |           |           |                | 12,751 |           |           |           | 17,178  |          
|                                                       |                                                        |                            |                                                                                        |           |           |                |        |           |           |           |         |          
|                                                       |                                                        |                            |                                                                                        |           |           |                |        |           |           |           |         |          
|                                                       |                                                        |                            | Net income (loss)                                                                      |           |           | (431,007       | )      |           |           | 41,500    |         |           |           | 99,709    | 
|                                                       |                                                        |                            |                                                                                        |           |           |                |        |           |           |           |         |          
|                                                       |                                                        |                            |                                                                                        |           |           |                |        |           |           |           |         |          
|                                                       |                                                        |                            |                                                                                        |           |           | Yen            |       
|                                                       |                                                        |                            |                                                                                        |           |           |                |       
|Net income (loss) per share of common stock (Note 12): |                                                        |                            |                                                                                        |           |           |                |        |           |           |           |         |          
|                                                       | Basic                                                  |                            |                                                                                        | (207.65   | )         |                |        | 19.96     |           |           |         | 48.35     |          
|                                                       | Diluted                                                |                            |                                                                                        | (207.65   | )         |                |        | 19.56     |           |           |         | 46.36     |          

See accompanying Notes to Consolidated Financial Statements.



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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Consolidated Statements of Stockholders Equity

Years ended March 31, 2002, 2001 and 2000

|                                   |                                                                                 |  |      |                |      |  |      |           |   |  |  |           |  
|---------------------------------- | ------------------------------------------------------------------------------- |  | ---- | -------------- | ---- |  | ---- | --------- | - |  |  | --------- | -
|                                   |                                                                                 |  |      | Yen (millions) |     
|                                   |                                                                                 |  |      |                |     
|                                   |                                                                                 |  | 2002 |                | 2001 |  | 2000
|                                   |                                                                                 |  |      |                |      |  |     
|Common stock (Notes 10 and 13):    |                                                                                 |  |      |                |      |  |      |           |   |  |  |          
|                                   | Balance at beginning of year                                                    |  |      | 210,994        |      |  |      | 209,708   |   |  |  | 209,444   |  
|                                   | Conversion of bonds                                                             |  |      | 47,743         |      |  |      | 470       |   |  |  | 264       |  
|                                   | Stock issued under exchange offering                                            |  |      |               |      |  |      | 816       |   |  |  |          |  
|                                   |                                                                                 |  |      |                |      |  |      |           |   |  |  |          
|                                   |                                                                                 |  |      |                |      |  |      |           |   |  |  |          
|                                   | Balance at end of year                                                          |  |      | 258,737        |      |  |      | 210,994   |   |  |  | 209,708   |  
|                                   |                                                                                 |  |      |                |      |  |      |           |   |  |  |          
|                                   |                                                                                 |  |      |                |      |  |      |           |   |  |  |          
|Capital surplus (Notes 10 and 13): |                                                                                 |  |      |                |      |  |      |           |   |  |  |          
|                                   | Balance at beginning of year                                                    |  |      | 621,267        |      |  |      | 570,964   |   |  |  | 567,696   |  
|                                   | Conversion of bonds                                                             |  |      | 47,743         |      |  |      | 470       |   |  |  | 264       |  
|                                   | Stock issued under exchange offering                                            |  |      |               |      |  |      | 49,291    |   |  |  |          |  
|                                   | Transfer from legal reserve and retained earnings due to
merger of subsidiaries |  |      | 11,008         |      |  |      | 1,511     |   |  |  |          |  
|                                   | Capital transactions by consolidated and associated
companies                   |  |      | 2,830          |      |  |      | (969      | ) |  |  | 3,004     |  
|                                   |                                                                                 |  |      |                |      |  |      |           |   |  |  |          
|                                   |                                                                                 |  |      |                |      |  |      |           |   |  |  |          
|                                   | Balance at end of year                                                          |  |      | 682,848        |      |  |      | 621,267   |   |  |  | 570,964   |  
|                                   |                                                                                 |  |      |                |      |  |      |           |   |  |  |          
|                                   |                                                                                 |  |      |                |      |  |      |           |   |  |  |          
|Legal reserve (Note 10):           |                                                                                 |  |      |                |      |  |      |           |   |  |  |          
|                                   | Balance at beginning of year                                                    |  |      | 88,251         |      |  |      | 86,553    |   |  |  | 86,112    |  
|                                   | Transfer from retained earnings                                                 |  |      | 771            |      |  |      | 1,698     |   |  |  | 441       |  
|                                   | Transfer to capital surplus due to merger of subsidiaries                       |  |      | (6,668         | )    |  |      |          |   |  |  |          |  
|                                   |                                                                                 |  |      |                |      |  |      |           |   |  |  |          
|                                   |                                                                                 |  |      |                |      |  |      |           |   |  |  |          
|                                   | Balance at end of year                                                          |  |      | 82,354         |      |  |      | 88,251    |   |  |  | 86,553    |  
|                                   |                                                                                 |  |      |                |      |  |      |           |   |  |  |          
|                                   |                                                                                 |  |      |                |      |  |      |           |   |  |  |          
|Retained earnings (Note 10):       |                                                                                 |  |      |                |      |  |      |           |   |  |  |          
|                                   | Balance at beginning of year                                                    |  |      | 2,924,071      |      |  |      | 2,911,665 |   |  |  | 2,841,268 |  
|                                   | Net income (loss)                                                               |  |      | (431,007       | )    |  |      | 41,500    |   |  |  | 99,709    |  
|                                   | Cash dividends                                                                  |  |      | (25,990        | )    |  |      | (25,885   | ) |  |  | (28,871   | )
|                                   | Transfer to legal reserve                                                       |  |      | (771           | )    |  |      | (1,698    | ) |  |  | (441      | )
|                                   | Transfer to capital surplus due to merger of subsidiaries                       |  |      | (4,340         | )    |  |      | (1,511    | ) |  |  |          |  
|                                   |                                                                                 |  |      |                |      |  |      |           |   |  |  |           |  
|                                   |                                                                                 |  |      |                |      |  |      |           |   |  |  |          
|                                   | Balance at end of year                                                          |  |      | 2,461,963      |      |  |      | 2,924,071 |   |  |  | 2,911,665 |  
|                                   |                                                                                 |  |      |                |      |  |      |           |   |  |  |          

(Continued)



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- 84 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Consolidated Statements of Stockholders Equity

Years ended March 31, 2002, 2001 and 2000

|                                                         |                                                |                                                           |  |          |                |      |  |         |          |   |  |         |          |  
|-------------------------------------------------------- | ---------------------------------------------- | --------------------------------------------------------- |  | -------- | -------------- | ---- |  | ------- | -------- | - |  | ------- | -------- | -
|                                                         |                                                |                                                           |  |          | Yen (millions) |     
|                                                         |                                                |                                                           |  |          |                |     
|                                                         |                                                |                                                           |  | 2002     |                | 2001 |  | 2000   
|                                                         |                                                |                                                           |  |          |                |      |  |        
|Accumulated other comprehensive income (loss) (Note 11): |                                                |                                                           |  |          |                |      |  |         |          |   |  |        
|                                                         | Balance at beginning of year                   |                                                           |  | (71,164  | )              |      |  | (94,021 | )        |   |  | (62,117 | )       
|                                                         | Other comprehensive income (loss), net of tax  |                                                           |  | (79,469  | )              |      |  | 22,857  |          |   |  | (31,904 | )       
|                                                         |                                                |                                                           |  |          |                |      |  |         |          |   |  |        
|                                                         |                                                |                                                           |  |          |                |      |  |         |          |   |  |        
|                                                         | Balance at end of year                         |                                                           |  | (150,633 | )              |      |  | (71,164 | )        |   |  | (94,021 | )       
|                                                         |                                                |                                                           |  |          |                |      |  |         |          |   |  |        
|                                                         |                                                |                                                           |  |          |                |      |  |         |          |   |  |        
|Treasury stock (Note 10):                                |                                                |                                                           |  |          |                |      |  |         |          |   |  |        
|                                                         | Balance at beginning of year                   |                                                           |  | (739     | )              |      |  | (540    | )        |   |  | (252    | )       
|                                                         | Repurchase of common stock                     |                                                           |  | (91,969  | )              |      |  | (307    | )        |   |  | (288    | )       
|                                                         | Exercise of stock options                      |                                                           |  |         |                |      |  | 83      |          |   |  |        |         
|                                                         | Sale of treasury stock                         |                                                           |  | 523      |                |      |  | 25      |          |   |  |        |         
|                                                         |                                                |                                                           |  |          |                |      |  |         |          |   |  |         |         
|                                                         |                                                |                                                           |  |          |                |      |  |         |          |   |  |        
|                                                         | Balance at end of year                         |                                                           |  | (92,185  | )              |      |  | (739    | )        |   |  | (540    | )       
|                                                         |                                                |                                                           |  |          |                |      |  |         |          |   |  |        
|                                                         |                                                |                                                           |  |          |                |      |  |         |          |   |  |        
|Disclosure of comprehensive income (loss) (Note 11):     |                                                |                                                           |  |          |                |      |  |         |          |   |  |        
|                                                         | Net income (loss)                              |                                                           |  | (431,007 | )              |      |  | 41,500  |          |   |  | 99,709  |         
|                                                         | Other comprehensive income (loss), net of tax: |                                                           |  |          |                |      |  |         |          |   |  |         |         
|                                                         |                                                | Translation adjustments                                   |  |          | 98,740         |      |  |         | 144,684  |   |  |         | (139,946 | )
|                                                         |                                                | Unrealized holding gains of
available-for-sale securities |  |          | (27,975        | )    |  |         | (121,827 | ) |  |         | 108,042  |  
|                                                         |                                                | Unrealized gains of derivative instruments                |  |          | 128            |      |  |         |         |   |  |         |         |  
|                                                         |                                                | Minimum pension liability adjustments                     |  |          | (150,362       | )    |  |         |         |   |  |         |         |  
|                                                         |                                                |                                                           |  |          |                |      |  |         |          |   |  |         |         
|                                                         |                                                |                                                           |  |          |                |      |  |         |          |   |  |        
|                                                         | Total comprehensive income (loss)              |                                                           |  | (510,476 | )              |      |  | 64,357  |          |   |  | 67,805  |         
|                                                         |                                                |                                                           |  |          |                |      |  |         |          |   |  |        

See accompanying Notes to Consolidated Financial Statements.



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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years ended March 31, 2002, 2001 and 2000

|                                                |                                                                                          |  |                                                                       |          |                |          |      |          |      |          |   |          |   |          |  
|----------------------------------------------- | ---------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------- | -------- | -------------- | -------- | ---- | -------- | ---- | -------- | - | -------- | - | -------- | -
|                                                |                                                                                          |  |                                                                       |          | Yen (millions)
|                                                |                                                                                          |  |                                                                       |          |               
|                                                |                                                                                          |  |                                                                       |          | 2002           |          | 2001 |          | 2000
|                                                |                                                                                          |  |                                                                       |          |                |          |      |          |     
|Cash flows from operating activities (Note 13): |                                                                                          |  |                                                                       |          |                |          |      |          |      |          |   |         
|                                                | Net income (loss)                                                                        |  |                                                                       | (431,007 | )              |          |      | 41,500   |      |          |   | 99,709   |  
|                                                | Adjustments to reconcile net income (loss) to net cash
provided by operating activities: |  |                                                                       |          |                |          |      |          |      |          |   |          |  
|                                                |                                                                                          |  | Depreciation and amortization                                         |          |                | 352,890  |      |          |      | 374,102  |   |          |   | 364,966  |  
|                                                |                                                                                          |  | Net gain on sale of investments                                       |          |                | (6,160   | )    |          |      | (13,706  | ) |          |   | (98,278  | )
|                                                |                                                                                          |  | Provision for doubtful receivables                                    |          |                | 4,170    |      |          |      | 16,449   |   |          |   | 11,980   |  
|                                                |                                                                                          |  | Deferred income taxes                                                 |          |                | (87,246  | )    |          |      | (67,994  | ) |          |   | (41,430  | )
|                                                |                                                                                          |  | Write-down of investment securities                                   |          |                | 92,806   |      |          |      | 5,330    |   |          |   | 15,325   |  
|                                                |                                                                                          |  | Impairment loss on long-lived assets (Note 6)                         |          |                | 24,420   |      |          |      |         |   |          |   | 19,565   |  
|                                                |                                                                                          |  | Minority interests                                                    |          |                | (59,732  | )    |          |      | 22,125   |   |          |   | (941     | )
|                                                |                                                                                          |  | (Increase) decrease in trade receivables                              |          |                | 199,266  |      |          |      | (69,146  | ) |          |   | (28,889  | )
|                                                |                                                                                          |  | (Increase) decrease in inventories                                    |          |                | 248,601  |      |          |      | (56,335  | ) |          |   | 17,564   |  
|                                                |                                                                                          |  | (Increase) decrease in other current assets                           |          |                | (30,694  | )    |          |      | 27,682   |   |          |   | (14,274  | )
|                                                |                                                                                          |  | Increase (decrease) in trade payables                                 |          |                | (127,978 | )    |          |      | (4,284   | ) |          |   | 30,042   |  
|                                                |                                                                                          |  | Increase (decrease) in accrued income taxes                           |          |                | (32,379  | )    |          |      | (28,839  | ) |          |   | 261      |  
|                                                |                                                                                          |  | Increase (decrease) in accrued expenses and other
current liabilities |          |                | 4,230    |      |          |      | 101,747  |   |          |   | 65,995   |  
|                                                |                                                                                          |  | Increase (decrease) in retirement and severance benefits              |          |                | (86,345  | )    |          |      | 26,789   |   |          |   | 34,625   |  
|                                                |                                                                                          |  | Other                                                                 |          |                | 12,022   |      |          |      | 17,032   |   |          |   | (84      | )
|                                                |                                                                                          |  |                                                                       |          |                |          |      |          |      |          |   |         
|                                                |                                                                                          |  |                                                                       |          |                |          |      |          |      |          |   |         
|                                                |                                                                                          |  | Net cash provided by operating activities                             |          |                | 76,864   |      |          |      | 392,452  |   |          |   | 476,136  |  
|                                                |                                                                                          |  |                                                                       |          |                |          |      |          |      |          |   |         
|                                                |                                                                                          |  |                                                                       |          |                |          |      |          |      |          |   |         
|Cash flows from investing activities (Note 13): |                                                                                          |  |                                                                       |          |                |          |      |          |      |          |   |         
|                                                | Proceeds from sale of short-term investments                                             |  |                                                                       | 21,103   |                |          |      | 145,870  |      |          |   | 259,485  |  
|                                                | Purchase of short-term investments                                                       |  |                                                                       | (14,503  | )              |          |      | (105,127 | )    |          |   | (278,243 | )
|                                                | Proceeds from disposition of investments and advances                                    |  |                                                                       | 172,588  |                |          |      | 110,405  |      |          |   | 146,885  |  
|                                                | Increase in investments and advances                                                     |  |                                                                       | (123,037 | )              |          |      | (71,203  | )    |          |   | (71,186  | )
|                                                | Capital expenditures                                                                     |  |                                                                       | (335,695 | )              |          |      | (480,844 | )    |          |   | (331,475 | )
|                                                | Proceeds from disposals of property, plant and equipment                                 |  |                                                                       | 142,072  |                |          |      | 35,407   |      |          |   | 25,349   |  
|                                                | (Increase) decrease in finance receivables                                               |  |                                                                       | 60,731   |                |          |      | 9,754    |      |          |   | 18,562   |  
|                                                | (Increase) decrease in time deposits                                                     |  |                                                                       | 29,742   |                |          |      | (160,576 | )    |          |   | (340,000 | )
|                                                | Other                                                                                    |  |                                                                       | (22,767  | )              |          |      | (66,274  | )    |          |   | (33,731  | )
|                                                |                                                                                          |  |                                                                       |          |                |          |      |          |      |          |   |          |  
|                                                |                                                                                          |  | Net cash used in investing activities                                 |          |                | (69,766  | )    |          |      | (582,588 | ) |          |   | (604,354 | )
|                                                |                                                                                          |  |                                                                       |          |                |          |      |          |      |          |   |         

(Continued)



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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years ended March 31, 2002, 2001 and 2000

|                                                             |                                                                           |                                                     |         |          |                |      |           |          |          |   |           |          |          |  
|------------------------------------------------------------ | ------------------------------------------------------------------------- | --------------------------------------------------- | ------- | -------- | -------------- | ---- | --------- | -------- | -------- | - | --------- | -------- | -------- | -
|                                                             |                                                                           |                                                     |         |          | Yen (millions) |     
|                                                             |                                                                           |                                                     |         |          |                |     
|                                                             |                                                                           |                                                     |         | 2002     |                | 2001 |           | 2000    
|                                                             |                                                                           |                                                     |         |          |                |      |           |         
|Cash flows from financing activities (Note 13):              |                                                                           |                                                     |         |          |                |      |           |          |          |   |           |         
|                                                             | Decrease in short-term borrowings                                         |                                                     |         | (62,969  | )              |      |           | (44,573  | )        |   |           | (156,619 | )       
|                                                             | Increase (decrease) in deposits and advances
from customers and employees |                                                     |         | (22,768  | )              |      |           | 3,822    |          |   |           | 7,576    |         
|                                                             | Proceeds from long-term debt                                              |                                                     |         | 446,228  |                |      |           | 380,185  |          |   |           | 240,485  |         
|                                                             | Repayments of long-term debt                                              |                                                     |         | (208,804 | )              |      |           | (415,838 | )        |   |           | (269,915 | )       
|                                                             | Dividends paid                                                            |                                                     |         | (25,990  | )              |      |           | (25,885  | )        |   |           | (28,871  | )       
|                                                             | Dividends paid to minority interests                                      |                                                     |         | (9,905   | )              |      |           | (8,027   | )        |   |           | (8,377   | )       
|                                                             | Repurchase of common stock (Note 10)                                      |                                                     |         | (91,969  | )              |      |           | (307     | )        |   |           | (288     | )       
|                                                             | Decrease of treasury stock (Note 10)                                      |                                                     |         | 523      |                |      |           | 108      |          |   |           |         |         
|                                                             | Other                                                                     |                                                     |         | 5,115    |                |      |           | (2,211   | )        |   |           |         |         
|                                                             |                                                                           |                                                     |         |          |                |      |           |          |          |   |           |          |         
|                                                             |                                                                           |                                                     |         |          |                |      |           |          |          |   |           |         
|                                                             |                                                                           | Net cash provided by (used in)
financing activities |         |          | 29,461         |      |           |          | (112,726 | ) |           |          | (216,009 | )
|                                                             |                                                                           |                                                     |         |          |                |      |           |          |          |   |           |         
|                                                             |                                                                           |                                                     |         |          |                |      |           |          |          |   |           |         
|Effect of exchange rate changes on cash and cash equivalents |                                                                           |                                                     | 14,332  |          |                |      | 35,478    |          |          |   | (73,096   | )       
|                                                             |                                                                           |                                                     |         |          |                |      |           |          |          |   |           |          |         
|                                                             |                                                                           |                                                     |         |          |                |      |           |          |          |   |           |         
|Net increase (decrease) in cash and cash equivalents         |                                                                           |                                                     | 50,891  |          |                |      | (267,384  | )        |          |   | (417,323  | )       
|                                                             |                                                                           |                                                     |         |          |                |      |           |          |          |   |           |         
|Cash and cash equivalents at beginning of year               |                                                                           |                                                     | 848,878 |          |                |      | 1,116,262 |          |          |   | 1,533,585 |         
|                                                             |                                                                           |                                                     |         |          |                |      |           |          |          |   |           |          |         
|                                                             |                                                                           |                                                     |         |          |                |      |           |          |          |   |           |         
|Cash and cash equivalents at end of year                     |                                                                           |                                                     | 899,769 |          |                |      | 848,878   |          |          |   | 1,116,262 |         
|                                                             |                                                                           |                                                     |         |          |                |      |           |          |          |   |           |         

See accompanying Notes to Consolidated Financial Statements.



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- 87 -

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2002, 2001 and 2000



|(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 2002 were categorized as follows: AVC Networks59%,
Home Appliances17%, Industrial Equipment4%, and Components and
Devices20%. A sales breakdown in fiscal 2002 by geographical market
was as follows: Japan49%, North and South America20%, Europe11%,
and Asia and Others20%.                                                                                                                                                                                                                                                                          
|
| |     |  | 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.                                                                                                                                                                                                                                                                                                                                                                                           



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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.                                                                                                                                                                                                                                                                                     
|
| | (e) |  | Leases (See Note 5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |     |  | A subsidiary of the Company leases 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.
|
| | (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



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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (i) |  | Investments in Available-for-Sale Securities (See Notes 4 and 11)                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The Company accounts for debt and equity securities in accordance with
SFAS No. 115, Accounting for Certain Investments in Debt and Equity
Securities.                                                                                                                                                                                                                                                                                                                                                                    
|
| |     |  | 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.                                                                                                                                                                                                                                                          
|
| | (j) |  | 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.                                                                                                                                                                                                                                         
|
| | (k) |  | Advertising (See Note 13)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |     |  | Advertising costs are expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | (l) |  | Net Income (Loss) per Share (See Notes 7, 10 and 12)                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |     |  | The Company accounts for net income (loss) per share in accordance
with SFAS No. 128, Earnings per Share. This Statement establishes
standards for computing net income (loss) per share and requires dual
presentation of basic and diluted net income (loss) per share on the
face of the statements of operations for all entities with complex
capital structures.                                                                                                                                                    



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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |     |  | Under SFAS No. 128, basic net income (loss) per share is computed
based on the weighted average number of common shares outstanding
during each period, and diluted net income (loss) per share assumes
the dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (m) |  | Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |     |  | Cash equivalents include all highly liquid debt instruments purchased
with a maturity of three months or less.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | (n) |  | Derivative Financial Instruments (See Notes 14, 15 and 16)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |     |  | Derivative financial instruments utilized by the Company and its
subsidiaries are comprised principally of foreign exchange contracts
used to hedge currency risk.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |     |  | Prior to the adoption of SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, and SFAS No. 138, Accounting for
Certain Derivative Instruments and Certain Hedging Activities, an
amendment of SFAS No. 133, on April 1, 2001, gains and losses on
derivatives used to hedge existing assets or liabilities denominated
in foreign currencies were recognized in income currently, as were 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 were deferred and recognized in
income when the transaction occurred. Derivative financial
instruments that did not meet the criteria for hedge accounting were
marked to market.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |     |  | The Company adopted SFAS No. 133, as amended, for the fiscal year
beginning April 1, 2001. The cumulative effect upon adoption was not
significant. After the adoption of SFAS No. 133, as amended, the
Company recognizes derivatives in the balance sheet at their fair
value in Other current assets or Other current liabilities. On
the date the derivative contract is entered into, the Company
designates the derivative as either a hedge of the fair value of a
recognized asset or liability or of an unrecognized firm commitment
(fair-value hedge), a hedge of a forecasted transaction or of the
variability of cash flows to be received or paid related to a
recognized asset or liability (cash-flow hedge), or a
foreign-currency fair-value or cash-flow hedge (foreign-currency
hedge). The Company formally documents all relationships between
hedging instruments and hedged items, as well as its risk-management
objective and strategy for undertaking various hedge transactions.
The Company also formally assesses, both at the hedges inception and
on an ongoing basis, whether the derivatives that are used in hedging
transactions are highly effective in offsetting changes in fair values
or cash flows of hedged items.



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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |     |  | Changes in the fair value of a derivative that is highly effective and
that is designated and qualifies as a fair-value hedge, along with the
loss or gain on the hedged asset or liability or unrecognized firm
commitment of the hedged item that is attributable to the hedged risk
are recorded in earnings. Changes in the fair value of a derivative
that is highly effective and that is designated and qualifies as a
cash-flow hedge are recorded in other comprehensive income (loss),
until earnings are affected by the variability in cash flows of the
designated hedged item. Changes in the fair value of derivatives that
are highly effective as hedges and that are designated and qualify as
foreign-currency hedges are recorded in either earnings or other
comprehensive income (loss), depending on whether the hedge
transaction is a fair-value hedge or a cash-flow hedge. Changes in
the fair value of derivative instruments that are not designated as
part of a hedging relationship are reported in current period
earnings.
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (o) |  | 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.                                                                                                    
|
| | (p) |  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | (q) |  | Reclassifications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |     |  | Certain reclassifications have been made to the prior years
consolidated financial statements to conform with the presentation
used for the year ended March 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     



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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (r) |  | New Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The Company will adopt Emerging Issues Task Force Issue (EITF) 01-9
Accounting for Consideration Given by a Vender to a Customer or
Reseller of the Vendors Products in the fiscal year beginning April
1, 2002. The Company does not expect that the adoption of EITF 01-9
will materially affect the results of operations or financial
position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |     |  | In June 2001, FASB issued SFAS No. 141, Business Combinations, and
SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141
requires that all business combinations be accounted for by the
purchase method and changes the criteria for recognition of intangible
assets acquired in business combinations. The provisions of SFAS No.
141 apply to all business combinations initiated after June 30, 2001,
as well as all purchase method business combinations completed after
June 30, 2001. SFAS No. 142 will require that goodwill and intangible
assets that have indefinite useful lives no longer be amortized but
should be tested at least annually for impairment. Intangible assets
that have estimable useful lives will continue to be amortized over
their useful lives. SFAS No. 142 also provides specific guidance for
testing for impairment of goodwill and intangibles with indefinite
useful lives. The provisions of SFAS No. 142 will be effective from
the fiscal year beginning April 1, 2002, however, goodwill and
intangible assets acquired after June 30, 2001, will be subject
immediately to the nonamortization and amortization provisions of SFAS
No. 142. The adoption of SFAS No. 141 did not have a material effect
on the Companys results of operations or financial position. The
Company does not expect that the adoption of SFAS No. 142 will
materially affect the results of operations or financial position.
|
| |     |  | In June 2001, FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations, which addresses financial accounting and
reporting for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs. This
Statement applies to legal obligations associated with the retirement
of long-lived assets that result from the acquisition, construction,
development and (or) normal operation of a long-lived asset, except
for certain obligations of lessees. SFAS No. 143 requires that the
fair value of a liability for an asset retirement obligation be
recognized in the period in which it is incurred if a reasonable
estimate of fair value can be made. The associated asset retirement
costs are capitalized as part of the carrying amount of the long-lived
asset and subsequently allocated to expense over the assets useful
life. The Company will adopt the provisions of SFAS No. 143 on April
1, 2003. The Company does not expect that the adoption will
materially affect the results of operations or financial position.                                                                                                                                                                                                                                                                                                                                                                



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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |  |  | In August 2001, FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, applicable for the
fiscal year beginning April 1, 2002. SFAS No. 144 amends the existing
guidance on accounting for the impairment of long-lived assets to be
held or used, establishes one accounting model to be used for
long-lived assets to be disposed of by sale and broadens the
presentation of discontinued operations to include more disposal
transactions. The Company does not expect that the adoption of SFAS
No. 144 will materially affect the results of operations or financial
position.
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) |  | Inventories                                                      
|--- |  | -----------------------------------------------------------------
|   
|    |  | Inventories at March 31, 2002 and 2001 are summarized as follows:

|                |  |                |         |      |  |  |           | 
|--------------- |  | -------------- | ------- | ---- |  |  | --------- | 
|                |  | Yen (millions)
|                |  |               
|                |  | 2002           |         | 2001
|                |  |                |         |     
|Finished goods  |  |                | 422,582 |      |  |  | 516,972   | 
|Work in process |  |                | 157,116 |      |  |  | 187,309   | 
|Raw materials   |  |                | 254,910 |      |  |  | 343,334   | 
|                |  |                |         |      |  |  |           | 
|                |  |                |         |      |  |  |           | 
|                |  |                | 834,608 |      |  |  | 1,047,615 | 
|                |  |                |         |      |  |  |           | 



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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|(3) |  | Investments in and Transactions with Associated Companies                                                                                                                                                                                                                                                                
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Certain financial information in respect of associated companies at March
31, 2002 and 2001 and for the three years ended March 31, 2002 is shown
below. The most significant of these associated companies is Matsushita
Electric Works, Ltd. (MEW). At March 31, 2002, the Company has a 33.1%
equity ownership in MEW.

|                               |            |  |                |         |      |  |           |         | 
|------------------------------ | ---------- |  | -------------- | ------- | ---- |  | --------- | ------- | 
|                               |            |  | Yen (millions)
|                               |            |  |               
|                               |            |  | 2002           |         | 2001
|                               |            |  |                |         |     
|Current assets                 |            |  | 884,729        |         |      |  | 851,026   |        
|Other assets                   |            |  | 1,376,341      |         |      |  | 1,552,170 |        
|                               |            |  |                |         |      |  |           |        
|                               |            |  | 2,261,070      |         |      |  | 2,403,196 |        
|                               |            |  |                |         |      |  |           |        
|Current liabilities            |            |  | 674,512        |         |      |  | 585,769   |        
|Other liabilities              |            |  | 657,753        |         |      |  | 869,257   |        
|                               |            |  |                |         |      |  |           |        
|                               |            |  |                |         |      |  |           |        
|                               | Net assets |  |                | 928,805 |      |  |           | 948,170 | 
|                               |            |  |                |         |      |  |           |        
|                               |            |  |                |         |      |  |           |        
|Companys equity in net assets |            |  | 290,753        |         |      |  | 279,266   |        
|                               |            |  |                |         |      |  |           |        

| |              |                |           |      |  |      |           |  |  |  |           | 
| | ------------ | -------------- | --------- | ---- |  | ---- | --------- |  |  |  | --------- | 
| |              | Yen (millions)
| |              |               
| |              | 2002           |           | 2001 |  | 2000
| |              |                |           |      |  |     
| | Net sales    |                | 1,562,422 |      |  |      | 1,807,373 |  |  |  | 1,835,138 | 
| | Gross profit |                | 423,583   |      |  |      | 492,107   |  |  |  | 500,373   | 
| | Net income   |                | 4,345     |      |  |      | 8,399     |  |  |  | 47,651    | 



| |  | Purchases and dividends received from associated companies for the three
years ended March 31, 2002 are as follows:
| |  | -------------------------------------------------------------------------------------------------------------------

| |                    |                |         |      |  |      |         |  |  |  |         | 
| | ------------------ | -------------- | ------- | ---- |  | ---- | ------- |  |  |  | ------- | 
| |                    | Yen (millions)
| |                    |               
| |                    | 2002           |         | 2001 |  | 2000
| |                    |                |         |      |  |     
| | Purchases from     |                | 152,234 |      |  |      | 177,865 |  |  |  | 235,599 | 
| | Dividends received |                | 5,693   |      |  |      | 5,089   |  |  |  | 7,935   | 



| |  | Retained earnings include undistributed earnings of associated companies
in the amount of 86,031 million yen and 89,413 million yen, respectively,
as of March 31, 2002 and 2001.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |  | Investments in associated companies include equity securities which have
quoted market values at March 31, 2002 and 2001 compared with related
carrying amounts as follows:
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                |  |                |         |      |  |  |         | 
|--------------- |  | -------------- | ------- | ---- |  |  | ------- | 
|                |  | Yen (millions)
|                |  |               
|                |  | 2002           |         | 2001
|                |  |                |         |     
|Carrying amount |  |                | 274,389 |      |  |  | 278,199 | 
|Market value    |  |                | 275,174 |      |  |  | 355,851 | 



|(4) |  | Investments in 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.                                                                       
|   
|    |  | 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, 2002 and 2001 are as
follows:

|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |       |       | 
|----------- | ------------------------------------- |  | -------------- | ------- | ----- |  | ------- | ------- | ------- |  | ---------- | ------- | ---------- |  | ----- | ----- | 
|            |                                       |  | Yen (millions)
|            |                                       |  |               
|            |                                       |  | 2002          
|            |                                       |  |               
|            |                                       |  |                |         |       |  |         |         |         |  | Gross      |         | Gross     
|            |                                       |  |                |         |       |  |         |         |         |  | unrealized |         | unrealized
|            |                                       |  |                |         |       |  | Fair    |         | holding |  | holding   
|            |                                       |  | Cost           |         | value |  | gains   |         | losses 
|            |                                       |  |                |         |       |  |         |         |         |  |            |         |           
|Current:    |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |       |      
|            | Japanese and foreign government bonds |  |                | 3,804   |       |  |         | 3,807   |         |  |            | 4       |            |  |       | 1     | 
|            | Convertible and straight bonds        |  |                | 709     |       |  |         | 709     |         |  |            |        |            |  |       |      | 
|            | Other debt securities                 |  |                | 7,333   |       |  |         | 7,333   |         |  |            |        |            |  |       |      | 
|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |       |       | 
|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |       |      
|            |                                       |  | 11,846         |         |       |  | 11,849  |         |         |  | 4          |         |            |  | 1     |      
|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |       |       | 
|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |       |      
|Noncurrent: |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |       |      
|            | Equity securities                     |  |                | 288,816 |       |  |         | 411,621 |         |  |            | 125,778 |            |  |       | 2,973 | 
|            | Japanese and foreign government bonds |  |                | 46,645  |       |  |         | 43,966  |         |  |            |        |            |  |       | 2,679 | 
|            | Convertible and straight bonds        |  |                | 3,537   |       |  |         | 3,576   |         |  |            | 47      |            |  |       | 8     | 
|            | Investment trusts                     |  |                | 13,662  |       |  |         | 13,609  |         |  |            | 15      |            |  |       | 68    | 
|            | Other debt securities                 |  |                | 41,769  |       |  |         | 42,325  |         |  |            | 556     |            |  |       |      | 
|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |       |       | 
|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |       |      
|            |                                       |  | 394,429        |         |       |  | 515,097 |         |         |  | 126,396    |         |            |  | 5,728 |      
|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |       |       | 



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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |        |        | 
|----------- | ------------------------------------- |  | -------------- | ------- | ----- |  | ------- | ------- | ------- |  | ---------- | ------- | ---------- |  | ------ | ------ | 
|            |                                       |  | 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 |       
|            |                                       |  |                |         |       |  |         |         |         |  |            |         |            |  |        |        | 



|Maturities of investments in available-for-sale securities at March 31,
2002 and 2001 are as follows:
|-----------------------------------------------------------------------------------------------------

|                                      |  |                |         |       |  |      |         |       |  |  |         |      |  |  |         | 
|------------------------------------- |  | -------------- | ------- | ----- |  | ---- | ------- | ----- |  |  | ------- | ---- |  |  | ------- | 
|                                      |  | Yen (millions)
|                                      |  |               
|                                      |  | 2002           |         | 2001 
|                                      |  |                |         |      
|                                      |  |                |         |       |  | Fair |         |       |  |  |         | Fair
|                                      |  | Cost           |         | value |  | Cost |         | value
|                                      |  |                |         |       |  |      |         |      
|Due within one year                   |  |                | 11,846  |       |  |      | 11,849  |       |  |  | 11,401  |      |  |  | 11,421  | 
|Due after one year through five years |  |                | 105,613 |       |  |      | 103,476 |       |  |  | 173,167 |      |  |  | 172,050 | 
|Equity securities                     |  |                | 288,816 |       |  |      | 411,621 |       |  |  | 369,972 |      |  |  | 533,421 | 
|                                      |  |                |         |       |  |      |         |       |  |  |         |      |  |  |         | 
|                                      |  |                |         |       |  |      |         |       |  |  |         |      |  |  |         | 
|                                      |  |                | 406,275 |       |  |      | 526,946 |       |  |  | 554,540 |      |  |  | 716,892 | 
|                                      |  |                |         |       |  |      |         |       |  |  |         |      |  |  |         | 



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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, 2002, 2001 and 2000 were 158,637 million yen, 202,023 million
yen and 326,811 million yen, respectively. The gross realized gains for
the years ended March 31, 2002, 2001 and 2000 were 10,582 million yen,
16,638 million yen and 40,590 million yen, respectively. The gross
realized losses on sale of available-for-sale securities for the years
ended March 31, 2002, 2001 and 2000 were 4,422 million yen, 2,932 million
yen and 878 million yen, respectively. The cost of securities sold in
computing gross realized gains and losses is determined by the average
cost method.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | During the year ended March 31, 2002, the Company incurred a write-down of
92,806 million yen on investment securities reflecting the aggravated
condition of the Japanese stock market. The write-down is included in
other deductions of costs and expenses in the consolidated statements of
operations.                                                                                                                                                                                                                                                                                                                                                                 
|   
|(5) |  | Leases                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    |  | The Company and its subsidiaries have capital and operating leases for
certain machinery and equipment. At March 31, 2002, the gross amount of
machinery and equipment and the related accumulated depreciation recorded
under capital leases was 9,314 million yen and 5,337 million yen,
respectively.                                                                                                                                                                                                                                                                                                                                                                    
|   
|    |  | During the year ended March 31, 2002, the Company sold and leased back
certain machinery and equipment for 108,024 million yen. The lease base
term is four years. The resulting leases are being accounted for as
operating leases. The resulting gains of these transactions, included in
other income, were not significant. The Company has options to purchase
the leased assets, or to terminate the leases and guarantee a specified
value of the leased assets thereof, subject to certain conditions, during
or at the end of the lease term.                                                                                                                      
|   
|    |  | Rental expense for operating leases, including the above-mentioned
sale-leaseback transactions was 4,415 million yen for the year ended March
31, 2002. Rental expense for operating leases for the years ended March
31, 2001 and 2000 were not significant.                                                                                                                                                                                                                                                                                                                                                                                                               



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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |  | Future minimum lease payments under capital leases and operating leases at
March 31, 2002 are as follows:
| |  | ---------------------------------------------------------------------------------------------------------

|                                            |  |                |       |           |  |  |        | 
|------------------------------------------- |  | -------------- | ----- | --------- |  |  | ------ | 
|                                            |  | Yen (millions)
|                                            |  |               
|                                            |  | Capital        |       | Operating
|Year ending March 31:                       |  | leases         |       | leases   
|                                            |  |                |       |          
|2003                                        |  |                | 1,774 |           |  |  | 14,483 | 
|2004                                        |  |                | 1,295 |           |  |  | 20,430 | 
|2005                                        |  |                | 756   |           |  |  | 20,362 | 
|2006                                        |  |                | 404   |           |  |  | 24,164 | 
|2007                                        |  |                | 100   |           |  |  | 18,719 | 
|Thereafter                                  |  |                | 21    |           |  |  |       | 
|                                            |  |                |       |           |  |  |        | 
|Total minimum lease payments                |  |                | 4,350 |           |  |  | 98,158 | 
|                                            |  |                |       |           |  |  |        | 
|Less amount representing interest           |  |                | 222   |           |  |  |        | 
|                                            |  |                |       |           |  |  |        | 
|Present value of net minimum lease payments |  |                | 4,128 |           |  |  |        | 
|Less current portion                        |  |                | 1,664 |           |  |  |        | 
|                                            |  |                |       |           |  |  |        | 
|                                            |  |                |       |           |  |  |        | 
|Long-term capital lease obligations         |  |                | 2,464 |           |  |  |        | 
|                                            |  |                |       |           |  |  |        | 



| |  | A subsidiary of the Company leases machinery and equipment. Leases of
such assets are principally accounted for as direct financing leases.
Investments in financing leases at March 31, 2002 and 2001 are as follows:
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                   |  |                |         |      |  |  |         | 
|-------------------------------------------------- |  | -------------- | ------- | ---- |  |  | ------- | 
|                                                   |  | Yen (millions)
|                                                   |  |               
|                                                   |  | 2002           |         | 2001
|                                                   |  |                |         |     
|Total minimum lease payments to be received        |  |                | 433,516 |      |  |  | 480,122 | 
|Less amounts representing estimated executory cost |  |                | 16,436  |      |  |  | 16,995  | 
|Less unearned income                               |  |                | 28,692  |      |  |  | 36,209  | 
|                                                   |  |                |         |      |  |  |         | 
|                                                   |  |                | 388,388 |      |  |  | 426,918 | 
|Less allowance for doubtful receivables            |  |                | 4,112   |      |  |  | 5,104   | 
|                                                   |  |                |         |      |  |  |         | 
|                                                   |  |                |         |      |  |  |         | 
|Net investment in financing leases                 |  |                | 384,276 |      |  |  | 421,814 | 
|Less current portion                               |  |                | 137,118 |      |  |  | 178,629 | 
|                                                   |  |                |         |      |  |  |         | 
|                                                   |  |                |         |      |  |  |         | 
|Long-term investment in financing leases           |  |                | 247,158 |      |  |  | 243,185 | 
|                                                   |  |                |         |      |  |  |         | 



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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |  | The aggregate annual maturities of the investments in financing leases
after March 31, 2002 are as follows:
| |  | -----------------------------------------------------------------------------------------------------------

|                                            |  |                |         | 
|------------------------------------------- |  | -------------- | ------- | 
|                                            |  | Yen (millions)
|                                            |  |               
|Year ending March 31:                       |  |                |         | 
|                                            |  |                |         | 
|2003                                        |  |                | 145,520 | 
|2004                                        |  |                | 120,470 | 
|2005                                        |  |                | 85,517  | 
|2006                                        |  |                | 51,426  | 
|2007                                        |  |                | 22,669  | 
|Thereafter                                  |  |                | 7,914   | 
|                                            |  |                |         | 
|                                            |  |                |         | 
|Total minimum lease payments to be received |  |                | 433,516 | 
|                                            |  |                |         | 



|(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(o), the Company accounts for impairment of
long-lived assets in accordance with SFAS No. 121.
|   
|    |  | The Company recognized an impairment loss of 24,420 million yen during
fiscal 2002 related to the write-down of the machinery and equipment to
manufacture display devices and other components.                                                                                                                                              
|   
|    |  | 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.                                                                                                                                                         
|   
|    |  | In both cases, as the prices of these products significantly decreased
during the respective fiscal year due to highly competitive market
conditions, the Company projected that the future business of those
products would result in a net operating loss.                                                                                  
|   
|    |  | Impairment losses recorded in fiscal 2002 and 2000 are included in other
deductions of costs and expenses in the consolidated statements of
operations.                                                                                                                                                                                       



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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, 2002 and 2001 is set forth below:

|                                                                                                                                                               |  |                |         |      |  |  |         | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | ---- |  |  | ------- | 
|                                                                                                                                                               |  | Yen (millions)
|                                                                                                                                                               |  |               
|                                                                                                                                                               |  | 2002           |         | 2001
|                                                                                                                                                               |  |                |         |     
|Convertible bonds, due 2002, interest 1.3%                                                                                                                     |  |                |        |      |  |  | 98,708  | 
|Convertible bonds, due 2004, interest 1.4%                                                                                                                     |  |                | 97,744  |      |  |  | 97,744  | 
|Convertible bonds issued by subsidiaries,
due 2002 and 2005, interest 0.35%1.5%                                                                               |  |                | 45,482  |      |  |  | 45,482  | 
|U.S. dollar unsecured bonds, due 2002,
effective interest 5.8%                                                                                                 |  |                | 125,237 |      |  |  | 125,152 | 
|Straight bonds, due 2005, interest 0.42%                                                                                                                       |  |                | 100,000 |      |  |  |        | 
|Straight bonds, due 2007, interest 0.87%                                                                                                                       |  |                | 100,000 |      |  |  |        | 
|Straight bonds, due 2011, interest 1.64%                                                                                                                       |  |                | 100,000 |      |  |  |        | 
|Straight bonds issued by a subsidiary, due
20032007, interest 1.68%2.15%                                                                                     |  |                | 45,000  |      |  |  | 50,000  | 
|Unsecured yen loans from banks and
insurance companies, principally by
financial subsidiaries, due 20012007,
effective interest 0.8% in 2002 and 1.2%
in 2001 |  |                | 339,772 |      |  |  | 393,392 | 
|Capital lease obligation                                                                                                                                       |  |                | 4,128   |      |  |  |        | 
|                                                                                                                                                               |  |                |         |      |  |  |         | 
|                                                                                                                                                               |  |                | 957,363 |      |  |  | 810,478 | 
|Less current portion                                                                                                                                           |  |                | 265,471 |      |  |  | 268,937 | 
|                                                                                                                                                               |  |                |         |      |  |  |         | 
|                                                                                                                                                               |  |                |         |      |  |  |         | 
|                                                                                                                                                               |  |                | 691,892 |      |  |  | 541,541 | 
|                                                                                                                                                               |  |                |         |      |  |  |         | 



| |  | The aggregate annual maturities of long-term debt after March 31, 2002 are
as follows:
| |  | --------------------------------------------------------------------------------------

|                      |      |  |                |         | 
|--------------------- | ---- |  | -------------- | ------- | 
|                      |      |  | Yen (millions)
|                      |      |  |               
|Year ending March 31: |      |  |                |        
|                      | 2003 |  |                | 265,471 | 
|                      | 2004 |  |                | 202,064 | 
|                      | 2005 |  |                | 179,052 | 
|                      | 2006 |  |                | 68,170  | 
|                      | 2007 |  |                | 132,570 | 



| |  | 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.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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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, 2002 and 2001, short-term loans subject to such general
agreements amounted to 108,386 million yen and 88,069 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 rate on short-term borrowings
outstanding at March 31, 2002 and 2001 was 4.2%.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Acceptances payable by foreign subsidiaries, in the amount of 108 million
yen and 187 million yen at March 31, 2002 and 2001, 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 1.4% convertible bonds maturing in 2004 are redeemable from 2001 at
the option of the Company at prices ranging from 102% 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 103%
of principal to 100% of principal near maturity.                                                                                                                                                                                                                                                                                                                                                
|   
|    |  | The Company set up a shelf registration in Japan for issuance of straight
bonds within two years from December 29, 2001 with the maximum aggregate
principal amount of 500,000 million yen. In February 2002, straight bonds
in the aggregate principal amount of 300,000 million yen were issued.                                                                                                                                                                                                                                              
|   
|(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 (substitutional 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.                                                                                                                                       



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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |  | Effective April 1, 2002, the Company and certain of its subsidiaries
amended their lump-sum payment plans to cash balance pension plans. Under
the cash balance pension plans, each participant has an account which is
credited yearly based on the current rate of pay and market-related
interest rate.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Net periodic benefit cost for the contributory, funded benefit pension
plans and the unfunded lump-sum payment plans of the Company for the three
years ended March 31, 2002 consisted of the following components:                                                                                       

|                                               |  |                |         |      |  |      |         |   |  |  |         |  
|---------------------------------------------- |  | -------------- | ------- | ---- |  | ---- | ------- | - |  |  | ------- | -
|                                               |  | Yen (millions)
|                                               |  |               
|                                               |  | 2002           |         | 2001 |  | 2000
|                                               |  |                |         |      |  |     
|Service cost  benefits earned during the year |  |                | 85,009  |      |  |      | 89,737  |   |  |  | 86,391  |  
|Interest cost on projected benefit obligation  |  |                | 84,846  |      |  |      | 84,665  |   |  |  | 84,619  |  
|Expected return on plan assets                 |  |                | (51,459 | )    |  |      | (57,415 | ) |  |  | (49,389 | )
|Amortization of net transition obligation      |  |                | 9,972   |      |  |      | 9,972   |   |  |  | 9,972   |  
|Amortization of prior service cost (benefit)   |  |                | (3,965  | )    |  |      |        |   |  |  |        |  
|Recognized actuarial loss                      |  |                | 17,208  |      |  |      | 11,054  |   |  |  | 15,561  |  
|                                               |  |                |         |      |  |      |         |   |  |  |         |  
|                                               |  |                |         |      |  |      |         |   |  |  |         |  
|Net periodic benefit cost                      |  |                | 141,611 |      |  |      | 138,013 |   |  |  | 147,154 |  
|                                               |  |                |         |      |  |      |         |   |  |  |         |  



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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 at March 31,
2002 and 2001, and actuarial assumptions used as of March 31, 2002, 2001
and 2000 are as follows:
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                  |                                                             |  |                |           |      |  |          |           |  
|----------------------------------------------------------------- | ----------------------------------------------------------- |  | -------------- | --------- | ---- |  | -------- | --------- | -
|                                                                  |                                                             |  | Yen (millions)
|                                                                  |                                                             |  |                |          
|                                                                  |                                                             |  | 2002           |           | 2001
|                                                                  |                                                             |  |                |           |      | 
|Change in benefit obligations:                                    |                                                             |  |                |           |      |  |          |          
|                                                                  | Benefit obligations at beginning of year                    |  |                | 2,235,210 |      |  |          | 2,136,223 |  
|                                                                  | Service cost                                                |  |                | 85,009    |      |  |          | 89,737    |  
|                                                                  | Interest cost                                               |  |                | 84,846    |      |  |          | 84,665    |  
|                                                                  | Plan participants contributions                            |  |                | 13,676    |      |  |          | 13,902    |  
|                                                                  | Prior service cost (benefit)                                |  |                | (36,802   | )    |  |          | (64,171   | )
|                                                                  | Actuarial loss                                              |  |                | 289,768   |      |  |          | 39,341    |  
|                                                                  | Benefits paid                                               |  |                | (196,980  | )    |  |          | (68,965   | )
|                                                                  | Foreign currency exchange impact                            |  |                | 2,214     |      |  |          | 4,478     |  
|                                                                  |                                                             |  |                |           |      |  |          |          
|                                                                  | Benefit obligations at end of year                          |  |                | 2,476,941 |      |  |          | 2,235,210 |  
|                                                                  |                                                             |  |                |           |      |  |          |          
|                                                                  |                                                             |  |                |           |      |  |          |          
|Change in plan assets:                                            |                                                             |  |                |           |      |  |          |          
|                                                                  | Fair value of plan assets at beginning of year              |  |                | 1,340,637 |      |  |          | 1,410,872 |  
|                                                                  | Actual return on plan assets                                |  |                | (75,208   | )    |  |          | (134,692  | )
|                                                                  | Employer contributions                                      |  |                | 73,238    |      |  |          | 78,084    |  
|                                                                  | Plan participants contributions                            |  |                | 13,676    |      |  |          | 13,902    |  
|                                                                  | Benefits paid                                               |  |                | (44,535   | )    |  |          | (31,260   | )
|                                                                  | Foreign currency exchange impact                            |  |                | 1,733     |      |  |          | 3,731     |  
|                                                                  |                                                             |  |                |           |      |  |          |          
|                                                                  | Fair value of plan assets at end of year                    |  |                | 1,309,541 |      |  |          | 1,340,637 |  
|                                                                  |                                                             |  |                |           |      |  |          |          
|                                                                  |                                                             |  |                |           |      |  |          |          
|Funded status                                                     |                                                             |  | (1,167,400     | )         |      |  | (894,573 | )        
|                                                                  |                                                             |  |                |           |      |  |          |          
|Unrecognized net transition obligation                            |                                                             |  | 3,298          |           |      |  | 13,270   |          
|Unrecognized prior service cost (benefit)                         |                                                             |  | (97,008        | )         |      |  | (64,171  | )        
|Unrecognized actuarial loss                                       |                                                             |  | 786,786        |           |      |  | 387,078  |          
|                                                                  |                                                             |  |                |           |      |  |          |          
|                                                                  |                                                             |  |                |           |      |  |          |          
|Net amount recognized                                             |                                                             |  | (474,324       | )         |      |  | (558,396 | )        
|                                                                  |                                                             |  |                |           |      |  |          |          
|                                                                  |                                                             |  |                |           |      |  |          |          
|Amounts recognized in the consolidated balance sheets consist
of: |                                                             |  |                |           |      |  |          |          
|                                                                  | Retirement and severance benefits                           |  |                | (718,501  | )    |  |          | (558,396  | )
|                                                                  | Accumulated other comprehensive income (loss), gross of tax |  |                | 244,177   |      |  |          |          |  
|                                                                  |                                                             |  |                |           |      |  |          |          
|                                                                  |                                                             |  |                |           |      |  |          |          
|Net amount recognized                                             |                                                             |  | (474,324       | )         |      |  | (558,396 | )        
|                                                                  |                                                             |  |                |           |      |  |          |          



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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

|                       |                                |  |      |     |      |  |      |     |   |  |  |     |  
|---------------------- | ------------------------------ |  | ---- | --- | ---- |  | ---- | --- | - |  |  | --- | -
|                       |                                |  | 2002 |     | 2001 |  | 2000
|                       |                                |  |      |     |      |  |     
|Actuarial assumptions: |                                |  |      |     |      |  |      |     |   |  |  |    
|                       | Discount rate                  |  |      | 3.2 | %    |  |      | 4.0 | % |  |  | 4.0 | %
|                       | Expected return on plan assets |  |      | 4.0 | %    |  |      | 4.0 | % |  |  | 4.0 | %
|                       | Rate of compensation increase  |  |      | 2.6 | %    |  |      | 2.6 | % |  |  | 2.6 | %



|(9) |  | Income Taxes                                                                                                          
|--- |  | ----------------------------------------------------------------------------------------------------------------------
|   
|    |  | Income (loss) before income taxes and income taxes for the three years
ended March 31, 2002 are summarized as follows:

|      |                            |          |                    |          |          |         |         |         |                |        |  |          |         |         |  
|----- | -------------------------- | -------- | ------------------ | -------- | -------- | ------- | ------- | ------- | -------------- | ------ |  | -------- | ------- | ------- | -
|      |                            |          |                    |          |          |         |         |         | Yen (millions) |        |  |          |        
|      |                            |          |                    |          |          |         |        
|      |                            |          |                    |          | Domestic |         | Foreign |         | Total         
|      |                            |          |                    |          |          |         |         |         |               
|2002: |                            |          |                    |          |          |         |         |         |                |        |  |         
|      | Loss before income taxes   |          |                    | (543,624 | )        |         |         | (4,385  | )              |        |  | (548,009 | )      
|      | Income taxes:              |          |                    |          |          |         |         |         |                |        |  |          |        
|      |                            | Current  |                    |          | 10,904   |         |         |         | 19,131         |        |  |          | 30,035  |        
|      |                            | Deferred |                    |          | (78,398  | )       |         |         | (8,848         | )      |  |          | (87,246 | )      
|      |                            |          |                    |          |          |         |         |         |                |        |  |         
|      |                            |          |                    |          |          |         |         |         |                |        |  |         
|      |                            |          | Total income taxes |          |          | (67,494 | )       |         |                | 10,283 |  |          |         | (57,211 | )
|      |                            |          |                    |          |          |         |         |         |                |        |  |         
|      |                            |          |                    |          |          |         |         |         |                |        |  |         
|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 |  
|      |                            |          |                    |          |          |         |         |         |                |        |  |         



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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 provision
(benefit) rate of approximately (41.9)% for the year ended March 31, 2002
and 41.9% for the years ended March 31, 2001 and 2000.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The effective tax rates for the years differ from the normal tax rates for
the following reasons:                                                                                                                                                                                    

|                   |                                                                |  |       |      |      |  |      |      |   |  |      |      |  
|------------------ | -------------------------------------------------------------- |  | ----- | ---- | ---- |  | ---- | ---- | - |  | ---- | ---- | -
|                   |                                                                |  | 2002  |      | 2001 |  | 2000
|                   |                                                                |  |       |      |      |  |     
|Normal tax rate    |                                                                |  | (41.9 | )%   |      |  | 41.9 | %    |   |  | 41.9 | %   
|                   | Tax credit for increased research expenses                     |  |       | (0.2 | )    |  |      | (2.8 | ) |  |      | (1.3 | )
|                   | Lower tax rates of overseas subsidiaries                       |  |       | (0.7 | )    |  |      | (7.5 | ) |  |      | (3.2 | )
|                   | Expenses not deductible for tax purposes                       |  |       | 1.8  |      |  |      | 11.2 |   |  |      | 6.6  |  
|                   | Change in valuation allowance allocated
to
income tax expenses |  |       | 25.1 |      |  |      | 5.4  |   |  |      | 18.7 |  
|                   | Other                                                          |  |       | 5.5  |      |  |      | 1.3  |   |  |      |     |  
|                   |                                                                |  |       |      |      |  |      |      |   |  |      |     
|                   |                                                                |  |       |      |      |  |      |      |   |  |      |     
|Effective tax rate |                                                                |  | (10.4 | )%   |      |  | 49.5 | %    |   |  | 62.7 | %   
|                   |                                                                |  |       |      |      |  |      |      |   |  |      |     



| |  | The significant components of deferred income tax expenses for the three
years ended March 31, 2002 are as follows:
| |  | -------------------------------------------------------------------------------------------------------------------

|                                                                                  |  |  |                |         |      |  |         |         |   |  |         |         |  
|--------------------------------------------------------------------------------- |  |  | -------------- | ------- | ---- |  | ------- | ------- | - |  | ------- | ------- | -
|                                                                                  |  |  | Yen (millions)
|                                                                                  |  |  |                |         |     
|                                                                                  |  |  | 2002           |         | 2001 |  | 2000   
|                                                                                  |  |  |                |         |      |  |         |         |   |  |         |         |  
|Deferred tax
expense (exclusive
of the effects of
another component
listed below) |  |  | (225,008       | )       |      |  | (73,447 | )       |   |  | (82,267 | )      
|Increase in the
balance of
valuation allowance
for deferred tax
assets            |  |  | 137,762        |         |      |  | 5,453   |         |   |  | 40,837  |        
|                                                                                  |  |  |                |         |      |  |         |         |   |  |         |         |  
|                                                                                  |  |  |                |         |      |  |         |         |   |  |         |         |  
|                                                                                  |  |  |                | (87,246 | )    |  |         | (67,994 | ) |  |         | (41,430 | )
|                                                                                  |  |  |                |         |      |  |         |         |   |  |         |         |  



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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, 2002 and 2001 are presented below:
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                          |                                                                                                |                                      |  |                |           |   |  |         |         |  
|------------------------- | ---------------------------------------------------------------------------------------------- | ------------------------------------ |  | -------------- | --------- | - |  | ------- | ------- | -
|                          |                                                                                                |                                      |  | Yen (millions) |          
|                          |                                                                                                |                                      |  |                |           |  
|                          |                                                                                                |                                      |  |                | 2002      |   |  |         | 2001   
|                          |                                                                                                |                                      |  |                |           |   |  |         |        
|Deferred tax assets:      |                                                                                                |                                      |  |                |           |   |  |        
|                          | Inventory valuation                                                                            |                                      |  | 82,320         |           |   |  | 98,749  |        
|                          | Expenses accrued for financial statement purposes
but not currently included in taxable income |                                      |  | 176,020        |           |   |  | 180,465 |        
|                          | Depreciation                                                                                   |                                      |  | 145,490        |           |   |  | 135,719 |        
|                          | Retirement and severance benefits                                                              |                                      |  | 217,568        |           |   |  | 149,540 |        
|                          | Tax loss carryforwards                                                                         |                                      |  | 270,292        |           |   |  | 76,920  |        
|                          | Other                                                                                          |                                      |  | 142,885        |           |   |  | 103,613 |        
|                          |                                                                                                |                                      |  |                |           |   |  |        
|                          |                                                                                                | Total gross deferred tax assets      |  |                | 1,034,575 |   |  |         | 745,006 |  
|                          |                                                                                                |                                      |  |                |           |   |  |        
|                          |                                                                                                | Less valuation allowance             |  |                | 221,968   |   |  |         | 80,807  |  
|                          |                                                                                                |                                      |  |                |           |   |  |        
|                          |                                                                                                |                                      |  |                |           |   |  |        
|                          |                                                                                                | Net deferred tax assets              |  |                | 812,607   |   |  |         | 664,199 |  
|                          |                                                                                                |                                      |  |                |           |   |  |        
|Deferred tax liabilities: |                                                                                                |                                      |  |                |           |   |  |        
|                          | Purchase accounting step-up of identifiable assets                                             |                                      |  | (4,677         | )         |   |  | (3,971  | )      
|                          | Net unrealized holding gains of
available-for-sale securities                                  |                                      |  | (48,850        | )         |   |  | (65,968 | )      
|                          | Other                                                                                          |                                      |  | (29,512        | )         |   |  | (25,345 | )      
|                          |                                                                                                |                                      |  |                |           |   |  |        
|                          |                                                                                                | Total gross deferred tax liabilities |  |                | (83,039   | ) |  |         | (95,284 | )
|                          |                                                                                                |                                      |  |                |           |   |  |        
|                          |                                                                                                |                                      |  |                |           |   |  |        
|                          |                                                                                                | Net deferred tax assets              |  |                | 729,568   |   |  |         | 568,915 |  
|                          |                                                                                                |                                      |  |                |           |   |  |        



| |  | The net change in total valuation allowance for the years ended March 31,
2002 and 2001 were increases of 141,161 million yen and 5,087 million yen,
respectively.                                                       
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | At March 31, 2002, the Company and certain of its subsidiaries had, for
tax reporting purposes, net operating loss carryforwards of approximately
668,492 million yen, which will generally expire between 2003 and 2022.



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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |  | Net deferred tax assets and liabilities at March 31, 2002 and 2001 are
reflected in the accompanying consolidated balance sheets under the
following captions:
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                         |  |                |         |      |  |  |         |   | 
| | ----------------------- |  | -------------- | ------- | ---- |  |  | ------- | - | 
| |                         |  | Yen (millions) |        
| |                         |  |                |        
| |                         |  | 2002           |         | 2001 | 
| |                         |  |                |         |      | 
| | Other current assets    |  |                | 267,420 |      |  |  | 309,432 |   | 
| | Other assets            |  |                | 483,523 |      |  |  | 282,558 |   | 
| | Other liabilities       |  |                | (21,375 | )    |  |  | (23,075 | ) | 
| |                         |  |                |         |      |  |  |         |   | 
| |                         |  |                |         |      |  |  |         |   | 
| | Net deferred tax assets |  |                | 729,568 |      |  |  | 568,915 |   | 
| |                         |  |                |         |      |  |  |         |   | 



|(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 58,941,866 shares, 580,241 shares and
326,535 shares in connection with the conversion of bonds for the
years ended March 31, 2002, 2001 and 2000, respectively.                                                                                                                                                                                                                                                                                    
|    
|     |  | On April 1, 2000, the Company issued 16,321,187 shares under exchange
offering in connection with the integration of two subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    
|     |  | For the year ended March 31, 2002, 54,000,000 shares of the Companys
common stock were repurchased from the market for the aggregate cost
of 90,598 million yen pursuant to a revision in the Japanese
Commercial Code, with the intention to hold such repurchased shares
as treasury stock to improve capital efficiency, and to use some or
all of the repurchased shares for the forthcoming share exchange (See
Note 19) to transform five companies into wholly-owned subsidiaries
of the Company.                                                                                                          
|    
|     |  | The Japanese Commercial Code, amended effective October 1, 2001,
provides that an amount equal to at least 10% of appropriations paid
in cash be appropriated as a legal reserve until the aggregated
amount of capital surplus and legal reserve equals 25% of stated
capital. The capital surplus and legal reserve, up to 25% of stated
capital, are not available for dividends but may be used to reduce a
deficit or may be transferred to stated capital. The capital surplus
and legal reserve, exceeding 25% of stated capital, are available for
distribution upon approval of the shareholders meeting.



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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |  | Cash dividends and transfers to the legal reserve charged to retained
earnings during the three years ended March 31, 2002 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 3.75 yen per share,
totaling 7,813 million yen, proposed in June 2002 in respect of the year
ended March 31, 2002 or for the related appropriation.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | In accordance with the Japanese Commercial Code, there are certain
restrictions on payment of dividends in connection with the treasury stock
repurchased. As a result of restrictions on the treasury stock
repurchased, retained earnings of approximately 92,185 million yen at
March 31, 2002 were restricted as to the payment of cash dividends.                                                                                                                                        
|
| |  | 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, 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  |                                              |  | 295,000   |         |                      |  | 2,557 |      
|                           | Granted                                      |  |           | 128,000 |                      |  |       | 2,163 | 
|                           | Forfeited                                    |  |           | (28,000 | )                    |  |       | 2,490 | 
|                           |                                              |  |           |         |                      |  |       |      
|Balance at March 31, 2002, |                                              |  |           |         |                      |  |       |      
|                           | weighted average remaining life  3.99 years |  |           | 395,000 |                      |  |       | 2,434 | 
|                           |                                              |  |           |         |                      |  |       |      



| |  | 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 (loss) for the three years ended March 31, 2002 would
not be material.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|     |  | Treasury stock reserved for options at March 31, 2002 and 2001 was 395,000
shares and 295,000 shares, respectively.                                                                                                                                                                                                                                              
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | On June 27, 2002, the annual shareholders meeting approved that the
Companys stock acquisition rights as stock options would be allotted to
27 directors and 8 senior executives. These stock option rights are
exercisable from July 1, 2004 to June 30, 2008. Total number of stock
acquisition rights will be limited in aggregate to 130,000 common shares.
|    
|(11) |  | Other Comprehensive Income (Loss)                                                                                                                                                                                                                                                                                                                                
|    
|     |  | Components of other comprehensive income (loss) for the three years
ended March 31, 2002 are as follows:                                                                                                                                                                                                                                                         

|                                  |                                                            |                                                                   |  |                |          |         |  |            |         |   |  |          |         |  
|--------------------------------- | ---------------------------------------------------------- | ----------------------------------------------------------------- |  | -------------- | -------- | ------- |  | ---------- | ------- | - |  | -------- | ------- | -
|                                  |                                                            |                                                                   |  | Yen (millions)
|                                  |                                                            |                                                                   |  |               
|                                  |                                                            |                                                                   |  | Pre-tax        |          | Tax     |  | Net-of-tax
|                                  |                                                            |                                                                   |  | amount         |          | expense |  | amount    
|                                  |                                                            |                                                                   |  |                |          |         |  |           
|For the year ended March 31, 2002 |                                                            |                                                                   |  |                |          |         |  |            |         |   |  |         
|                                  | Translation adjustments                                    |                                                                   |  | 98,740         |          |         |  |           |         |   |  | 98,740   |        
|                                  | Unrealized holding gains of available-for-sale
securities: |                                                                   |  |                |          |         |  |            |         |   |  |          |        
|                                  |                                                            | Unrealized holding gains (losses) arising
during the period       |  |                | (133,472 | )       |  |            | 53,472  |   |  |          | (80,000 | )
|                                  |                                                            | Less: Reclassification adjustment for losses
included in net loss |  |                | 85,846   |         |  |            | (33,821 | ) |  |          | 52,025  |  
|                                  |                                                            |                                                                   |  |                |          |         |  |            |         |   |  |          |        
|                                  |                                                            | Net unrealized gains (losses)                                     |  |                | (47,626  | )       |  |            | 19,651  |   |  |          | (27,975 | )
|                                  |                                                            |                                                                   |  |                |          |         |  |            |         |   |  |         
|                                  | Unrealized holding gains of derivative instruments:        |                                                                   |  |                |          |         |  |            |         |   |  |          |        
|                                  |                                                            | Unrealized holding gains (losses) arising
during the period       |  |                | (28,241  | )       |  |            | 11,821  |   |  |          | (16,420 | )
|                                  |                                                            | Less: Reclassification adjustment for losses
included in net loss |  |                | 28,482   |         |  |            | (11,934 | ) |  |          | 16,548  |  
|                                  |                                                            |                                                                   |  |                |          |         |  |            |         |   |  |          |        
|                                  |                                                            | Net unrealized gains (losses)                                     |  |                | 241      |         |  |            | (113    | ) |  |          | 128     |  
|                                  |                                                            |                                                                   |  |                |          |         |  |            |         |   |  |          |        
|                                  |                                                            |                                                                   |  |                |          |         |  |            |         |   |  |         
|                                  | Minimum pension liability adjustments                      |                                                                   |  | (199,175       | )        |         |  | 48,813     |         |   |  | (150,362 | )      
|                                  |                                                            |                                                                   |  |                |          |         |  |            |         |   |  |          |        
|                                  |                                                            |                                                                   |  |                |          |         |  |            |         |   |  |         
|                                  |                                                            | Other comprehensive income (loss)                                 |  |                | (147,820 | )       |  |            | 68,351  |   |  |          | (79,469 | )
|                                  |                                                            |                                                                   |  |                |          |         |  |            |         |   |  |          |        



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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

|                                  |                                                            |                                                                    |  |                |          |         |  |            |         |   |  |          |          |  
|--------------------------------- | ---------------------------------------------------------- | ------------------------------------------------------------------ |  | -------------- | -------- | ------- |  | ---------- | ------- | - |  | -------- | -------- | -
|                                  |                                                            |                                                                    |  | 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  | )
|                                  |                                                            |                                                                    |  |                |          |         |  |            |         |   |  |         



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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|(12) |  | Net Income (Loss) per Share                                                                                                                                                 
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | A reconciliation of the numerators and denominators of the basic and
diluted net income (loss) per share computation for the three years ended
March 31, 2002 is as follows:

|                                                   |                                            |  |                |   |      |  |        |     |  |  |         |     | 
|-------------------------------------------------- | ------------------------------------------ |  | -------------- | - | ---- |  | ------ | --- |  |  | ------- | --- | 
|                                                   |                                            |  | Yen (millions)
|                                                   |                                            |  |               
|                                                   |                                            |  | 2002           |   | 2001 |  | 2000  
|                                                   |                                            |  |                |   |      |  |       
|Net income (loss) available to common stockholders |                                            |  | (431,007       | ) |      |  | 41,500 |     |  |  | 99,709  |    
|Effect of assumed conversions:                     |                                            |  |                |   |      |  |        |     |  |  |         |    
|                                                   | Convertible bonds, due 2002, interest 1.3% |  |                |  |      |  |        | 747 |  |  |         | 747 | 
|                                                   | Convertible bonds, due 2004, interest 1.4% |  |                |  |      |  |        | 795 |  |  |         | 802 | 
|                                                   |                                            |  |                |   |      |  |        |     |  |  |         |    
|                                                   |                                            |  |                |   |      |  |        |     |  |  |         |    
|Diluted net income (loss)                          |                                            |  | (431,007       | ) |      |  | 43,042 |     |  |  | 101,258 |    
|                                                   |                                            |  |                |   |      |  |        |     |  |  |         |    

|                                        |                                           |  |                  |      |  |  |               |            |  |  |               |            | 
|--------------------------------------- | ----------------------------------------- |  | ---------------- | ---- |  |  | ------------- | ---------- |  |  | ------------- | ---------- | 
|                                        |                                           |  | Number of shares
|                                        |                                           |  |                  |      | 
|                                        |                                           |  |                  | 2002 |  |  |               | 2001       |  |  |               | 2000       | 
|                                        |                                           |  |                  |      |  |  |               |            |  |  |               |            | 
|Average common shares outstanding       |                                           |  | 2,075,667,943    |      |  |  | 2,079,235,871 |            |  |  | 2,062,295,743 |           
|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       |                                           |  | 2,075,667,943    |      |  |  | 2,200,577,003 |            |  |  | 2,184,343,298 |           
|                                        |                                           |  |                  |      |  |  |               |            |  |  |               |           

|                             |         |  |      |         |      |  |      |       |  |  |  |       | 
|---------------------------- | ------- |  | ---- | ------- | ---- |  | ---- | ----- |  |  |  | ----- | 
|                             |         |  | Yen 
|                             |         |  |      |        
|                             |         |  | 2002 |         | 2001 |  | 2000
|                             |         |  |      |         |      |  |     
|Net income (loss) per share: |         |  |      |         |      |  |      |       |  |  |  |      
|                             | Basic   |  |      | (207.65 | )    |  |      | 19.96 |  |  |  | 48.35 | 
|                             | Diluted |  |      | (207.65 | )    |  |      | 19.56 |  |  |  | 46.36 | 



| |  | The effect of potentially dilutive securities was not included in the
calculation of diluted net loss per share for the year ended March 31,
2002 as their effect would be antidilutive due to the net loss incurred
for the year.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|(13) |  | Supplementary Information to the Statements of Operations and Cash Flows                                                                                        
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | Research and development costs, advertising costs and shipping and handling costs charged to operations for the three
years ended March 31, 2002 are as follows:

|                               |  |                |         |      |  |      |         |  |  |  |         | 
|------------------------------ |  | -------------- | ------- | ---- |  | ---- | ------- |  |  |  | ------- | 
|                               |  | Yen (millions)
|                               |  |               
|                               |  | 2002           |         | 2001 |  | 2000
|                               |  |                |         |      |  |     
|Research and development costs |  |                | 565,530 |      |  |      | 543,804 |  |  |  | 525,557 | 
|Advertising costs              |  |                | 114,760 |      |  |      | 112,139 |  |  |  | 114,587 | 
|Shipping and handling costs    |  |                | 129,158 |      |  |      | 149,563 |  |  |  | 152,387 | 



| |  | Included in other deductions of costs and expenses for the years ended
March 31, 2002 and 2001 is a loss of 164,056 million yen and 100,195
million yen, respectively, associated with the implementation of the early
retirement programs and the regional-based employee remuneration system in
some domestic companies.                           
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Included in other deduction of costs and expenses for the year ended March
31, 2002 is a loss of 61,622 million yen associated with the closure or
integration of several manufacturing facilities, of which the total of
6,660 million yen was accrued at March 31, 2002.                                                                           
|
| |  | 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.                                                                                         
|
| |  | Foreign exchange gains and losses included in other deductions of costs
and expenses for the years ended March 31, 2002 and 2001 is a loss of
12,975 million yen and 6,730 million yen, respectively. Foreign exchange
gains and losses included in the consolidated statements of operations for
the year ended March 31, 2000 were not significant.
|
| |  | Shipping and handling costs are included in selling, general and
administrative expenses in the consolidated statements of operations.                                                                                                                                                                                                               





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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, 2002 are as
follows:
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------

|   |                                             |                                                               |  |                |  |         |  |        
|-- | ------------------------------------------- | ------------------------------------------------------------- |  | -------------- |  | ------- |  | -------
|   |                                             |                                                               |  | Yen (millions)
|   |                                             |                                                               |  |               
|   |                                             |                                                               |  | 2002           |  | 2001    |  | 2000   
|   |                                             |                                                               |  |                |  |         |  |        
|a) | Cash paid:                                  |                                                               |  |                |  |         | 
|   |                                             | Interest                                                      |  | 49,180         |  | 48,985  |  | 47,729 
|   |                                             | Income taxes                                                  |  | 62,414         |  | 146,694 |  | 178,184
|   |                                             |                                                               |  |                |  |         |  |        
|b) | Noncash investing and financing activities: |                                                               |  |                |  |         | 
|   |                                             | Conversion of bonds                                           |  | 95,486         |  | 940     |  | 528    
|   |                                             | Capital transactions by consolidated and associated companies |  | 2,830          |  | 969     |  | 3,004  
|   |                                             | Stock issued under exchange offering                          |  |               |  | 50,107  |  |       



|(14) |  | Foreign Exchange Contracts (Prior to SFAS No. 133 and SFAS No. 138)                                                                                                                                                                                                                                                                                                                                                                
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | 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 are as follows:                                                                                                                                                                                                                                                                                                                                               

|                                             |                            |  |                |         | 
|-------------------------------------------- | -------------------------- |  | -------------- | ------- | 
|                                             |                            |  | Yen (millions)
|                                             |                            |  |               
|                                             |                            |  | 2001          
|                                             |                            |  |               
|Forward:                                     |                            |  |                |        
|                                             | To sell foreign currencies |  |                | 350,087 | 
|                                             | To buy foreign currencies  |  |                | 109,523 | 
|Options purchased to sell foreign currencies |                            |  | 16,430         |        
|Options purchased to buy foreign currencies  |                            |  | 34,412         |        
|Options written to buy foreign currencies    |                            |  | 24,956         |        
|Options written to sell foreign currencies   |                            |  | 40,080         |        





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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) |  | Derivatives and Hedging Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    
|     |  | 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 assesses foreign
currency exchange rate risk by continually monitoring changes in these exposures and by evaluating hedging opportunities.
The Company does not hold or issue derivative financial instruments for any purposes other than hedging.                              
|    
|     |  | Gains and losses related to derivative instruments are classified in other income (deductions) in the statements of
operations. The amount of the hedging ineffectiveness and net gain or loss excluded from the assessment of hedge
effectiveness is not material for the year ended March 31, 2002. Amounts included in accumulated other comprehensive
income (loss) at March 31, 2002 are expected to be recognized in earnings over the next twelve months. The maximum term
over which the Company is hedging exposures to the variability of cash flows for foreign currency exchange risk is
approximately five months.
|    
|     |  | 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 mitigated by the high credit rating of the counterparties.                                                                                                                                                                                                                                                                                                                                                                                             
|    
|     |  | The contract amounts of foreign exchange contracts at March 31, 2002 are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

|                                             |                            |  |                |         | 
|-------------------------------------------- | -------------------------- |  | -------------- | ------- | 
|                                             |                            |  | Yen (millions)
|                                             |                            |  |               
|                                             |                            |  | 2002          
|                                             |                            |  |               
|Forward:                                     |                            |  |                |        
|                                             | To sell foreign currencies |  |                | 374,993 | 
|                                             | To buy foreign currencies  |  |                | 173,546 | 
|Options purchased to sell foreign currencies |                            |  | 37,940         |        



|(16) |  | 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:





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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |  | 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 quoted
market prices or the present value of future cash flows using appropriate
current discount rates.                                    
|
| |  | Long-term debt
The fair value of long-term debt is estimated based on quoted market
prices or the present value of 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.
|
| |  | The estimated fair values of financial instruments, all of which are held
or issued for purposes other than trading, at March 31, 2002 and 2001 are
as follows:                                                                       

|                                                                 |              |                                          |       |                |          |       |       |          |          |       |        |   |           |   |        |   |           |  
|---------------------------------------------------------------- | ------------ | ---------------------------------------- | ----- | -------------- | -------- | ----- | ----- | -------- | -------- | ----- | ------ | - | --------- | - | ------ | - | --------- | -
|                                                                 |              |                                          |       | Yen (millions)
|                                                                 |              |                                          |       |               
|                                                                 |              |                                          |       | 2002           |          | 2001 
|                                                                 |              |                                          |       |                |          |      
|                                                                 |              |                                          |       | Carrying       |          | Fair  |       | Carrying |          | Fair 
|                                                                 |              |                                          |       | amount         |          | value |       | amount   |          | value
|                                                                 |              |                                          |       |                |          |       |       |          |          |      
|Non-derivatives:                                                 |              |                                          |       |                |          |       |       |          |          |       |        |   |           |   |        |  
|                                                                 | Assets:      |                                          |       |                |          |       |       |          |          |       |        |   |           |   |        |   |          
|                                                                 |              | Short-term investments                   |       |                | 11,849   |       |       |          | 11,849   |       |        |   | 11,421    |   |        |   | 11,421    |  
|                                                                 |              | Investments and advances                 |       |                | 813,104  |       |       |          | 813,118  |       |        |   | 1,008,170 |   |        |   | 1,009,122 |  
|                                                                 | Liabilities: |                                          |       |                |          |       |       |          |          |       |        |   |           |   |        |   |          
|                                                                 |              | Long-term debt,including current
portion |       |                | (965,466 | )     |       |          | (981,512 | )     |        |   | (809,111  | ) |        |   | (903,698  | )
|Derivatives relating to long-termdebt, including current portion |              |                                          | 8,103 |                |          |       | 8,103 |          |          |       | (1,367 | ) |           |   | (1,399 | )





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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|     |  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    
|(17) |  | Commitments and Contingent Liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    
|     |  | At March 31, 2002, commitments outstanding for the purchase of property,
plant and equipment approximated 6,496 million yen. Contingent
liabilities at March 31, 2002 for discounted export bills of exchange and
guarantees of loans amounted to approximately 79,674 million yen,
including 59,521 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    
|(18) |  | Segment Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    
|     |  | The Company adopted SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information, in the fiscal year beginning April 1,
2001, and accordingly, prior year figures have been restated to reflect
this change. These segments reported below are the components of the
Company for which separate financial information is available that is
evaluated regularly by the chief operating decision maker of the Company
in deciding how to allocate resources and in assessing performance.
Business segments correspond to categories of activity classified
primarily by markets and products. AVC Networks includes video and
audio equipment and information and communications equipment. Home
Appliances includes home appliances and household equipment. Industrial
Equipment includes electronic-parts-mounting machines, industrial robots
and industrial equipment. Components and Devices includes electronic
components, semiconductors, electric motors and batteries.





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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |  | Information by segment for the three years ended March 31, 2002 is shown in
the tables below:
| |  | ---------------------------------------------------------------------------------------------
|
| |  | By Business Segment:                                                                         

|                       |                            |                                                |          |          |                |           |          |          |           |           |         |          |           |           | 
|---------------------- | -------------------------- | ---------------------------------------------- | -------- | -------- | -------------- | --------- | -------- | -------- | --------- | --------- | ------- | -------- | --------- | --------- | 
|                       |                            |                                                |          |          | Yen (millions)
|                       |                            |                                                |          |          |                |          
|                       |                            |                                                |          |          | 2002           |           | 2001     |          | 2000     
|                       |                            |                                                |          |          |                |           |          |          |           |          
|Sales:                 |                            |                                                |          |          |                |           |          |          |           |           |         |         
|                       | AVC Networks:              |                                                |          |          |                |           |          |          |           |           |         |          |          
|                       |                            | Customers                                      |          |          | 4,051,846      |           |          |          | 4,280,021 |           |         |          | 4,081,435 |          
|                       |                            | Intersegment                                   |          |          | 65             |           |          |          | 119       |           |         |          | 124       |          
|                       |                            |                                                |          |          |                |           |          |          |           |           |         |         
|                       |                            |                                                | Total    |          |                | 4,051,911 |          |          |           | 4,280,140 |         |          |           | 4,081,559 | 
|                       | Home Appliances:           |                                                |          |          |                |           |          |          |           |           |         |          |          
|                       |                            | Customers                                      |          |          | 1,178,185      |           |          |          | 1,316,254 |           |         |          | 1,305,978 |          
|                       |                            | Intersegment                                   |          |          | 998            |           |          |          | 13        |           |         |          | 25        |          
|                       |                            |                                                |          |          |                |           |          |          |           |           |         |         
|                       |                            |                                                | Total    |          |                | 1,179,183 |          |          |           | 1,316,267 |         |          |           | 1,306,003 | 
|                       | Industrial Equipment:      |                                                |          |          |                |           |          |          |           |           |         |          |          
|                       |                            | Customers                                      |          |          | 288,702        |           |          |          | 467,518   |           |         |          | 381,492   |          
|                       |                            | Intersegment                                   |          |          | 7,065          |           |          |          | 6,995     |           |         |          | 9,595     |          
|                       |                            |                                                |          |          |                |           |          |          |           |           |         |         
|                       |                            |                                                | Total    |          |                | 295,767   |          |          |           | 474,513   |         |          |           | 391,087   | 
|                       | Components and Devices:    |                                                |          |          |                |           |          |          |           |           |         |          |          
|                       |                            | Customers                                      |          |          | 1,357,955      |           |          |          | 1,617,768 |           |         |          | 1,530,482 |          
|                       |                            | Intersegment                                   |          |          | 614,832        |           |          |          | 859,973   |           |         |          | 827,805   |          
|                       |                            |                                                |          |          |                |           |          |          |           |           |         |         
|                       |                            |                                                | Total    |          |                | 1,972,787 |          |          |           | 2,477,741 |         |          |           | 2,358,287 | 
|                       | Eliminations               |                                                |          | (622,960 | )              |           |          | (867,100 | )         |           |         | (837,549 | )        
|                       |                            |                                                |          |          |                |           |          |          |           |           |         |         
|                       |                            | Consolidated total                             |          |          | 6,876,688      |           |          |          | 7,681,561 |           |         |          | 7,299,387 |          
|                       |                            |                                                |          |          |                |           |          |          |           |           |         |         
|Segment profit (loss): |                            |                                                |          |          |                |           |          |          |           |           |         |         
|                       | AVC Networks               |                                                |          | (51,687  | )              |           |          | 104,158  |           |           |         | 101,155  |          
|                       | Home Appliances            |                                                |          | 38,063   |                |           |          | 54,655   |           |           |         | 42,474   |          
|                       | Industrial Equipment       |                                                |          | (44,493  | )              |           |          | 18,050   |           |           |         | 20,471   |          
|                       | Components and Devices     |                                                |          | (95,938  | )              |           |          | 88,685   |           |           |         | 66,110   |          
|                       | Corporate and eliminations |                                                |          | (57,752  | )              |           |          | (77,144  | )         |           |         | (71,156  | )        
|                       |                            |                                                |          |          |                |           |          |          |           |           |         |         
|                       |                            | Total segment profit (loss)                    |          |          | (211,807       | )         |          |          | 188,404   |           |         |          | 159,054   |          
|                       |                            |                                                |          |          |                |           |          |          |           |           |         |         
|Interest income        |                            |                                                | 33,556   |          |                |           | 43,712   |          |           |           | 42,949  |         
|Dividends received     |                            |                                                | 9,162    |          |                |           | 12,237   |          |           |           | 14,674  |         
|Other income           |                            |                                                | 53,774   |          |                |           | 54,082   |          |           |           | 135,746 |         
|Interest expense       |                            |                                                | (41,213  | )        |                |           | (43,538  | )        |           |           | (46,237 | )       
|Other deductions       |                            |                                                | (391,481 | )        |                |           | (154,162 | )        |           |           | (87,581 | )       
|                       |                            |                                                |          |          |                |           |          |          |           |           |         |         
|                       |                            | Consolidated income (loss)
before income taxes |          |          | (548,009       | )         |          |          | 100,735   |           |         |          | 218,605   |          
|                       |                            |                                                |          |          |                |           |          |          |           |           |         |         





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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

|                                                                |                            |                    |  |                |           |      |  |           |           |  |  |           |           | 
|--------------------------------------------------------------- | -------------------------- | ------------------ |  | -------------- | --------- | ---- |  | --------- | --------- |  |  | --------- | --------- | 
|                                                                |                            |                    |  | Yen (millions)
|                                                                |                            |                    |  |                |          
|                                                                |                            |                    |  | 2002           |           | 2001 |  | 2000     
|                                                                |                            |                    |  |                |           |      |  |           |          
|Identifiable assets:                                            |                            |                    |  |                |           |      |  |           |           |  |  |          
|                                                                | AVC Networks               |                    |  | 2,513,877      |           |      |  | 2,689,343 |           |  |  | 2,627,626 |          
|                                                                | Home Appliances            |                    |  | 1,137,909      |           |      |  | 1,233,308 |           |  |  | 1,226,741 |          
|                                                                | Industrial Equipment       |                    |  | 221,195        |           |      |  | 297,396   |           |  |  | 320,861   |          
|                                                                | Components and Devices     |                    |  | 1,706,920      |           |      |  | 1,960,950 |           |  |  | 1,790,492 |          
|                                                                | Corporate and eliminations |                    |  | 2,047,258      |           |      |  | 1,975,291 |           |  |  | 1,989,355 |          
|                                                                |                            |                    |  |                |           |      |  |           |           |  |  |          
|                                                                |                            | Consolidated total |  |                | 7,627,159 |      |  |           | 8,156,288 |  |  |           | 7,955,075 | 
|                                                                |                            |                    |  |                |           |      |  |           |           |  |  |          
|Depreciation (including intangibles
other than goodwill):       |                            |                    |  |                |           |      |  |           |           |  |  |          
|                                                                | AVC Networks               |                    |  | 110,669        |           |      |  | 116,696   |           |  |  | 123,484   |          
|                                                                | Home Appliances            |                    |  | 30,435         |           |      |  | 28,398    |           |  |  | 31,116    |          
|                                                                | Industrial Equipment       |                    |  | 9,187          |           |      |  | 8,356     |           |  |  | 7,426     |          
|                                                                | Components and Devices     |                    |  | 174,790        |           |      |  | 189,633   |           |  |  | 177,099   |          
|                                                                | Corporate and eliminations |                    |  | 9,639          |           |      |  | 9,749     |           |  |  | 10,072    |          
|                                                                |                            |                    |  |                |           |      |  |           |           |  |  |          
|                                                                |                            | Consolidated total |  |                | 334,720   |      |  |           | 352,832   |  |  |           | 349,197   | 
|                                                                |                            |                    |  |                |           |      |  |           |           |  |  |          
|Capital investment (including
intangibles other than goodwill): |                            |                    |  |                |           |      |  |           |           |  |  |          
|                                                                | AVC Networks               |                    |  | 99,064         |           |      |  | 137,354   |           |  |  | 133,747   |          
|                                                                | Home Appliances            |                    |  | 22,046         |           |      |  | 30,759    |           |  |  | 22,120    |          
|                                                                | Industrial Equipment       |                    |  | 6,438          |           |      |  | 11,489    |           |  |  | 7,866     |          
|                                                                | Components and Devices     |                    |  | 191,704        |           |      |  | 337,406   |           |  |  | 179,355   |          
|                                                                | Corporate and eliminations |                    |  | 13,814         |           |      |  | 14,192    |           |  |  | 11,583    |          
|                                                                |                            |                    |  |                |           |      |  |           |           |  |  |          
|                                                                |                            | Consolidated total |  |                | 333,066   |      |  |           | 531,200   |  |  |           | 354,671   | 
|                                                                |                            |                    |  |                |           |      |  |           |           |  |  |          



| |  | Corporate expenses include certain corporate R&D expenditures and general
corporate expenses.                                                                                                    
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | 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.





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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |  | Intangibles mainly represent patents, software and rights to public
facilities.                       
| |  | ------------------------------------------------------------------------------------------------------
|
| |  | By Geographical Area:                                                                                 
|
| |  | Sales attributed to countries based upon the customers location and
long-lived assets are as follows:

|                                                             |                         |                    |           |                |           |      |           |           |           |  |           |           |           | 
|------------------------------------------------------------ | ----------------------- | ------------------ | --------- | -------------- | --------- | ---- | --------- | --------- | --------- |  | --------- | --------- | --------- | 
|                                                             |                         |                    |           | Yen (millions)
|                                                             |                         |                    |           |               
|                                                             |                         |                    |           | 2002           |           | 2001 |           | 2000     
|                                                             |                         |                    |           |                |           |      |           |          
|Sales:                                                       |                         |                    |           |                |           |      |           |           |           |  |           |          
|                                                             | Japan                   |                    |           | 3,348,353      |           |      |           | 4,033,785 |           |  |           | 3,698,181 |          
|                                                             | North and South America |                    |           | 1,358,689      |           |      |           | 1,379,959 |           |  |           | 1,384,550 |          
|                                                             | Europe                  |                    |           | 774,820        |           |      |           | 849,205   |           |  |           | 905,620   |          
|                                                             | Asia and Others         |                    |           | 1,394,826      |           |      |           | 1,418,612 |           |  |           | 1,311,036 |          
|                                                             |                         |                    |           |                |           |      |           |           |           |  |           |          
|                                                             |                         | Consolidated total |           |                | 6,876,688 |      |           |           | 7,681,561 |  |           |           | 7,299,387 | 
|                                                             |                         |                    |           |                |           |      |           |           |           |  |           |          
|                                                             |                         |                    |           |                |           |      |           |           |           |  |           |          
|United States of America included
in North and South America |                         |                    | 1,217,241 |                |           |      | 1,245,280 |           |           |  | 1,274,024 |          
|                                                             |                         |                    |           |                |           |      |           |           |           |  |           |          
|Long-lived assets:                                           |                         |                    |           |                |           |      |           |           |           |  |           |          
|                                                             | Japan                   |                    |           | 1,147,295      |           |      |           | 1,284,744 |           |  |           | 1,145,057 |          
|                                                             | North and South America |                    |           | 121,784        |           |      |           | 135,767   |           |  |           | 120,933   |          
|                                                             | Europe                  |                    |           | 61,644         |           |      |           | 62,433    |           |  |           | 57,630    |          
|                                                             | Asia and Others         |                    |           | 251,039        |           |      |           | 236,351   |           |  |           | 189,839   |          
|                                                             |                         |                    |           |                |           |      |           |           |           |  |           |          
|                                                             |                         | Consolidated total |           |                | 1,581,762 |      |           |           | 1,719,295 |  |           |           | 1,513,459 | 
|                                                             |                         |                    |           |                |           |      |           |           |           |  |           |          
|United States of America included
in North and South America |                         |                    | 115,971   |                |           |      | 128,815   |           |           |  | 115,431   |          



| |  | There are no individually material countries of which sales and long-lived
assets should be separately disclosed in North and South America, Europe
and Asia and Others, except for the United States of America.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Transfers between business segments or geographic segments are made at
arms-length prices. There are no sales to a single external major customer
for the three years ended March 31, 2002.                      





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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |  | The following information shows sales, geographical profit (loss) and
identifiable assets which are attributed to geographic areas based on the
country location of the Company or its subsidiaries for the three years
ended March 31, 2002. In addition to the disclosure requirements under
SFAS No. 131, the Company discloses this information as supplemental
information in light of the disclosure requirements of the Japanese
Securities and Exchange Law, which a Japanese public company is subject to:
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                            |                            |                    |       |            |                |           |      |            |           |           |  |            |           |           | 
|--------------------------- | -------------------------- | ------------------ | ----- | ---------- | -------------- | --------- | ---- | ---------- | --------- | --------- |  | ---------- | --------- | --------- | 
|                            |                            |                    |       |            | Yen (millions)
|                            |                            |                    |       |            |                |           |     
|                            |                            |                    |       |            | 2002           |           | 2001 |            | 2000     
|                            |                            |                    |       |            |                |           |      |            |           |           |  |            |           |           | 
|Sales:                      |                            |                    |       |            |                |           |      |            |           |           |  |           
|                            | Japan:                     |                    |       |            |                |           |      |            |           |           |  |            |          
|                            |                            | Customers          |       |            | 4,140,314      |           |      |            | 4,981,666 |           |  |            | 4,706,534 |          
|                            |                            | Intersegment       |       |            | 903,876        |           |      |            | 1,204,963 |           |  |            | 1,057,828 |          
|                            |                            |                    |       |            |                |           |      |            |           |           |  |           
|                            |                            |                    | Total |            |                | 5,044,190 |      |            |           | 6,186,629 |  |            |           | 5,764,362 | 
|                            | North and South America:   |                    |       |            |                |           |      |            |           |           |  |            |          
|                            |                            | Customers          |       |            | 1,177,512      |           |      |            | 1,148,909 |           |  |            | 1,084,157 |          
|                            |                            | Intersegment       |       |            | 36,662         |           |      |            | 30,326    |           |  |            | 30,968    |          
|                            |                            |                    |       |            |                |           |      |            |           |           |  |           
|                            |                            |                    | Total |            |                | 1,214,174 |      |            |           | 1,179,235 |  |            |           | 1,115,125 | 
|                            | Europe:                    |                    |       |            |                |           |      |            |           |           |  |            |          
|                            |                            | Customers          |       |            | 598,390        |           |      |            | 622,938   |           |  |            | 669,595   |          
|                            |                            | Intersegment       |       |            | 14,872         |           |      |            | 30,667    |           |  |            | 25,945    |          
|                            |                            |                    |       |            |                |           |      |            |           |           |  |           
|                            |                            |                    | Total |            |                | 613,262   |      |            |           | 653,605   |  |            |           | 695,540   | 
|                            | Asia and Others:           |                    |       |            |                |           |      |            |           |           |  |            |          
|                            |                            | Customers          |       |            | 960,472        |           |      |            | 928,048   |           |  |            | 839,101   |          
|                            |                            | Intersegment       |       |            | 636,625        |           |      |            | 580,183   |           |  |            | 461,938   |          
|                            |                            |                    |       |            |                |           |      |            |           |           |  |           
|                            |                            |                    | Total |            |                | 1,597,097 |      |            |           | 1,508,231 |  |            |           | 1,301,039 | 
|                            | Eliminations               |                    |       | (1,592,035 | )              |           |      | (1,846,139 | )         |           |  | (1,576,679 | )        
|                            |                            |                    |       |            |                |           |      |            |           |           |  |           
|                            |                            | Consolidated total |       |            | 6,876,688      |           |      |            | 7,681,561 |           |  |            | 7,299,387 |          
|                            |                            |                    |       |            |                |           |      |            |           |           |  |           
|                            |                            |                    |       |            |                |           |      |            |           |           |  |           
|Geographical profit (loss): |                            |                    |       |            |                |           |      |            |           |           |  |           
|                            | Japan                      |                    |       | (172,197   | )              |           |      | 214,521    |           |           |  | 165,721    |          
|                            | North and South America    |                    |       | (6,923     | )              |           |      | 11,569     |           |           |  | 15,334     |          
|                            | Europe                     |                    |       | (18,281    | )              |           |      | (5,910     | )         |           |  | (2,487     | )        
|                            | Asia and Others            |                    |       | 44,957     |                |           |      | 43,632     |           |           |  | 44,334     |          
|                            | Corporate and eliminations |                    |       | (59,363    | )              |           |      | (75,408    | )         |           |  | (63,848    | )        
|                            |                            |                    |       |            |                |           |      |            |           |           |  |           
|                            |                            | Consolidated total |       |            | (211,807       | )         |      |            | 188,404   |           |  |            | 159,054   |          
|                            |                            |                    |       |            |                |           |      |            |           |           |  |           





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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements

|                     |                            |                    |  |                |           |      |  |           |           |  |  |           |           | 
|-------------------- | -------------------------- | ------------------ |  | -------------- | --------- | ---- |  | --------- | --------- |  |  | --------- | --------- | 
|                     |                            |                    |  | Yen (millions)
|                     |                            |                    |  |               
|                     |                            |                    |  | 2002           |           | 2001 |  | 2000     
|                     |                            |                    |  |                |           |      |  |          
|Identifiable assets: |                            |                    |  |                |           |      |  |           |           |  |  |          
|                     | Japan                      |                    |  | 4,135,167      |           |      |  | 4,686,994 |           |  |  | 4,645,975 |          
|                     | North and South America    |                    |  | 509,153        |           |      |  | 546,560   |           |  |  | 479,095   |          
|                     | Europe                     |                    |  | 329,976        |           |      |  | 344,792   |           |  |  | 400,581   |          
|                     | Asia and Others            |                    |  | 796,670        |           |      |  | 749,007   |           |  |  | 638,495   |          
|                     | Corporate and eliminations |                    |  | 1,856,193      |           |      |  | 1,828,935 |           |  |  | 1,790,929 |          
|                     |                            |                    |  |                |           |      |  |           |           |  |  |          
|                     |                            | Consolidated total |  |                | 7,627,159 |      |  |           | 8,156,288 |  |  |           | 7,955,075 | 
|                     |                            |                    |  |                |           |      |  |           |           |  |  |          



|(19) |  | Subsequent Events                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | Effective April 1, 2002, pursuant to an agreement between the Company
and Toshiba Corporation to integrate their respective liquid crystal
display (LCD) business, a new joint venture, Toshiba Matsushita
Display Technology Co., Ltd. was established upon division of
relevant business from both companies. The Company transferred its
related assets of 89,510 million yen and liabilities of 60,031
million yen to the joint venture in exchange for a 40% ownership
interest.                                                                                                                                                                                                                                                                                                                                                                                                       
|    
|     |  | On April 26, 2002, the Company entered into definitive share exchange
agreements with five subsidiaries. The share exchange is expected to
take place on October 1, 2002. Under the terms of the agreement,
2.884, 0.576, 0.332, 0.833 and 0.538 of one share of the Companys
common stock will be issued in exchange for each share of Matsushita
Communication Industrial Co., Ltd., Kyushu Matsushita Electric Co.,
Ltd., Matsushita Seiko Co., Ltd., Matsushita Kotobuki Electronics
Industries, Ltd. and Matsushita Graphic Communication Systems, Inc.
common stock, respectively. The share exchange agreements were
approved at the June 27, 2002, annual shareholders meetings of the
Company and each of the five subsidiaries.                                                                                                                                                 
|    
|     |  | In June 2002, the Company and certain of its domestic subsidiaries
obtained approval from the Ministry of Health, Labour and Welfare
(the Ministry) for an exemption from the future benefit obligation
with respect to the substitutional portion of each Employees Pension
Fund (EPF) that the Company and certain of its domestic subsidiaries
operate on behalf of the government in accordance with Japanese
Welfare Pension Insurance Law, following the enactment in April 2001
of a new law concerning the defined benefit pension plans in Japan.
The Company and certain of its domestic subsidiaries will apply for
the return of the past benefit obligation of the substitutional
portion of each EPF. Settlement of the past benefit obligation of
the substitutional portion and the return of the pension assets to
the government will be carried out by December 15, 2003.





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MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|(20) |  | Quarterly Financial Data (Unaudited)                                                                                                               
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | Quarterly net sales, net income (loss) and net income (loss) per
share for the two years ended March 31, 2002 are set forth in the
following table:

|              |  |                                              |           |        |  |                   |          |                   |  |            |        |   |  |  |        |  
|------------- |  | -------------------------------------------- | --------- | ------ |  | ----------------- | -------- | ----------------- |  | ---------- | ------ | - |  |  | ------ | -
|              |  | Yen (millions), except per share information
|              |  |                                              |          
|              |  | 2002                                        
|              |  |                                              |          
|              |  |                                              |           |        |  | Net               |          | Net income        |  | Net income
|              |  | Net                                          |           | income |  | (loss) per share: |          | (loss) per share:
|              |  | sales                                        |           | (loss) |  | basic (yen)       |          | diluted (yen)    
|              |  |                                              |           |        |  |                   |          |                   | 
|Quarter ended |  |                                              |           |        |  |                   |          |                   |  |            |        |   |  |  |        |  
|              |  |                                              |           |        |  |                   |          |                   |  |            |        |   |  |  |        |  
|June 30       |  |                                              | 1,674,784 |        |  |                   | (19,373  | )                 |  |            | (9.32  | ) |  |  | (9.32  | )
|September 30  |  |                                              | 1,710,825 |        |  |                   | (50,100  | )                 |  |            | (24.10 | ) |  |  | (24.10 | )
|December 31   |  |                                              | 1,737,235 |        |  |                   | (172,025 | )                 |  |            | (82.74 | ) |  |  | (82.74 | )
|March 31      |  |                                              | 1,753,844 |        |  |                   | (189,509 | )                 |  |            | (91.76 | ) |  |  | (91.76 | )

|              |  |                                              |           |        |  |                   |         |                   |  |            |        |   |  |  |        |  
|------------- |  | -------------------------------------------- | --------- | ------ |  | ----------------- | ------- | ----------------- |  | ---------- | ------ | - |  |  | ------ | -
|              |  | 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 | )





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- 123 -

Schedule II

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
AND SUBSIDIARIES

Valuation and Qualifying Accounts and Reserves

(In millions of yen)

Years ended March 31, 2002, 2001 and 2000

|                                               |      |  |           |        |          |  |         |        |          |  |             |        |              |  |           |       |  |  |  |        |   |  |  |        | 
|---------------------------------------------- | ---- |  | --------- | ------ | -------- |  | ------- | ------ | -------- |  | ----------- | ------ | ------------ |  | --------- | ----- |  |  |  | ------ | - |  |  | ------ | 
|                                               |      |  |           |        |          |  |         |        |          |  | Deduct      |        |              |  |           |       |  |  | 
|                                               |      |  |           |        |          |  |         |        |          |  |             |        |              |  |           |       |  |  | 
|                                               |      |  | Balance   |        |          |  |         |        |          |  |             |        |              |  |           |       |  |  |  |        |   |  | 
|                                               |      |  | at        |        | Add      |  | Bad     |        |          |  |             |        | Add (deduct) |  |           |       | 
|                                               |      |  | beginning |        | -charged |  | debts   |        |          |  |             |        | -cumulative  |  | Balance  
|                                               |      |  | of        |        | to       |  | written |        |          |  |             |        | translation  |  | at end of
|                                               |      |  | period    |        | income   |  | off     |        | Reversal |  | adjustments |        | period      
|                                               |      |  |           |        |          |  |         |        |          |  |             |        |             
|Allowance for doubtful
trade receivables:      |      |  |           |        |          |  |         |        |          |  |             |        |              |  |           |       |  |  |  |        |   |  |  |       
|                                               |      |  |           |        |          |  |         |        |          |  |             |        |              |  |           |       |  |  |  |        |   |  |  |       
|                                               | 2002 |  |           | 42,530 |          |  |         | 4,249  |          |  |             | 3,729  |              |  |           | 4,013 |  |  |  | 1,261  |   |  |  | 40,298 | 
|                                               |      |  |           |        |          |  |         |        |          |  |             |        |              |  |           |       |  |  |  |        |   |  |  |       
|                                               | 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 | 
|                                               |      |  |           |        |          |  |         |        |          |  |             |        |              |  |           |       |  |  |  |        |   |  |  |       
|Allowance for doubtful
noncurrent receivables: |      |  |           |        |          |  |         |        |          |  |             |        |              |  |           |       |  |  |  |        |   |  |  |       
|                                               |      |  |           |        |          |  |         |        |          |  |             |        |              |  |           |       |  |  |  |        |   |  |  |       
|                                               | 2002 |  |           | 98     |          |  |         | 1,514  |          |  |             | 1,562  |              |  |           |      |  |  |  |       |   |  |  | 50     | 
|                                               |      |  |           |        |          |  |         |        |          |  |             |        |              |  |           |       |  |  |  |        |   |  |  |       
|                                               | 2001 |  |           | 144    |          |  |         | 3,160  |          |  |             | 3,206  |              |  |           |      |  |  |  |       |   |  |  | 98     | 
|                                               |      |  |           |        |          |  |         |        |          |  |             |        |              |  |           |       |  |  |  |        |   |  |  |       
|                                               | 2000 |  |           | 304    |          |  |         | 1,728  |          |  |             | 1,888  |              |  |           |      |  |  |  |       |   |  |  | 144    | 





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- 124 -




Item 18. Financial Statements

Not applicable




Item 19. Exhibits

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



|1.1 |  | Articles of Incorporation of the Registrant (English translation)                                                                                                                                                                                                                                                                                                                                          
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|1.2 |  | Share Handling Regulations of the Registrant (English translation)                                                                                                                                                                                                                                                                                                                                         
|   
|1.3 |  | Regulations of the Board of Directors of the Registrant (English translation)                                                                                                                                                                                                                                                                                                                              
|   
|1.4 |  | Regulations of the Board of Corporate Auditors of the Registrant (English translation)                                                                                                                                                                                                                                                                                                                     
|   
|   
|2.1 |  | Specimen common stock certificates of the Registrant (English translation)                                                                                                                                                                                                                                                                                                                                 
|   
|2.2 |  | Form of Amended and Restated Deposit Agreement among the Registrant,
Morgan Guaranty Trust Company of New York (now JP Morgan Chase Bank) as
Depositary and all owners and holders from time to time of American
Depositary Receipts, including the form of American Depositary Receipt
[incorporated by reference to the Registration Statement on Form F-6 (File
No. 333-12694) filed on October 4, 2000]
|   
|   
|8.1 |  | Subsidiaries of the Registrant [List of significant subsidiaries (see
Section C of Item 4)]                                                                                                                                                                                                                                                                                                                





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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 17, 2002 |  | By                                       |  | /s/ Shigeru Nakatani             
|                    |  |                                          |  |                                  
|                    |  |                                          |  | Shigeru Nakatani                 
|                    |  |                                          |  | President of                     
|                    |  |                                          |  | Panasonic Finance (America), Inc.
|                    |  |                                          |  | 1 Rockefeller Plaza, Suite 1001, 
|                    |  |                                          |  | New York, N.Y. 10020-2002